TN Health and Life Insurance Exam
P is self employed and owns an individual disabilitt income policy. he becomes totally disabled on june 1 and receives $2,000 a month for the next 10 months. How much of this income is subject to federal income tax? - $20,000 - $14,000 - $6,000 - $0
$0
T and S are named co-primary beneficiaries of a $500,000 Accidental Death and Dismemberment policy insuring their father. Their mother was name contingent beneficiary. Five years later, S dies of natural causes and the father is killed in a scuba accident shortly afterwards. How much of the death benefit will the mother receive? - $1,000,000 - $500,000 - $250,000 - $0
$0 - The mother receives $0 because T is still alive and the sole primary beneficiary, while the mother is still the contingent beneficiary
What is the max fine that can be imposed by the Commissioner to a producer who violates an insurance law? - $250 per violation - $500 per violation - $1,000 per violation - no limit to the fine
$1,000 PER VIOLATION - If the Commissioner finds a producer to be in violation of insurance laws, the Commissioner may impose a fine of no more than $1000 per violation
N is covered under an individual disability policy with a 30-day elimination period and a monthly benefit of $500. N is totally disabled for 3.5 months. N's total benefit received on this claim is: - $2,000 - $1,750 - $1,500 - $1,250
$1,250 - After the 30-day elimination period has been satisfied, the total benefit paid on this claim is $1,250 ($500+$500+$250)
Under the USA patriot act, insurers are required to report receipt of cash payments in excess of: -$10,000 - $7,500 - $5,000 - $2,500
$10,000
In TN, the max fine that the Commissioner can impose on a producer is ______ per violation - $500 - $1000 - $1500 - $2000
$1000
B has a $100,000 AD&D policy that pay triple indemnity for common carrier death. if B is killed from an accident on a commerical flight, what will the policy pay B's Beneficiary? - $100,000 - $200,000 - $300,000 - $400,000
$300,000
What are characteristics descrbing the nature of an insurance contract?
- unilateral -aleatory -adhesion
what type of term life policy most likely contains a renewability feature
10 YEAR CONVERTIBLE TERM
An insurer must provide an insured with claim forms within ____ days after receiving notice of a loss - 5 - 10 - 15 - 20
15
How long is a temporary license valid? - 45 days - 90 - 120 - 180
180 DAYS
what is the minimum number of activities of daily living (ADL) an insured must be unable to perform to qualify for long term care benefits
2
what type of policy would offer a 40-year old the quickest accumulation of cash value?
20 PAY LIFE
a potential client, age 40, would like to purchase a whole life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct? - straight life accumulates faster than limited- pay life - 20 pay life accumulates cash value faster than straight life - cash value accumulation of both 20 pay life and straight life depend on the insurer's financial rating - 20-pay life and straight life accumulate cash value at the same rate
20-PAY LIFE ACCUMULATES CASH VALUE FASTER THAN STRAIGHT LIFE
The USA patriot act was enacted in - 2001 - 2002 - 2003 - 2004
2001
An agent needs to complete ____ of continuing education every _____ years - 25;2 - 24;3 - 24;2 - 25;2
24;2
The commissioner notifies the association of an insolvent insurer no later than _____ after receiving notice of the insurer's insolvency - 3 days - 5 days - 10 days - 30 days
3 DAYS - the commissioner notifies the association of an insolvent insurer no later than 3 days after receiving notice of the insurer's insolvency
How long is the typical free look period for long term care insurance policies? - 20 days - 30 days - 40 days - 50 days
30 DAYS - most long term care policies require a 30 day free look period
According to the mandatory uniform policy provisions, what is the max amount of time after the premium due date during which the policy remains in force even though the premiums has not been paid? - 7 days - 10 days - 31 days - 60 days
31 DAYS
V is insured under an individual disability income policy with a 30-day elimination period. on july 1, he is involved in an accident and temporarily disabled. He returns to work on december 1. How many months of benefit are payable? - 6 months - 5 months - 4.5 months - 4 month
4 MONTHS -after the 30 day eliminiation period has been satisfied, there will be 4 months of benefit payments
M's insurance company denied a reinstatement application for her lapsed health insurance policy. The company did not notify M of this denial. How many days from the reinstatement application date does the insurance company have to notify M of the denial before the policy will be automatically placed back in force? - 10 days - 30 days - 45 days - 60 days
45 DAYS
qualified long term care polices may take into consideration an applicant's pre-existing conditions for a max of not more than______month(s) prior to the effective date of coverage
6 MONTHS
If an insurance producer applicant is required to pass a written examination, what is also required? - a fingerprint based criminal background check - a college degree - applicant is at least 21 years old - the applicants credit report
A FINGER PRINT BASED CRIMINAL BACKGROUND CHECK
Which of these is an element of a Variable Life policy? - a fixed, level premium - insurer assumes the investment risk - no investment risk to policyowner - rate of returns are guaranteed
A FIXED LEVEL PREMIUM
P received disability income benefits for 3 months then returns to work. She is able to work one month before her condition returns, leaving her disabled once again. What would the insurance company most likely regard this second period of disability as?
A RECURRENT DISABILITY
who would qualify for a temporary license in TN? - an individual who has recently failed the state exam - a nonresident producer in another state who wishes to conduct business in TN - a producer with a recently expired license - a surviving spouse of a deceased producer
A SURVIVING SPOUSE OF A DECEASED PRODUCER
What is NOT included in an annuity contract?
AD&D RIDEr
a term life rider offers the insured
ADDITIONAL LIFE COVERAGE
Q purchases a $500,000 life insurance poliocy and pays $900 in premiums over the first 6 months. Q dies suddenly and the beneficiary is paid $500,000. this exchange of unequal value reflects which of the following insurance contract features?
