EXAM FX REVIEW

The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called A.) Joint and survivor B.) Fixed period C.) Fixed amount D.) Joint life

A A joint and survivor option pays while either beneficiary is still living.

What is the maximum amount that the Nevada Life & Health Insurance Guaranty Association may be obligated to pay with respect to major medical insurance for one life? A.) $150,000 B.) $100,000 C.) $300,000 D.) $500,000

D With respect to one life, the Nevada Life & Health Insurance Guaranty Association may be obligated to pay $500,000 for major medical insurance.

What is the purpose of establishing the target premium for a universal life policy? A.) To cover all policy expenses B.) To keep the policy in force C.) To accumulate cash value faster D.) To pay up the policy faster

B The target premium is a recommended amount that should be paid on a policy in order to cover the cost of insurance protection and to keep the policy in force throughout its lifetime.

Which is TRUE about the cash surrender nonforfeiture option? A.) The policy remains active for some time after the policyholder opts for cash surrender B.) The policyholder recieves the original cash value of the policy C.) Funds exceeding the premium paid are taxable as ordinary income D.) After the cash surrender, the insured is covered for a grace period of 1 month

C The insurers surrender the policy at its current cash value. Only any excess of value is taxable as income. Once the policyholder opts for cash surrender, the policy is immediately inactive.

Insurers usually do not reimburse claimants for 100% of income lost due to disability. What is the reason for insurer limitations on coverage amounts? A.) To reimburse only for the premiums paid into the policy B.) TO pay no more than 50% of the pre-disability income C.) to provide an incentive for the insured to return to work D.) To make sure there is enough money to reimburse all the claims

C The reason the insurers don't pay benefits that are equal to the insured's prior earnings is to reduce the chance of malingering on the part of the insured. Limiting the amount of coverage provides an incentive for the insured to return to work after a disability, as opposed to collecting benefits when he or she is capable of returning to work.

Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another? A.) Switching B.) False advertising C.) Rebating D.) Twisting

D "Twisting" is a misrepresentation that persuades an insured/owner, to his or her detriment, to cancel, lapse, or switch policies from one to another.

Variable Life insurance is based on what kind of premium? A.) Incresing B.) Decreasing C.) Graded D.) Level fixed

D Variable Life insurance is a level fixed premium investment based product.

Which of the following entities ultimately determines if an advertisement is deceptive or confusing? A.) Commissioner B.) Consumer Protection Agency C.) State Insurance Board D.) Federal Advertising Board

A Advertising for accident and sickness polices must avoid any type of misrepresentation, defamation, deception, exaggeration, or minimization. Confusing or ambiguous presentations must be avoided. The Commissioner can decide whether an ad violates these guidelines.

Which of the following would be an example of limited accident and health insurance policy? A.) A dread disease policy B.) An accidental death and dismemberment policy C.) A Medicare policy D.) A long-term care policy

A Limited risk policies cover specific illness or accidents.

An insured purchased a disability income policy with a 10-year benefit period. the policy stated a 20-day probationary period for illness. If the insured is hospitalized with an illness 2 weeks after the policy was issued, how much will the policy pay? A.) Nothing; illness is not covered during the first 20 days of the contract B.) The insured will receive a return of premium C.) It will pay up to 10 years of benefit D.) It will pay until the insured is released from the hospital

A Loss by illness is not covered if it occurs during the probationary period.

All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy? A.) Lower B.) Higher C.) As high D.) Half the amount

A Survivorship Life is much the same as joint life in that it insures 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 the 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 typically charged for joint life.

Which provision states that the insurance company must pay Medical Expense claims immediately? A.) Time of Payment of Claims B.) Payment of Claims C.) Legal Actions D.) Relation of Earnings to Insurance

A The Time Payment of Claims provision requires that claims will be paid immediately upon receipt of proofs of loss except for periodic payments, which are to be paid as specified in the policy.

The insuring clause of a disability policy usually states all of the following EXCEPT? A.) The method of premium payment B.) The identities of the insurance company and the insured C.) The insurance against loss is provided D.) The types of losses covered

A The insuring clause, usually on the first page of the policy, is the general statement that defines the insurance agreement and identifies the insured and the insurance company and states what kind of loss (peril) is covered.

Agents who persuade insureds to cancel a policy in favor of another one when it might not be in the insured's best interest are guilty of A.) Twisting B.) Defamation C.) Misrepresentation D.) Rebating

A Twisting is a misrepresentation that persuades an insured or a policyowner, to his or her detriment, to cancel, lapse, or switch policies.

In the event of loss, after a notice of claim is submitted to the insurer, who is responsible for providing claims forms and to which party? A.) Insurer to the insured B.) Insured to the insurer C.) Insurer to the Department of Insurance D.) Insured to the Department of Insurance

A Upon receipt of a notice of claim, the company must supply claims forms to the insured within a specified number of days.

The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose? A.) Interest only option B.) Life income with period certain C.) Joint and survivor D.) Fixed amount option

A With the interest-only option, the insurance company retains the policy proceeds and pays interest on the proceeds to the recipient (Beneficiary) at regular intervals.

Which of the following terms describes a specific dollar amount of the cost of care that must be paid by the member? A.) Contractual cost B.) Copayment C.) Cost share D.) Prepayment

B A copayment is a specific dollar amount of the cost of care that must be paid by the member.

What is material misrepresentation? A.) Concealment B.) A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company C.) Any misstatement made by an applicant for insurance D.) Any misstatement by the producer

B A material misrepresentation is a statement that, if discovered, would alter the underwriting decision of the insurance company.

In health insurance, if a doctor charged $50 more than what the insurance company considers usual, customary and reasonable, the extra cost A.) Counts towards coinsurance B.) Is not covered C.) Must be covered by the insurer D.) Counts toward deductible

B An insurance company will pay the usual, reasonable, or customary amount for a given procedure based upon the average charge for that procedure.

How is emergency care covered for a member of an HMO? A.) An HMO emergency specialist will cover the patient B.) A member of an HMO can receive care in or out of the HMO service area, but care is preferred in the service area. C.) A member of an HMO may receive care at any emergency facility, at the same cost as if in his or her own service area. D.) HMOs have salaried member physicians, but they do not cover emergency care

B Emergency care must be provided for the member in or out of the HMO's service area. .If emergency care is being provided for a member outside the service area, the HMO will be eager to get the member back into the service area so that care can be provided by salaried member physicians.

Which is true regarding HMO coverage? A.) HMOs provide nationwide coverage B.) It is divided into geographic territories C.) It is divided based on the average tax bracket of a family D.) It is divided by state

B HMOs offer services to those living within specific geographic boundaries that may be formed by county lines or city limits. If one lives within the boundaries, they are eligible to belong to the HMO, but if they do not live within the boundaries, they are ineligible.

If an insured withdraws a portion of the face amount in the form of accelerated benefits because of a terminal illness, how will that affect the payable death benefit from the policy? A.) The death benefit will be larger B.) The death benefit will be smaller C.) The death benefit will be forfeited D.) The death benefit will be the same as the original face amount

B If an insured withdraws a portion of the death benefit by the use of this rider, the benefit payable at death will be reduced by the amount, plus the amount of earnings lost by the insurance company in interest income.

When an agent is handling premium funds while conducting business,the insurance agent acts in a(n) A.) Special capacity B.) Fiduciary capacity C.) Accounting capacity D.) Financial capacity

B Money designated as premium belongs to the insurance company. An agent is handling this money in a position of trust. Fiduciary is the term that refers to the handling of money.

Which of the following must be obtained by someone who intends to function as an administrator? A.) Limited lines producer license B.) Certificate of registration C.) Certificate of authority D.) Administrator's license

B No one may function as an administrator unless he or she obtains a certificate of registration as an administrator form the commissioner.

An insured has Medicare Part D coverage. He has reached his initial benefit limit and must now pay 50% of his prescription drug costs. What is the term for this gap in coverage? A.) Latency period B.) Donut hole C.) Bridge D.) Blackout Period

B Once the initial benefit limit is reached, a gap called a "donut hole" occurs, in which the beneficiary is responsible for a portion of prescription drug costs.

An insured purchased a 10-year level term life policy that is guaranteed renewable and convertible. What happens at the end of the 10-year term? A.) The insured may renew the policy for another 10 years at the same premium rate B.) The insured may renew the policy for another 10 years, but at a higher premium rate. C.) The insured must provide evidence of insurability to renew the policy D.) The insured may only convert the policy to another term policy

B Policies that are guaranteed renewable and convertible may be renewed, without evidence of insurability, for another like term, or may be converted to permanent insurance, without evidence of insurability.

