9.14 exam

Which of the following statements is INCORRECT? A licensee is barred from charging a fee in addition to a commission to a person for the sale, solicitation or negotiation of a contract of insurance for commercial business. No insurance producer may charge a fee for the completion of an application for a contract of insurance. The fee charged by the licensee must be disclosed in advance in writing to the person and must be reasonable in relationship to the services provided. A licensee may charge a fee in addition to a commission to a person for the sale, solicitation or negotiation of a contract of insurance for commercial business.

A licensee is barred from charging a fee in addition to a commission to a person for the sale, solicitation or negotiation of a contract of insurance for commercial business. A licensee may charge a fee in addition to a commission to a person for the sale, solicitation or negotiation of a contract of insurance for commercial business. The fee charged by the licensee must be disclosed in advance in writing to the person and must be reasonable in relationship to the services provided. Insurance producers cannot charge a fee for the completion of an application for a contract of insurance.

Because an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe? Express Implied Assumed Apparent

Apparent Apparent authority (also known as perceived authority) is the appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created.

What document describes an insured's medical history, including diagnoses and treatments? Individual Medical Summary Comprehensive Medical History Attending Physician's Statement Physician's Review

Attending Physician's Statement An Attending Physician's Statement (APS) is the best way for an underwriter to evaluate an insured's medical history. The report includes past diagnoses, treatments, length of recovery time, and prognoses.

What is the civil penalty for the first violation of the Pennsylvania Insurance Fraud Prevention Act? $1,000 $5,000 $10,000 $15,000

$10,000 The civil penalty for violation the Pennsylvania Insurance Fraud Prevention Act is up to $5,000 for the first violation, $10,000 for the second violation, and $15,000 for each subsequent violation.

An insured's disability income policy includes an additional monthly benefit rider. For how many years can the insured expect to receive payment from the insurer before Social Security benefits begin? 5 3 2 1

1 The additional monthly benefit rider stipulates that the insurer will pay benefits comparable to what Social Security would pay. After a year, the insurer ends the benefit and assumes that Social Security will begin benefit payment.

What is the period of coverage for events such as death or divorce under COBRA? 31 days 12 months 36 months 60 days

36 months The maximum period of coverage under COBRA is 36 months, in the event of the covered employee's death or divorce.

If a licensed person is moving to Pennsylvania, he or she may become licensed as a resident if they submit a completed application within how many days of establishing residence in Pennsylvania with proof of licensing from their prior home state? 180 30 60 90

90 Nonresident producers may become resident producers if they submit a completed application within 90 days of establishing residence in Pennsylvania with proof of licensing from their prior home state.

Which of the following would be considered an unfair claims settlement practice? Advising the insured that if the claim goes to arbitration, the insured would probably receive less than what is currently being offered Requesting the insured to submit a signed proof of loss statement, after the insured has already verbally advised the insurer of the claim Requesting the insured swear under oath concerning the facts of the claim Delaying the settlement of a claim for 30 days in order for the insured to conduct an investigation

Advising the insured that if the claim goes to arbitration, the insured would probably receive less than what is currently being offered This act is a violation as defined in the Unfair Settlement Practices.

Under HIPAA, which of the following is INCORRECT regarding eligibility requirements for conversion to an individual policy? An individual who was previously covered by group health insurance for 6 months is eligible. An individual who has used up COBRA continuation coverage is eligible. An individual who doesn't qualify for Medicare may be eligible. The gap of coverage for eligibility is a period of 63 or less days.

An individual who was previously covered by group health insurance for 6 months is eligible. All of these eligibility requirements are correct, except an individual who was previously covered for at least 6 months. HIPAA requires that the individual have a previous continuous creditable health coverage for at least 18 months.

Which of the following provisions must be included on the first page of a Medicare supplement policy, which states the insurer's right to change premium amounts? Coverage limitations Continuation provision Premium provision Insurer's rights

Continuation provision The renewal provision, also known as a continuation provision, must be included on the first page of Medicare supplement policies. This provision explains the right of the insurer to alter premium amounts.

Which of the following statements is correct concerning taxation of long-term care insurance? Benefits may be taxable as ordinary income. Premiums may be taxable as income. Premiums are not deductible in any case. Excessive benefits may be taxable.

Excessive benefits may be taxable Regardless of whether or not the insured can deduct individual long-term care premiums, the benefits are received income tax free by the individual. Excessive benefits as determined by statute are taxable as ordinary income.

The authority granted to an agent through the agent's contract is referred to as Apparent authority. Implied authority. Absolute authority. Express authority.

Express authority Express powers are written into the contract between the insurer and the agent.

An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of? Twisting Defamation False advertising Unfair claims

False advertising False advertising is the illegal practice of advertising or circulating materials that are untrue, deceptive, or misleading.