ALEATORY
under what circumstance will the benefits under COBRA continuation coverage end?
ALL GROUP HEALTH PLANS ARE TERMINATED BY THE EMPLOYER
A producer may apply for one or more of the following licenses: - life insurance - personal lines property - accident and health or sickness insurance - all of the above
ALL OF THE ABOVE
Which of the following is the purpose of the TN Guaranty Association? - avoid excess delay in payment - avoid a loss to policyholders and claimant due to the insolvency of an insurer - charged to distribute the costs of protection to all insurers - all of the above
ALL OF THE ABOVE
Which of the following statements is CORRECT regarding the tax treatment of a lump-sum payment paid to a life insurance policy's primary beneficiary? - the proceeds which exceed the amount paid in premiums are taxable - the proceeds taxable only if the beneficiary's tax bracket has changed from the payout - all proceeds are considered taxable income in the year they are received - all proceeds are income tax free in the year they are received
ALL PROCEEDS ARE INCOME TAX FREE IN THE YEAR THEY ARE RECEIVED
All of these are considerd a producers breach of fiduciary duty EXCEPT - missapropration of premiums - conversion of premiums - improper withholding of premiums - allowing premiums to be submitted electronically
ALLOWING PREMIUMS TO BE SUBMITTED ELECTRONICALLY
All of the following statements regarding group health insurance is true, EXCEPT: - premiums are usually determined by the claims experience of the group - a master contract is issued for the group - an individual policy is given to each member - group health insurance premiums are typically lower than individual health insurance premiums
AN INDIVIDUAL POLICY IS GIVEN TO EACH MEMEBR - each member receives a certificate of insurance not an individual policy
group life insurance policies are generally written as
ANNUALLY RENEWABLE TERM
When an insurance application is take by a producer, which of these statements is true?
ANY CHANGES MADE ON APPLICATION REQUIRE APPLICANTS INTITIALS
any changes made on an insurance application requires the intials of whom?
APPLICANT
An applicant's medical info received form the MIB may be furnished to the
APPLICANT'S PHYSICIAN
which of the following is the MOST important factor when deciding how much disability income coverage an applicant should purchase? - applicant's occupation - applicants monthly income - applicant's health - applicant's previous disabilities
APPLICANTS MONTHLY INCOME
An incomplete life insurance application submitted to an insurer will result in which of these actions? - application will be returned to writing agent - application will be approved with restrictions - application will be pending until a MIB report is sent to the insurer - application will be automatically declined
APPLICATION WILL BE RETURNED TO THE WRITING AGENT
what medical expense does cancer indsurance NOT cover?
ARTHRITIS
what action can a policyowner take if an application for a bank loan requires collateral?
ASSIGN POLICY OWNERSHIP TO THE BANK
A business entity can be defined as a(n) - agency that must only operate outside of TN - agency that must only operate inside of TN - association or a limited liability company - business that requires approval by the Attorney General to transact business
ASSOCIATION OR A LIMITED LIABILITY COMPANY - The definition of a business entity includes an association or limited liability company
Medicare part C is: - government insurance - available to those who are enrolled in a Medicare Supplement Plan with income under $12,000 per year - orginal part A and B medicare - available to those who are enrolled in Medicare Part A and Part B
AVAILABLE TO THOSE WHO ARE ENROLLED IN MEDICARE PART A AND PART B
The Automatic Premium Loan provision is designed to: - provide a source of revenue to the insurance company - avoid a policy lapse - allow a polocyowner to request a policy loan - allow a pollicyowner to take out additional coverage without evidence of insurability
AVOID A POLICY LAPSE - The purpose of the automatic premium loan is to keep the policy from lapsing
insurance contract may be sold, solicited, or negotiated by an insurance producer ONLY upon - filing an application for licensure - passing the licensure exam - issuance of license - becoming an appointed producer of an insurer
BECOMING AN APPOINTED PRODUCER OF AN INSURER
T is the policyowner for a life insurance policy with an irrevocable beneficiary designation. If T wishes to change the beneficiary, T must obtain permission from - payor - agent - beneficiary - commissioner of insurnace
BENEFICIARY
S would like to use dividends from her life insurance policy to purchase paid up additions. All of these would be factors that determine how much coverage can be purchased EXCEPT - type of life insurance - S's attained age - dividend amount used toward purchase - beneficiary's age
BENEFICIARY'S AGE - is IRRELEVANT
What is considered to be a characteristic of an immediate annuity? - Benefit payments start within one payment period of purchase - benefit payments start within 5 years of initial purchase - normally tied to a specific equity or stock index - periodical contributions begin immediately
BENEFIT PAYMENTS START WITHIN ONE PAYMENT PERIOD OF PURCHASE - an immediate annuity is designed to make its first benefit payment to the annuitant at one payment interval from the date of purchase
which type of policy would pay an employee's salary if the employer was injured in a bicycle accident and out of work for 6 weeks?
BUSINESS OVERHEAD EXPENSE
G is an accountant who has ten employees and is concerned about how the business would survive financially if G became disabled. The type of policy which BEST addresses this concern is" - Business Overhead Expense - Disability Income - Key employee life - contributory
BUSINESS OVERHEAD EXPENSE - purpose is to cover certain overhead expenses that continue when the business owner is disabled
the guarantee of insurability option provides a long term care policyowner to
BUY ADDITIONAL COVERAGE AT A LATER DATE
P loses an arm in a farm accident and is paid $10,000 from his AD&D policy. This benefit is known as the
CAPITAL SUM
a whole life insurance poliocyowner does NOT have the right to
CHANGE THE GRACE PERIOD
For a change to a health policy to be valid, what is required? - the producer must approve of the changes - changes in the policy must be approved by an executive officer of the insurer - changes must be notarized by the commissioner and attached to the policy - the producer must take an affidavit from the policyholder
CHANGES IN THE POLICY MUST BE APPROVED BY AN EXECUTIVE OFFICER OF THE INSURER
m applies for health insurance policy and pays initial premium. when agent completes application, a conditional receipt is left with the applicant. Insurance company's underwriting department requests Ms medical records and determins M has had asthma for many years. Possible underwriting outcomes would NOT include
CHANGING THE POLICYS PROVISIONS
Unfair discrimination is BEST described as - charging a different rate for someone in the same actuarial class - charging different policy rates for a 60-year old individual and a 30-year old individual - requiring physical exams for all employees to be covered by a company's insurance policy - converting term coverage to an individual whole life policy after the insured as reached an attained age of 50
CHARGING A DIFFERENT RATE FOR SOMEONE IN THE SAME ACTUARIAL CLASS
S is covered by a whole life policy. which insurance product can cover his children
CHILD TERM RIDER
Which of the following is an example of defamation? - making statements that encourage the purchase of term life insurance over whole life insurance - publishing a newsletter that makes reference to reputable brokers in the area - circulating brochures that falsely denounce the financial condition of an insurer - issuing pamphlets containing false info about term life insurance
CIRCULATING BROCHURES THAT FALSELY DENOUNCE THE FINANCIAL CONDITION OF AN INSURER
A disability income policyowner recently submitted a claim for a chronic neck problem that has now resulted in total disability. The original neck injury occured before the application was taken 5 years prior. The neck injury was never disclosed to insurer at time of application. How will insurer handle this claim?
CLAIMS WILL BE PAID AND COVERAGE WILL REMAIN IN FORCE -after policy has been in force for 2 (sometimes 3) years , it enteres the incontestable period, in which the insurer may not deny a claim based on info not disclosed at the time of the application
a major medical policy typically contains a provision that requires the insurer to pay only part of a loss, while the balance is paid by the insured. this provision is called - assignment of benefits - coinsurance - indemnity - co-deductible
COINSURANCE - requires insurance company pay only part of a loss and insured to pay balance
Which of the following reimburses its insureds for covered medical expenses? - health maintenance organizations - preferred provider organizations - commercial insurers - service providers
COMMERCIAL INSURERS - Commercial insurance companies function on the reimbursement approach. Policyowners obtain medical treatment from whatever source they feel is most appropriate and submit their charges to their insurer for reimbursement
This type of deductible provision states that should more than one family memeber be involved in a common accident, or suffer the same illness, only one individual deductible amount shall be applied
COMMON ACCIDENT DEDUCTIBLE
Which of the following is NOT a requirement to sell, solicit, or negotiate long-term care insurance? - be a licensed producer for life or health - complete a one-time 8 hours long-term care specific training course - complete 4 hours of long-term care continuing education - complete a one-time 4 hour course on estate planning
COMPLETE A ONE TIME 4 HOUR COURSE ON ESTATE PLANNING
K applies for health insurance policy on herself and submits intial premium with the application. She is given receipt stating coverage begins immediatly if application is approved. This receipt is called
CONDITIONAL
major medical policies typically
CONTAIN A DEDUCTIBLE AND COINSURANCE
the incontestable clause allows the insurer to
CONTEST A CLAIM DURING THE CONTESTABLE PERIOD
a prospective insured completes and signs an applications for health insuance but intentionally conceals info about pre-existing heart condition. company issues the policy. two months later, the insured suffers a heart attack and submits a claim. while processing the claim, the company discovers the pre-existing condition. in this situation, the company will
CONTINUE COVERAGE BUT EXCLUDE THE HEART CONDITION
Which of the following consists of an offer, acceptance, and consideration? - warranty - estoppel - contract - representation
CONTRACT - offer, acceptance, and consideration are all elements of a contract
an employee of 20 years recently retired at age 50.5. this employees group life contract can be - converted to an individual permanent policy at an individual rate - converted to an indivodual permanent ploicy at a group rate - continued at an individual rate - continued at a group rate
CONVERTED TO AN INDIVIDUAL PERMANENT POLICY AT AN INDIVIDUAL RATE
When does the free look provision for health insurance begin? - dates of sales appt - date the policy is delivered to the insured - dates the sales appt was set - date the policy was issued
DATE THE POLICY IS DELIVERED TO THE INSURED
the combination of whole life and ____ term insurance is ferred to as a family income policy
DECREASING
what type of life policy has a death benefit that adjusts periodically and is written for a specific period of time
DECREASING TERM
credit life insurance is typically issued with what type of coverage?
DECREASING TERM -term matched to the length of the loan period
How are surrender charges deducted in a life policy with a rear-end loaded provision?
DEDUCTED WHEN THE POLICY IS DISCONTINUED
M is insured under a basic hospital/surgical expense policy. a physician performs surgery on M. What detemines the claim M is eligible for?
DETERMINED BY THE TERMS OF THE POLICY
which contract permits the remaining partners to buy out the interest of a disabled business partner?
DISABILITY BUY-SELL
a CEO's personal assistant suffered injuries at home and as a result, was unable to work for four months. Which type of policy will pay a monthly benefit to the personal assistant?
DISABILITY INCOME
what best describes the intent of a coinsurance clause in a Major Medical policy?
DISCOURAGES OVERUTLIZATION OF THE INSURANCE COVERAGE
T purchased a $100,000 single premium, straight life annuity 5 years ago. He has received monthly payments since rthe inception of the annuity. If T dies, the insurance company
DOES NOT HAVE TO MAKE ANY FURTHER PAYMENTS
what health policy clause stipulates than an insurance company must attach copy of the application to the policy to ensure that is is part of the contract?
ENTIRE CONTRACT
A provision that the policy, application, and all attachments shall constitute the_______ between the parties - grace period - entire contract - notice of claim - proof of loss
ENTIRE CONTRACT - a provision that the policy, application, and all attachments shall constitute the entire contract between the parties
When an insurance company sends a policy to the insured with an attached application, the element that makes the application part of the contract between the insured and the insurer is called the - Entire Contract Provision - Insuring clause - time limit on certain defense provision - legal contract clause
ENTIRE CONTRACT PROVISION
How often must the commissioner examine each domestic company? - every 2 yrs - every 3 yrs - every 4 yrs - every 5 yrs
EVERY 5 YEARS
Health insurance benefits NOT covered due to an act of war are: - excluded by the insurer in the contract provisions - assigned to a reinsurer - given a longer probationary period - charged a higher premium
EXCLUDED BY THE INSURER IN THE CONTRACT PROVISIOSNS - An exclusion is a provision that entirely eliminates coverage for a specified risk, such as an act of war or aviation
when an insurer issues a policy that refuses to cover certain risks, this is referred to as a(n): - elimination - exclusion - limitation - exception
EXCLUSION
A Universal Life policy is sometimes referred to as an unbundled Life Policy because the owner can see the interest earned, cost of insurance, and the - inherent risk - commission rate - inflation factor - expense charges
EXPENSE CHARGES - The universal life policy is called an unbundled life policy because the policyholder can see the expense charges, the interest earned, and the cost of insurance
Long Term Care policies will usually pay for eligible benefits using which of the following methods? - Delayed - fee for service - expense incurred - respite
EXPENSE INCURRED - Most long term care policies pay on a reimbursement (or expense-incurred) basis, up to policy limits
After and inured gives notice of loss, what must he/she do if the insurer does not furnish forms? - file a lawsuit - contact the insurer again requesting forms - nothing - file written proof of loss
FILE WRITTEN PROOF OF LOSS - the insured may file written proof of loss in any form if the insurer does NOT furnish forms after the insured gives notice of loss
N age 50 recently bought an annuity that will pay a guaranteed $2000/month ate age 70 for life. what type of annuity did N purchase?
FIXED DEFERRED -fixed deferred annuity pays out a fixed amount for life starting at a future date
all of these settlement options involved the systematic liquidation of the death proceeds in the event of the insured's death
FIXED PERIOD, FIXED AMOUNT, LIFE INCOME. NOT INTEREST ONLY
In TN, a(n)________ insurance company is one formed under the laws of a state outside of TN - alien - domestic - foreign - captive
FOREIGN
What action should a producer take if the initial premium is NOT submittd with the application?
FORWARD THE APPLICATION TO THE INSURER WITH OUT THE INTIAL PREMIUM
The insurance Commissioner is REQUIRED to do which of the following before holding a hearing that could lead to the suspension of a producer's license?
GIVE WRITTEN NOTICE TO THE PRODUCER
With AD&D policies, what is the purpose of the Grace Period? - gives the policyowner additional time to pay overdue premiums - gives the policyowner additinal time to file a lawsuit - gives the policyowner additional time to file a claim - gives the policyowner additional time to provide proof of loss
GIVES THE POLICYOWNER ADDITIONAL TIME TO PAY OVERDUE PREMIUMS
A long term care policy sold in TN must be - conditonally renewable - optionally renewable - guaranteed renewable - noncancellable
GUARANTEED RENEWABLE
Which type of renewability best describes a disability income policy that covers an individual until the age of 65, but the insurer has the right to change the premium rate for the overall risk class? - conditionally renewable - noncancellable - guaranteed renewable - optionally renewable
GUARANTEED RENEWABLE
which organization would make reimbursement payments directly to the insured individual for covered medical expenditures?
HEALTH MAINTENANCE ORGANIZATION (HMO)
which of the following types of organizations are prepaid group health plans, where members pay in advance for the services of participating physicians and hospitals that have agreements? - PPO - HMO - MEWA - POS
HMO - HMO is prepaid group health plan, where members pay in advance for the services of participating physicians and hospitals that have agreements
A medical care provider which typically delivers health services at its own medical facility is known as a -HMO - regional provider -Multiple employer trust - PPO
HMO - HMO's traditionally provide services to its members at its own local health care facilities
what will a long term care plan typically provide benefits for?
HOME HEALTH CARE
in life insurance, the needs approach is used mostly to establish - which type of life insurance a client should apply for - how much life insurance a client should apply for - which company a client should use when applying for life insurance - what the max amount the client can spend of life insurance
HOW MUCH LIFE INSURANCE A CLIENT SHOULD APPLY FOR
What statement about Health Reimbursement arrangements (HRA) is true?
IF THE EMPLOYEE PAID FOR QUALIFIED MEDICAL EXPENSES, THE REIMBURSMENTS MAY BE TAX FREE
if a producer commits an act of coercion or intimidation, how would the producer's insurance company be held responsible for this act? - if the insurer only suspends the producer, not terminate - if the insurer reduces the commission level of the producer - if the insurer approves of the act - if the insurer does not make a public announcment of the act
IF THE INSURER APPROVES OF THE ACT
When must insurable interest exist for a life insurance contract to be valid?
INCEPTION OF THE CONTRACT
T age 70 withdraws cash from a profit sharing plan and purchases a straight life annuity. what will this transaction provide?
INCOME THAT CANNOT BE OUTLIVED BY THE OWNER
A licensed producer can be BEST described as a(n) - someone who places insurance advertisements in a newspaper - underwriting officer of an insurance company - individual who places insurance on behalf of anyone seeking insurance - administrator answering calls for an insurance agency
INDIVIDUAL WHO PLACES INSURANCE ON BEHALF OF ANYONE SEEKING INSURANCE - A person who places insurance on behalf of anyone seeking insurance must be licensed as a producer
medicare part B does not cover
INPATIENT HOSPITAL SERVICES
a life insurance policy would be considered a wagering contract WITHOUT
INSURABLE INTEREST
when a third party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have
INSURABLE INTEREST IN THE PROPOSED INSURED
policy of adhesion can be modified by
INSURANCE COMPANY
all of these statements about waiver of premium provision are correct EXCEPT
INSURED MUST BE ELIGIBLE FOR SOCIAL SECURITY DISABILITY FOR CLAIM TO BE ACCEPTED
What is the initial requirement for an insured to become eligible for benefits under the Waiver or Premiums provision?
INSURED MUST BE UNDER A PHYSICIANS CARE
the _____ clause identifies which losses resulting from an accident or sickness are insured by the policy
INSURING
Which of the following health insurance policy provisions specifies the health care services a policy will provide? - insuring clause - usual, customary, and reasonable clause - consideration clause - benefit clause
INSURING CLAUSE - The insuring clause identifies the specific type of health care services that are covered by that policy
all of these settlement options involve the systematic liquidation of the death proceeds in the event of the insured's death, EXCEPT - fixed period - interest only - fixed amount - life income
INTEREST ONLY - the interest only option foes NOT involve the systematic liquidation of the death proceeds
J was reviewing her health insurance policy and noticed the phrase "this policy will only pay for a semi-private room". This phrase is considerd to be an
INTERNAL LIMIT
A Life insurance arrangement which circumvents insurable interest statutes is called: - a contract of adhesion - an indemnity contract - key person insurance - investor- originated life insurance
INVESTOR ORIGINATED LIFE INSURANCE - This is done when an investor (or stranger) persuades an individual to take out life insurance specifically for the purpose of selling the policy to the investor. The investor compensates the insured and makes the premiums, then collects the death benefits when the insured dies
which arrangment allows one to bypass insurable interest laws?
INVESTORY ORIGINATED LIFE INSURANCE (IOLI) - used to circumvent state insurable interest statutes
The AD&D provision in a life insurance policy would pay additional benefits if the insured: - dies of natural causes - becomes critically ill - becomes chronically ill - is blinded in an accident
IS BLINDED IN A ACCIDENT
what would an insurance company most likely NOT take if an applicant, who has diabetes, applies for a disability income policy?
ISSUE THE POLICY WITH AN ALTERED TIME OF PAYMENT CLAIMS PROVISION
in regards to representations or warranties, which of these statements is TRUE?
If material to the risk, false representations will void a policy
a sole proprieto may use this plan ONLY if the employees of this business are included
KEOGH PENSION PLAN
An architecture firm would stand to lose a lot of money in the event of the death of its project manager. Which type of policy should the firm purchase on its project manager? - universal life insurance -key person insurance -graded insurance -executive insurance
KEY PERSON INSURANCE
Which of the following situations does a critical illness plan cover? - asthma - leukemia - alcohol rehabilitation - severe car accident
LEUKEMIA - type of cancer and would be covered
K is looking to purchase renewable term insurance. what type of term insurance may be renewable?
LEVEL -a level term policy pays the same benefit amount if death occurs at any point during the term. level term polices may be renewable
Which of the following is NOT a limited benefit plan? - Dental policy - life insurance policy - critical illness policy - cancer policy
LIFE INSURANCE POLICY - is not a limited benefit plan
The Accelerated Death Benefit provision in a life insurance policy is also known as a(n): - 1035 exchange - inter vivos gift - non-forfeiture option - living benefit
LIVING BENEFIT - The accelerated death benefit provision in a life insurance policy is also known as a "living Benefit"
basic hospital and surgical benefits are
LOWER THAN THE ACTUAL EXPENSES INCURRED
which of these is an element of a single premium annuity?
LUMP-SUM PAYMENT
a catastrophic illness would be best covered by
MAJOR MEDICAL
Comprehensive major medical policies usually combine
MAJOR MEDICAL WITH BASIC HOSPITAL/SURGICAL COVERAGE
z owns a disability income policy with a 30-day elimination period. z contracts pneumonia that leaves him unable to work from jan 1 until jan 15. Z then becomes disabled from an accident on feb 1 and the disability lasts until july 1 the same year. Z will become eligible to receive benefits starting on
MARCH 1ST -after a 30 day elimination period, Z will become eligible for receiving benefits on march 1
Which of these factors do NOT play a role in the underwriting of a life insurance policy? - avocations - credit status - marital status - occupation
MARITAL STATUS
The health insurance program which is administered by each state and funded by both the federal and state government is called - long term care - medicaid - medicare supplemental program - medicare
MEDICAID - medicaid is funded by both the federal and state governments and administered by individual states
What is NOT a managed care organization?
MIB
Which of the following are NOT managed care organizations? - POS -PPO - MIB - HMO
MIB (Medical information Bureau)
K buys a policy where the premium stays fixed for the first 5 years. the premium then increases in year 6 and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this? - variable life - adjustable life - graded premium whole life - modified whole life
MODIFIED WHOLE LIFE
According the time payment of claims provision, insurer must pay disability income benefits no less frequently than
MONTHLY
what is NOT an element of life insurance premiums?
MORBIDITY RATE
what best describes how a PPO is less restrictive than an HMO?
MORE PHYSICIANS TO CHOOSE FROM
if an insurance company uses a disability income policy that it cannot cancel or for which it cannot increase premiums, the type of renewability that best describes this policy is called - noncancellable - conditionally renewable - cancellable - guaranteed renewable
NONCANCELLABLE
A Disability Income policy that only the policyowner can terminate and which the rates will never go up is considered to be - optionally renewable - noncancellable - cancellable - guaranteed renewable
NONCANCELLABLE - A disability income policy that only the policyowner can terminate and on which the rates will never increase is a noncancellable policy
what BEST describes a short-term medical expense policy?
NONRENEWABLE
The Notice of Claims provision requires a policyowner to: - provide proof of loss to an insurer within a specified time -notify an insurer of a claim within a specified time - wait 60 days after filing a claim to initiate a lawsuit against insurer - notify their physician of a claim within a specified time
NOTIFY AN INSURER OF A CLAIM WITHIN A SPECIFIED TIME
When a medicare supplement policy is delivered to a policyholder, which of the following MUST accompany the policy? - producer's address - outline of coverage - insurer's AM best rating - outline of policy- loss ratios
OUTLINE OF COVERAGE
Deductibles are used in health polices to lower - the incidents of fraud - the coinsurance amt - overuse of medical services - adverse selection
OVERUSE OF MEDICAL SERVICES
deductibles are used in health policies to lower
OVERUSE OF MEDICAL SERVICES
M had an annual life insurance premium payment due Jan 1. She died Jan 10 without making the premium payment. What action will the insurer take? - collect premium from M's estate - deny the claim - pay face amount minus the past due premium - subtract past due premium from cash value
PAY FACE AMOUNT MINUS THE PAST DUE PREMIUM
Which of these is considered a mandatory provision? - payment of claims - insurance with other insurers - misstatement of age - change of occupation
PAYMENT OF CLAIMS
An individual health insurance policy is REQUIRED to contain a(n) - subrogation provision - payment of claims provision - other insurance provision - waiver of premium provision
PAYMENT OF CLAIMS PROVISION
a father who dies 3 years after purhcasing a life insurance policy on his infant daughter can have the policy premiums waved under which provision?
PAYOR PROVISION
A father who dies within 3 years after purchasing a life insurance policy on his infant daughter can have the policy premiums waived under which provision? - Payor provision - accelerated benefits provision - assignment provision - waiver of premium provision
PAYOR PROVISION - a payor provision provides that in the event of death or disability of the adult premium payor, the premium on a juvenile policy will be waived until the insured child reaches a specified age or the maturity date of the contract
the underwriting process does NOT involve
POLICY LOAN
A provision in a life insurance policy that pays the policyowner an amount that does not surpass the guaranteed cash value is called the: - policy loan provision - automatic premium loan provision - accelerated benefits provision - consideration clause
POLICY LOAN PROVISION - a policy loan will pay the policyowner an amount that, with interest, does NOT exceed the guaranteed cash value
XYZ corp was issued a group accident and health policy for its employees. under this plan a - certificate must be issued to XYZ, and a policy must be issued to each employee - certificate must be issued to XYZ and each employee - policy must be issued to XYZ, and a certificate must be issued to each employee - policy must be issued to XYZ and each employee
POLICY MUST BE ISSUED TO XYZ, AND A CERTIFICATE MUST BE ISSUED TO EACH EMPLOYEE
J applies for an insurance policy. What BEST describes the particular terms of this policy? - AM best statement - policy summary - provisional page - buyers guide
POLICY SUMMARY - a policy summary describes the particular terms of the policy being applied for
Q applied for life insurance and submitted the initial premium on Jan 1. The policy was issued Feb 1, but it was not delivered by the agent until Feb 7. Q is dissastisfied and return the policy on Feb 13. How will the insurer handle this situation? - Premium will be fully refunded minus a surrender charge - policy was not returned within the free-look period, premium will not be refunded - policy was returned within the free-look period, premium will be fully refunded - premium will be fully refunded minus a prorated amount for the period of Feb 7-Feb 13
POLICY WAS RETURNED WITHIN THE FREE-LOOK PERIOD, PREMIUM WILL BE FULLY REFUNDED - free-look period begins when the policy is delivered to the policyowner
What is true concerning a variable universal life policy?
POLICYOWNER CONTROLS WHERE THE INVESTMENT WILL GO AND SELECTS THE AMOUNT OF THE PREMIUM PAYMENT
under federal tax laws, what is the tax treatment for an employer providing $50,000 of a contributory group term life plan to all its eligible employees
PORTION OF THE PREMIUMS PAID FOR BY THE EMPLOYER MAY BE A TAX DEDUCTION
under what system to a group of doctors and hospitals IN A DESIGNATED AREA contract with an insurer to provide services at a prearrange cost to the insured
PPO
a policyowner is able to choose the frequency of premium payments through what policy feature? - consideration - payor benefit - premium mode - assignment provision
PREMIUM MODE
what is not possible with a universal life policy?
PREMIUMS MAY BE APPLIED AS A CREDIT AGAINST INCOME TAX
What is considered to be a characteristic of a conditionally renewable health insurance policy - premiums may increase at time of renewal - premiums may increase at any time - policy may be renewed at the discretion of the insured - policy may be amended by insurer at any time
PREMIUMS MAY INCREASE AT TIME OF RENEWAL
What is the purpose of the Time of Payment Claims Provision? - Requires the insured to wait 60 days after submitting Proof of Loss before filing a lawsuit - prevents delayed claim payments made by the insurer - requires a probation period for each claim filed by the insured - protects the insurer from frivolous lawsuits
PREVENTS DELAYED CLAIM PAYMENTS MADE BY THE INSURER - The purpose of the Time of Payment of Claims provision is to prevent the insurance company from delaying claim payments
What determines the full amount of Social Security retirement benefits a qualified individual is entitled to receive? - Primary insurance amount (PIA) - total taxes paid into FICA - number of dependents - state of residence
PRIMARY INSURANCE AMOUNT (PIA) - the PIA determines the full amount of retirement benefits for an eligible person
what is not a type of agent authority?
PRINCIPAL
Which of these is NOT a type of agent authority? - express - implied - principal - apparent
PRINCIPAL - agent authority is what an agent is authorized to do on behalf of their company. the 3 types of agent authority include express, implied, and apparent authority
consumer reports requested by an underwriter during the application process of a life insurance policy can be used to determine
PROBABILITY OF MAKING TIMELY PREMIUM PAYMENTS
what must the policyowner provide to the insurer for validation that a loss has occured
PROOF OF LOSS
when an insured has the same disability within a specified time period and the insurance company provides the same benefits without a new waiting period, the second disability is covered under what benefit?
RECURRENT DISABILITY
what type of policy pays benefits to a policyholder covered under a hospital expense policy?
REIMBURSEMENT
T has a term policy that allows him to continue the coverage after expiration of the initial policy period. What type of term coverage is this? - renewable - increasing - level - decreasing
RENEWABLE
what term accurately defines an underwriter's assessment of info on a health insurance application ?
RISK CLASSIFICATION
what is not considered a source of underwriting info about an applicant?
Rating services
what is the suicide provision designed to do
SAFEGUARD THE INSURER FROM AN APPLICANT WHO IS CONTEMPLATING SUICIDE
A prepaid application for individual disability income insurance was recently submitted to an insurer. When the insurer received the medical information bureau report, the report showed that the applicant had suffered a stroke 18 months ago, something that was not disclosed on the application. which of the following actions would the insurance company NOT take? - send the intitial premium back to the applicant - send a notice to the applicant that the coverage was declined - send a notice to the MIB that the applicant was declined - send a notice to the agent that the applicant was declined
SEND A NOTICE TO THE MIB THAT THE APPLICANT WAS DECLINED - the MIB does not need to be notified that coverage was denied
what best describes dental care indemnity coverage?
SERVICES ARE REIMBURSED AFTER INSURER RECEIVES THE INVOICE
P is a producer who notices 5 questions of a life application were not answered. What actions should P take? - mail incomplete aplication to applicant to be completed and returned to the agent - submit the application as-is to the insurer - call the applicant and complete application over the phone - set up a meeting with the applicant to answer the remaining questions
SET UP A MEETING WITH THE APPLICANT TO ANSWER THE REMAINING QUESTIONS
typically a life insurance death benefit is paid by a lump-sum payment. A(n) _______ option is a method of distributing a life insurance policy's death benefit OTHER than by lump sum payment - settlement - dividend - conversion - aleatory
SETTLEMENT -a settlement option is a method of distributing a life insurance policy's death benefit other than a lump sum paymenet
An insurance producer could be found guilty of rebating by - offering better insurance coverage to an existing policyholder - sharing commissions with a client who has purchased insurance - recommending a policyholder convert existing term life coverage to an individual whole life policy - offering a discount for a client being a non smoker
SHARING COMMISSIONS WITH A CLIENT WHO HAS PURCHASED INSURANCE
P is a new employee and will be obtaining non-contributory group major medical insurance from her employer. what action should she take during the open enrollment period?
SIGN AN ENROLLMENT CARD
what best describes a warranty?
STATEMENT GUARANTEED TO BE TRUE
Which of the following is the reimbursement of benefits for the treatment of beneficiary's injuries caused by a third party? - indemnity - subrogation - legal action - consideration
SUBROGATION
what service is NOT included under hospitalization expense coverage
SURGICAL FEES
a ____ rider may be used to include coverage for children under their parents life insurance polocy
TERM
B is an insurance producer who occassionally engages in financial planning. If B sells an insurance policy during the course of a financial planning seminar, B must disclose to the client - which state B is also licensed in - the exam score received on B's licensing exam - how old B when the producer license was obtained - that a commission will be earned in addition to any fee charged for financial planning
THAT A COMMISSION WILL BE EARNED IN ADDITION TO ANY FEE CHARGED FOR FINANCIAL PLANNING
Which of these is a valid TN regulation for referral fees? - Referral fees can be unlimited in amount - if the referral sale involves replacement, the notice regarding replacement form is not required - referral fees may only be paid in the event a policy is purchased - the commissioner may establish by rule a max amount for each referral
THE COMMISSIONER MAY ESTABLISH BY RULE A MAX AMOUNT FOR EACH REFERRAL
who is considered to be the owner of a 403(b) tax sheltered annuity?
