Exam 1 (64%)
Certificate of authority
A canadian insurer would like to do business in CT. what must the insurer first obtain?
Pay the policy proceeds only if it would have issued the policy. BECAUSE: The conditional receipt says that coverage will be effective either on the date of the application or the date of the medical exam, whichever occurs last, as long as the applicant is found to be insurable as a standard risk, and policy is issued exactly as applied for.
A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will?
Annually renewable term policy with a cash value account. BECAUSE: A universal policy has two components: an insurance component and a cash account. The insurance component (or the death protection) of a universal life policy is always annual renewable term insurance.
A universal life insurance policy is best described as an?
Phyicians and surgeons services
All of the following are covered by Part A of medicare except
The customer must sign a notice that the medicare supplement insurance benefits have been explained.
All of the following are requirements for marketing of medicare supplement insurance benefits except
Policy A, because the prior insurer remains liable for claims made during its effective period.
Group Heahtl policy A is replaced by Group health policy b. an insured submitted a health claim under policy a, before the replacement occured. now that policy b is in effect, which policy, if either will cover the insureds claim?
Loss of the owners income
If a business owner becomes totally disabled, a business overhead expense will pay all of the following except
The balance of the loan will be taken out of the death benefit. BECAUSE: If the loan and interest are not repaid and the insured dies, then it will be subracted from the death benefit.
If a policy has an automatic premium loan provision, what happens if the insured dies before the loan is paid back?
With the policy BECAUSE: If a life insurance policy contains a free-look period of at least 10 days, the buyers guide can be delivered with the policy. if it doesnt, the buyers guide must be delivered prior to accepting the initial premium.
If a policy includes a free-look period of at least 10 days, the buyers guide may be delivered to the applicant no later than?
No tax BECAUSE: Daily benefits from the LTC policy are recieved income tax free, as long as they do not exceed daily cost of long term care.
In an individual long-term care insurance plan, the insured is able to deduct the premiums from taxes. What income taxation will be imposed on the benefits recieved?
At distribution, all amounts are received by the employee are tax free. BECAUSE: Funds in a qualified plan accumulate on a tax-deferred basis; however, at distribution any amount recieved by the employee will be treated as ordinary income for tax purposes.
All of the following are true of the federal tax advantages of a qualified plan EXCEPT
Skilled care
All of the following long-term care coverages would allow an insured to recieve care at home EXCEPT
The annuitant receives a fixed amount of return. BECAUSE: Equity indexed annuities have a guaranteed minimum interest rate, so while they are aggressive in nature, the annuitant will not have to worry about receiving less than what the minimum interest rate would yield.
All of the following statements about equity index annuities are correct EXCEPT?
Dividend amounts are guaranteed in the policy. BECAUSE: Dividends cannot be guaranteed.
All of the following statements concerning dividends are true except
Taxation on accumulation BECAUSE: Taxation on accumulation is deferred in both types of plans.
All of the following would be different between qualified and non-qualified retirement plans EXCEPT
The group plan will not pay because the employee was injured at work. BECAUSE: The employees injuries were work related, the group health policy would not respond. The insured would have to rely on workers comp for coverage.
An employee insured under a group health policy is injured in a car wreck while performing her duties for her employer. This results in a long hospitalization period. Which of the following is true?
Pay a reduced death benefit. BECAUSE: The incontestability clause prevents an insurer from denying a claim due to statements in an application after the policy has been in force for 2 years. however it does not apply to statements relating to age, sex, and identity.
An insured has had a life insurance poliy that he purchased 3 years ago when he was 40. He is killed in an automobile accident, and it is discovered that he is actually 45. what will the company do?
$500 BECUASE: Once the primary insurer has paid the full available benefit, the secondary insurer will cover what the first company will not pay, such as deductibles and coinsurance. the insured will then be reimbursed for out of pocket costs.
An insured is covered under 2 group health plans- under his own and his spouses. he had suffered a loss of 2,000. after the insured paid the total of 500 in deductibles and coinsurance, the primary insurer covered 1,500 of medical expenses. what amount, if any would be paid by the secondary insurer?
Presumptive disability. BECAUSE: Presumptive disability is a provision that is found in most disability income policies which specifies the conditions that will automatically qualify the insured for full disability benefits.
Certain conditions, such as dismemberment or total and permanent blindess will automatically qualify the insured for full disability benefits. which disability policy provision does this describe?
When an insurers underwriter approves coverage. BECAUSE in insurance, the offer is usually made by the applicant in the form of application. acceptance takes place when the insurers underwriter approves the application and issues a policy.
In forming an insurance contract, when does acceptance usually occur?
Is not covered BECAUSE: An insurancnce company will pay the usual, reasonable, or customary amount for a given procedure based upon the average charge for that procedure.
In health insurance, if a doctor charges $50 more than what the insurance company considers usual, customary and reasonable, the extra cost
1 year.
Infertility is defined as the inability to conceive or retain a pregnancy during what period of time?
Rates by class BECAUSE: On a guaranteed renewable health insurance policy, the insurer may increase premiums on a class basis only and not on an individual policy.