An insured pays a monthly premium of $100 for her health insurance. What would be the duration of the grace period under her policy? A.) 7 days B.) 10 days C.) 31 days D.) 60 days

B The grace period is 7 days if the premium is paid weekly, 10 days if paid monthly, and 31 days for all other modes.

Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary? A.) Fixed-amount B.) Life income with period certain C.) Joint and survivor D.) Single life

B The life income with period certain option guarantees payments for the life of the recipient and also specifies a guaranteed period of continued payments. If the recipient should die during this period, the payments would continue to a designated beneficiary for the remainder of the period.

When is the earliest a policy may go into effect? A.) After the underwriter reviews the policy B.) When the application is signed and check is given to the agent C.) When the first premium is paid and the policy has been delivered D.) When the insurer approves the application

B The policy can be effective as early as the date of the application, if the premium is submitted with the application and the policy is issued as applied for.

A policyowner borrowed a portion of cash value from his whole life policy. When he died six months later, the loan had not been repaid. How will that affect the death benefit to the beneficiary? A.) Unpaid loans will cause the lapse of the policy, so no death benefit will be paid. B.) The death benefit will be reduced by the amount of any unpaid loans and interest C.) Loans are forgive upon the death of the insured, so the beneficiary will receive the full death benefit. D.) Beneficiary will have to pay the amount of any outstanding loans and interest after the death benefit is received.

B The policyowner has the right to borrow the cash value of a whole life policy. The loan does not have to be repaid; however, the amount of any outstanding loans, plus interest, will be deducted from the policy face amount upon the insured's death.

A medical expense policy that establishes the amount of benefit based upon the prevailing charges what fall within the standard range of fees normally charged for a specific procedure by a doctor of similar training and experience in that geographic area is known as? A.) Gatekeepers B.) Usual, customary and reasonable C.) Relative-value schedule D.) Benefit schedule

B The usual, customary and reasonable approach for determining insurance benefits is based upon the fees normally charged for specific procedures in the geographic location where the services are provided.

An insured becomes disabled at age 22 and can no longer work. She meets the definition of total disability under Social Security. What other requirement must the insured have met to receive Social Security disability benefits? A.) Have reached the age of 25 B.) Have accumulated 6 work credits in the past 3 years C.) Have accumulated 20 work credits in the past 10 years D.) Have accumulated 40 work credits

B To qualify for disability benefits under Social Security, the disabled person may have earned a certain amount of work credits. A maximum of 4 work credits can be earned each year. The amount of credits required varies by age. Persons disabled before the age of 24 can qualify for Social Security Benefits with only 6 work credits earned in the 3 years prior to the start of the disability.

What is the benefit of choosing extended term as a non-forfeiture option? A.) It can be converted to a fixed annuity B.) It has the highest amount of insurance protection. C.) It matures at age 100 D.) It allows for coverage to continue beyond maturity date

B Under this option the insurer uses the policy cash value to convert to term insurance for the same face amount as the former permanent policy. The duration of the new term coverage lasts for as long a period as the amount of cash value will purchase.

Which of the following statements about reinstatement provision is true? A.) It guarantees the reinstatement of a policy that has been surrendered for cash. B.) It requires the policyowner to pay all overdue premiums with interest before the policy is reinstated C.) It permits reinstatement within 10 years after a policy has lapsed D.) It provides for reinstatement of a policy regardless of the insured's health

B Upon policy reinstatement, the policyowner will be required to pay all back premiums plus interest, and may be required to repay any outstanding loans and interest.

Why is an equity indexed annuity considered to be a fixed annuity? A.) It is not tied to an index like the S&P 500 B.) It has a guaranteed minimum interest rate C.) It has modest investment potential D.) It has a fixed rate of return

B While equity indexed annuities earn higher interest rates than fixed annuities, both types of annuities guarantee a specific minimum interest rate.

Which option is being utilized when the insurer accumulates dividends at interest and then uses the accumulated dividends, plus interest, and the policy cash value to pay the policy up early? A.) Dividend Accumulation option B.) Paid-up option C.) Accumulation at interest D.) Paid-up additions

B With the paid-up option, the insurer can accumulate dividends at interest and then use them, in the addition to interest and the policy's cash value, to pay the policy earlier than planned. This is different from paid-up additions, in which the dividends are used to buy additional policies that increase the face amount of the original policy.

Under a health insurance policy, benefits, other than death benefits, that have not otherwise been assigned, will be paid to? A.) Beneficiary of the death benefit B.) The spouse of the insured C.) The insured D.) Creditors

C Payments for loss of life benefits are to be made to the designated beneficiary. If no beneficiary has been named, payment proceeds are to be paid to the deceased insured's estate. Claims other than death benefits are to be paid to the insured or the insured's estate, unless assigned by the insured.

The Patient Protection and Affordable Care Act mandates that insurers provide coverage for adult children of the insured up to the age of A.) 19 B.) 21 C.) 26 D.) 30

C The law extends coverage for children of the insured to age 26, regardless of their marital status, residency, financial dependence on their parents, or eligibility to enroll in their employer's plan.

A rider attached to a life insurance policy that provides coverage on the insured's family members is called the? A.) Juvenile rider B.) Payor rider C.) Other-insured rider D.) Change of insured rider

C The other-insureds rider is useful in providing insurance for more than one family member. The type of insurance offered by this rider is usually term insurance, with the right to convert a permanent insurance.

All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT? A.) The employer pays a bonus to a selected employee to fund the policy B.) It is considered a non-qualified employee benefit C.) The policy is owned by the company D.) Any type of insurance policy may be used

C The policy is owned by the employee.

The type of dental plan which is incorporated into a major medical expense plan is a/an A.) Stand-alone dental plan B.) Blanket dental plan C.) Integrated dental plan D.) Supplemental dental plan

C When dental coverage is covered under the benefits of a major medical plan, the dental coverage and medical coverage would be an integrated plan. Any deductible amount can be met by either dental or medical expenses.

An agent offers his client free tickets to a sporting event in exchange for the purchase of an insurance policy. The agent is guilty of A.) Twisting B.) Controlled business C.) Rebating D.) Coercion

C When producers give or promise anything of value that is not specified in the policy, they are guilty of rebating.

An insured bought a policy 20 years ago. The policy stated that 20 years later the cash value would be $480 per $1,000 of coverage. What type of policy does the insured have? A.) Universal Life B.) Annuity C.) Whole life D.) Term Life

C Whole life is the only one of these choices that is required by law to show cash values for the first 20 years.

An employee quits her job where she has a balance of $10,000 in her qualified plan. The balance was paid out directly to the employee in order for her to move the funds to a new account. If she decides to rollover her plan to a Traditional IRA, how much will she receive from the plan administrator and how long does she have to complete the tax-free rollover? A.) $8,000, 30 days B.) $10,000, 60 days C.) $10,000, 30 days D.) $8,000, 60 days

D Generally, IRA rollovers must be completed within 60 days from the time the money is taken out of the first plan. IF the distribution from the first plan is paid directly to the participant, 20% of the distribution must be withheld by the payor.

When requested by a person aggrieved by an act, a hearing must be held within how many days after the Commissioner received the written demand? A.) 60 days B.) 10 days C.) 15 days D.) 30 days

D If the Commissioner finds that the application is made in good faith, the applicant would be so aggrieved if his grounds are established, the Commissioner shall hold a hearing within 30 days after the filing of the application, unless postponed by mutual consent.

When may an insured deduct unreimbursed medical expenses paid under a long-term care policy? A.) Only if the insured is age 65 or older B.) All LTC expenses are tax deductible C.) Only if the insured does not itemize the expenses D.) When the expenses exceed a certain percentage of the insured's adjusted gross income

D In either medical expense insurance policies or long-term care insurance policies, unreimbursed medical expenses paid for the insured, the insured's spouse and dependents may be claimed as deductions if the expenses exceed a certain percentage of insured's adjusted gross income.

Long term care insurance policies can A.) Be cancelled due to the age of the insured B.) Limit coverage for the treatment of Alzheimer's disease C.) Be cancelled due to the deterioration of the insured's mental health D.) Limit coverage for the treatment of alcoholism

D Most long term care policies specially exclude coverage for drug and alcohol dependency, acts of war, self-inflicted injuries and non-organic mental conditions. Organic cognitive disorders such as Alzheimer's disease, senile dementia and Parkinson's disease are covered.

A Medicare supplement policy can exclude coverage based on A.) Medical conditions B.) Treatment for illness C.) Both medical conditions and treatment for illness D.) None of the above

D No Medicare supplement policy can be delivered in Nevada if it limits or excludes coverage by type of illness, treatment, medical conditions or accident.

All of the following are general requirements of a qualified plan EXCEPT A.) The plan must be communicated to all employees B.) The plan must be for the exclusive benefits of the employees and their beneficiaries C.)The plan must be permanent, written and legally binding D.) The plan must provide