THE EMPLOYEE
Who is normally considered to be the owner of a 403(b) tax-sheltered annuity? - the 403(b) custodian - the financial institution - the employer - the employee
THE EMPLOYEE - The participating employee normally applies for and owns a 403(b) tax-sheltered annuity
J chooses a monthly premium payment mode on his whole life insurance policy. which of these statements is correct
THE GROSS PREMIUM IS HIGHER ON A MONTHLY PAYMENT MODE AS COMPARED TO BEING PAID ANNUALLY
In TN, the definition of "individual" may include which of the following? - The individual's children - the individual's business associates - the individuals legal representative - the individuals financial accounts
THE INDIVIDUALS LEGAL REPRESENTATIVE - The term "individual" can be associated with an individuals legal representative
J, an AD&D policy holder, dies after injuries sustained in an accident. J's age, as stated on the application 5 years ago, was found to be understated by ten years. Which of the following will the insurance company take? - the insurer will pay the original benefit stated in the policy - the insurer will adjust the benefit to what the premiums paid would have purchased at the insured's actual age - the insurer will pay the original face amount minus any premium deficiencies owed - the insurer will deny the claim and refund premiums paid
THE INSURER WILL ADJUST THE BENEFIT TO WHAT THE PREMIUMS PAID WOULD HAVE PURCHASED AT THE INSURED'S ACTUAL AGE
t was insured under an individual disability income poloicy and was severly burned in a fire. as a result, t became totally disabled. the insurer began making monthly benefit payments, but later discovered that the fire was set by T in what was described as arson. what actions will the insurer take?
THE INSURER WITH RESCIND THE POLICY, DENY THE CLAIM, AND RECOVER ALL PAYMENTS MADE
the clause in an accident and health policy which defines the benefit amounts the insurer will pay is called the - insuring clause - contestable clause - consideration clause - free-look provision
THE INSURING CLAUSE
When a life insurance application is completed, a policy summary must be given to the applicant. The policy summary MUST include: - the insurer's AM best rating - the producers address - cash value rate - the premium cost for basic coverage applied for
THE PREMIUM COST FOR BASIC COVERAGE APPLIED FOR
P's individual health policy is now in the grace period. P's coverage will remain in force if - no claim is presented - the premium is paid - the insured proves insurability - the insured does not leave the state
THE PREMIUM IS PAID
who would be liable for an insurance claim on a policy sold by a TN producer and issued by an insurance company NOT authorized to conduct business in TN? - the guaranty assoc - the insurer - the commissioner -the producer
THE PRODUCER
The consideration clause of an insurance contract includes
THE SCHEDULE AND AMOUNT OF PREMIUM PAYMENTS
What is true about most Blue Cross/Blue Shield organizations?
THEY ARE NONPROFIT ORGANIZATIONS
The common disaster clause provides that if both the insured and sole named beneficiary were to die in a common accident, which of the following is true? - this clause provides the payment of proceeds to the insured's estate - this clause provides the payment of proceeds to the beneficiary's estate - the estate taxes in the insured's estate may be reduced - the estate taxes in the beneficiary's estate may be reduced
THIS CLAUSE PROVIDES THE PAYMENT OF PROCEEDS TO THE INSUREDS ESTATE
a business disability buyout plan policy is designed
TO PAY BENEFITS TO THE CORPORATION OR OTHER SHAREHOLDERS
Purpose of time of payment claims provision is
TO PREVENT DELAYED CLAIM PAYMENTS MADE BY THE INSURER
in an insurance contract, the insurer is the only party who makes a legally enforceable promise. what kind of contract is this
UNILATERAL
life and health insurance policies are
UNILATERAL CONTRACTS
which of the following life insurance policies combine term insurance with an investment element?
UNIVERSAL LIFE
Which of the following life insurance policies combine term insurance with an investment element? - Increasing term life - Decreasing term life - universal life - graded life
UNIVERSAL LIFE - A universal life policy combines term insurance and an investment element
a producer MUST leave a buyers guide with an applicant for which type of policy? - Group life insurance - annuity - universal life insurance - credit life insurance
UNIVERSAL LIFE INSURANCE
R becomes disabled and owns an individual disability income policy. When is R eligible to receive disability benefits?
UPON SATISFYING THE ELIMINITION PERIOD REQUIREMENT
which of the following best describes how pre-admission certificates are used?
USED TO PREVENT NONESSENTIAL MEDICAL COSTS
A(n) _____ annuity pays benefits based on units rather than stated dollar amounts - deferred - variable - immediate - unit
VARIABLE
a life insurance policyowner would like to take out a policy loan against the cash value in his whole life policy. the interest rate applied to this loan may vary over time. This is referred to as a_____ rate loan
VARIABLE
what is the primary factor that determines the benefits paid under a disability income policy?
WAGES
The provision in a group health policy that allows the insurer to postpone coverage for a covered illness 30 days after the policy's effective date is referred to as
WAITING PERIOD
what type of rider would be added to an accident and health policy if the policyowner wants to ensure the policy will continues is he/she ever becomes totally disabled? - accident death and dismemberment rider - disbility income rider - guaranteed insurability rider - waiver of premium rider
WAIVER OF PREMIUM RIDER
at what point does an informal contract become binding?
WHEN ONE PARTY MAKES AN OFFER AND THE OTHER PARTY ACCEPTS THAT OFFER
at what point does a whole life insurance polocy endoqw?
WHEN THE CASH VALUE EQUALS THE DEATH BENEFIT
An agent gives a conditional receipt to a client for an insurance policy after collecting the initial premium. When will the policy become effective? - when the policy is issued - the date of policy deliver - when the conditions of the receipt are met - the date the sales appointment was set
WHEN THE CONDITIONS OF THE RECEIPT ARE MET - A conditional receipt indicates that certain conditions must be met in order for the insurance coverage to go into effect
a life insurance policy that provides a policyowner with cash value along with a level face amount is called
WHOLE LIFE
what type of insurance offers permanent life coverage with premiums that are payable for life? - credit life - renewable term life - whole life - endowment
WHOLE LIFE
A return of premium life insurance policy is
WHOLE LIFE AND INCREASING TERM
a policy that becomes a modified endowment contract (MEC)
WILL LOSE MANY OF ITS TAX ADVANTAGES
medicare part A and B do not pay for
dental care