Which of the following is NOT true regarding a flexible spending account? It does not have limits on contributions. It operates on "use-or-lose" basis. It provides an opportunity to receive benefits on a pretax basis. It is a cafeteria plan.

It does not have limits on contributions. A Flexible Spending Account (FSA) is a form of cafeteria plan benefit funded by salary reduction. The employees are allowed to deposit a certain amount of their paycheck into an account before paying income taxes. FSA benefits are subject to annual maximum and "use-or-lose" rule.

A patient is being fitted for dentures. Which type of dental treatment is this? Restorative Orthodontics Prosthodontics Replacement

Orthodontics Prosthodontic treatment involves the replacement of natural teeth with artificial devices, such as bridgework and dentures.

Which of the following insurance options would be considered a risk-sharing arrangement? Stock Mutual Surplus lines Reciprocal

Reciprocal When insurance is obtained through a reciprocal insurer, the insureds are sharing the risk of loss with other subscribers of that reciprocal.

What is necessary in order to be eligible to receive benefits from a long-term care policy? Age is the only requirement; upon reaching age 65, LTC benefits are available. The insured must be unable to perform some activities of daily living. The insured must meet certain economic standards. The insured must have been receiving disability benefits for 6 months.

The insured must be unable to perform some activities of daily living. Normally to be eligible for benefits from a long-term care policy, the insured must be unable to perform some of their activities of daily living (ADLs). ADLs include bathing, dressing, toileting, transferring, continence, and eating.

COBRA applies to employers with at least 20 employees. 80 employees. 60 employees. 50 employees.

20 employees. Under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), any employer with 20 or more employees must extend group health coverage to terminated employees and their families

Under the mandatory uniform provision Notice of Claim, the first notice of injury or sickness covered under an accident and health policy must contain An estimate of the total amount of medical and hospital expense for the loss. A complete physician's statement. A statement that is sufficiently clear to identify the insured and the nature of the claim. A statement from the insured's employer showing that the insured was unable to work.

A statement that is sufficiently clear to identify the insured and the nature of the claim. The Insurance Code requires that each policy must include, "Written notice of claim must be given to the insurer within 20 days after the occurrence or commencement of any loss covered by the policy, or as soon thereafter as is reasonably possible".

Which of the following is not true of Disability Buy-Sell coverage? It is typically written to cover partners or corporate officers of a closely held business. Premium payments are not deductible to the business. The policies provide funds for the business organization to purchase the business interest of a disabled partner. Benefits are considered taxable income to the business.

Benefits are considered taxable income to the business. The buy-sell coverage benefits are tax free.

According to the Future Increase Option Rider (FIO), which of the following is NOT a qualifying event to increase an insured's benefit level? Death of a spouse Age 40 Marriage Birth of a child

Death of a spouse The FIO rider allows insureds to increase their benefit levels to certain amounts at specific times without proof of insurability. The following are the typical occasions when an insurer allows for a benefit increase: ages 25, 28, 31, 34, 37 and 40; marriage; and the birth of a child.

Which of the following authorities monitors the financial strength of insurers? Financial Industry Regulatory Authority Insurance companies Department of Insurance National Association of Insurance Commissioners

Department of Insurance The Commissioner and the Department of Insurance are charged with monitoring the financial strength and integrity of insurers authorized to conduct business in Pennsylvania in order to determine whether the continued operation of any insurer might be financially hazardous to policyholders, creditors, or to the public in general.

What is the goal of the HMO? Limiting the deductibles and coinsurance to reduce costs Providing health services close to home Early detection through regular checkups Providing free health services

Early detection through regular checkups The goal of the HMO is early detection so members are encouraged to participate in regular checkups. In this way the HMO hopes to catch disease in its earliest stages when treatment has the greatest chance for success

Which of the following statements is true regarding LTC insurance? LTC policies do not have a free-look period. Every policy must offer nonforfeiture benefits to the applicant. Every policy must offer reduced paid-up insurance to the applicant. LTC policies may not include any riders.

Every policy must offer nonforfeiture benefits to the applicant. Long-term care policies or certificates issued or delivered in this state must offer to the applicant nonforfeiture benefits. Reduced paid-up insurance is one of the possible nonforfeiture options, but it is not necessarily required. LTC policies must offer a free-look period - a specified number of days during which the policyowner may return the policy for a full refund.

As it pertains to group health insurance, COBRA stipulates that Terminated employees must be allowed to convert their group coverage to individual policies. Group coverage must be extended for terminated employees up to a certain period of time at the employer's expense. Group coverage must be extended for terminated employees up to a certain period of time at the former employee's expense. Retiring employees must be allowed to convert their group coverage to individual policies.

Group coverage must be extended for terminated employees up to a certain period of time at the former employee's expense. COBRA requires employers with 20 or more employees to continue group medical insurance for terminated workers and dependents for up to 18 months to 36 months. The employee can be required to pay up to 102% of the coverage's premium.

All of the following statements describe a MEWA EXCEPT MEWAs can be self-insured. MEWAs are groups of at least 3 employers. MEWAs can be sponsored by insurance companies. MEWA employers retain full responsibility for any unpaid claims.

MEWAs are groups of at least 3 employers. MEWAs are groups of at least 2 employers who pool their risks to self-insure. MEWAs can be sponsored by an insurance company, an independent administrator, or another group established to provide group benefits for participants.

All of the following are true regarding the Medical Information Bureau (MIB) EXCEPT MIB reports contain previous insurance information. Insurers may not refuse to accept an application solely due to information in an MIB report. MIB reports are based upon information supplied by doctors and hospitals. MIB information is reported to underwriters in coded form.

MIB reports are based upon information supplied by doctors and hospitals. The information contained in MIB reports comes from the underwriting disclosures made by applicants to MIB member insurers on prior insurance applications.

Which renewability provision are you most likely to see on a travel accident policy? Optionally renewable Conditionally renewable Period of time Noncancellable

Period of time The Period of Time (Term) provision means that the policy will only last a certain period of time and cannot be renewed. It will be cancelled at the end of the term for which it was purchased. A travel accident only policy will only provide coverage during the dates the insured is traveling.

A guaranteed renewable health insurance policy allows the Policy to be renewed at time of expiration, but the policy can be canceled for cause during the policy term. Insurer to renew the policy to a specified age. Policyholder to renew the policy to a stated age, with the company having the right to increase premiums on the entire class. Policyholder to renew the policy to a stated age and guarantees the premium for the same period.

Policyholder to renew the policy to a stated age, with the company having the right to increase premiums on the entire class. Coverage is guaranteed, but rates can be adjusted for the entire class.

All of the following are considered to be basic benefits of an HMO plan EXCEPT Preventive services. Out-of-area coverage. Diagnostic laboratory services. Prescription drugs.

Prescription drugs. HMOs are required to provide the following basic benefits: hospital inpatient services, physicians' services, outpatient medical services, preventive services, emergency services, diagnostic laboratory services, and out-of-area coverage.

While repairing the roof of his house an insured accidentally falls off and breaks his arm and sustains a head injury that results in total blindness of both eyes. His policy contains an Accidental Death & Dismemberment Rider. What is the extent of benefits that he will receive? Capital Sum 50% of the Principal Reciprocal Amount Principal Sum

Principal Sum If the insured dies, the insurer pays the full amount, also known as the "principal sum", which is also paid if the insured loses sight in both eyes or loses two limbs. If the insured lives but loses a hand or foot or the sight in one eye, the insured will be paid a percentage of the principal sum, usually 50%, which is called the "capital sum".

If an individual is covered by a policy that includes an Accidental Death & Dismemberment rider, what term describes the maximum benefits he will receive if he loses sight in both eyes as a result of a fire? Reciprocal amount Capital sum Percentage of full amount Principal sum

Principal sum If the insured dies, the insurer pays the full amount, also known as the "principal sum". Principal sum will most likely be paid out if the insured loses sight in both eyes or loses two limbs. If the insured lives but loses a hand or foot or the sight in one eye, the insured will be paid a percentage of the principal sum, called the "capital sum."

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 the same benefits as if the insured had seen a PPO physician. The PPO will pay reduced benefits. The PPO will not pay any benefits at all. The insured will be required to pay a higher deductible.

The PPO will pay reduced benefits. The group health plan will not pay the full amount charged by the non-PPO doctor.

Which of the following is true regarding optional benefits with long-term care policies? They are offered at no additional cost to the insured. They are included in all policies. They are available for an additional premium. Only standard benefits are available with LTC policies.

They are available for an additional premium. Optional benefits, such as guarantee of insurability and return of premium, are available with Long-Term Care policies for an additional premium.

Under the Physical Exam and Autopsy provision, how many times can an insurer have the insured examined, at its own expense, while a claim is pending? 2 examinations per week of the claim processing period Unlimited None at all 1 examination per week of the claim processing period

Unlimited The Physical Exam and Autopsy provision allows the insurer to examine the insured as much as is reasonably necessary while the claim is being processed, provided that the insurer pays the expenses.

An insured owes his insurer a premium payment. Since then, he incurs medical expenses. The insurer deducts the unpaid premium amount from the claim amount and pays the insured the difference. What provision allows for this? Payment of claims Unpaid premium Legal action Proof of loss

Unpaid premium If a premium is past due and the insurer owes claim payment, the amount of the premium will be deducted from the amount of the claim. For example, if a claim is worth $500 and the premium costs $200, the insured would receive the net total of $300 from his insurer.