Insurers may change which of the following on a guaranteed renewable health insurance policy?
To protect consumers.
The CT insurance dept sets a minimum level os standards for individual and group medical expense policies for which of the following reasons?
Gradually increases each year by the amount that the cash value increases. BECAUSE: Under option B the death benefit includes the annual increase in cash value so that the death benefit gradually increases each year by the amount that the cash value increases.
The death benefit under the universal life option B
Control specialist costs BECAUSE: Initially the member chooses a primary care physician, or gatekeeper. if the member needs the attention of a specialist, the primary care physician must refer the member. this helps keep the member away from higher priced specialist unless it is truly necessary.
The gatekeeper of an HMO phelps
The elimination period BECAUSE: The elimination period is a waiting period expressed in days, not dollars, imposed on the insured from the onset of disability until benefit payments commence.
The period of time immediately following a disability during which benefits are not payable is?
The policy contains sufficient cash value to cover the cost of insurance BECAUSE: In universal life insurance, the policy-owner may skip a premium payment without lapsing the policy as long as the policy contains a sufficient cash value at the time to cover the cost of insurance for that premium period.
The policy owner of a universal life policy may skip paying the premium and the policy will not lapses as long as
Reduction of premium BECAUSE: The reduction of premium option allows the policyholder to apply policy dividends toward the next years premium.
The policyowner pays for her life insurance annualy. Unitl now, she has collected a nontaxable dividend chech each year. she has decided that she would rather use the dividends to pay for her next premium. what option would allow her to do this?
Lower BECAUSE: Survivorship life is much the same as a joint life in that it insurers two or more lives for a premium that is based on a joint age. the major difference is that survivorship life pays on the last death rather than upon first death. since the death benefit is not paid until the last death, the joint life expectancy in a sense is extended, resulting in a lower premium than that which is typically charged for joint life.
The premium of a survivorship life policy compared with that of a joint life policy would be
The annuitant must be a natural person. BECAUSE: Owners of annuities can be individuals or entities like a corporation, but the annuitant must be a natural person whose life expectancy is taken into consideration for the annuity.
The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true?
To control health insurance claims expenses
The purpose of managed care health insurance plans is to
It allows guaranteed acceptance of all applicants. BECAUSE: A different choice can be made every time a need arises for medical services.
What is not a benefit of a POS plan?
Lump sum BECAUSE: Upon the death of the insured, the contract is designed to pay the proceeds in cash, called a lump sum.
What is the other term for cash payment settlement option?
Amounts payable under the policy will reflect the insureds correct age. BECAUSE: If an insured misstates his or her age upon policy application, the optional misstatement of age provision will change the payable benefit to that which would have been purchased at the insureds actual age.
When an insured purchased her disability income policy, she mistated her age to the agent. she told the agent that she was 30 years old, when in fact she was 37. if the policy contains the optional misstatement of age provision.
When the applications is signed and a check is given to the agent. BECAUSE: The policy can be effectives as early as the date of the application, if the premium is submitted with the application and the policy is issued as applied for.
When is the earliest a policy may go into effect?
Unlimited access to providers
Which characteristic does not describe managed care?
Provisions may be reworded by the insurer BECAUSE: The uniform individual accident and sickness policy provisions law defines the rights and duties of both the insurer and the policyholder. although the wording of the provisions may change from insurer to insurer, the provsions are essentially the same and are required by law to be included in all health insurance policies.
Which is true regarding the uniform individual accident and sickness policy provisions law?
Aleatory BECAUSE: An insurance contract is an aleatory contract in that it requires a relatively small amount of premium for a large risk.
Which of the following best describes the concept that the insured pays a small amount of premium for a large amount of risk on the part of the insurance company?
Dept of insurance BECAUSE: Only an executive officer to the company not an agent, has the authority to make any changes to the policy. the insurer must have the insured's written agreement to the change.
Which of the following entities has the authority to make changes to an insurance policy?
The insurer can increase the policy premium on an individual basis. BECAUSE: Guranteed renewable provision has all the same features that the noncancellable provision does, with the exception that the insurer can increase the policy premium on the policy anniversary date. However, the premiums can only be increased on a class basis, not an individual policy.
Which of the following is NOT a feature of a guaranteed renewable provision?
Money borrowed from the cash value is taxable. BECAUSE: Money borrowed from the cash value is not taxable. policy loans can be repaid at any time, including surrender and death. an insurer can charge interest on outstanding policy loans.
Which of the following is NOT true regarding policy loans?
The employees recieve individual policies.
Which of the following is incorrect concerning a noncontributory group plan?
They earn lower interest rates than fixed annuities
Which of the following is not true regarding equity indexed annuities?
The larger the percentage that is paid by the insured, the lower the required premium will be.
Which of the following statements is true regarding coinsurance?
Medical Information Bureau (MIB)
Which of the following would provide an underwriter with information concerning an applicants health history?
Option B BECAUSE: Under option B the death benefit includes the annual increase in cash value so that the death benefit gradually increases each year by the amount that the cash value increase.
Which option for universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured?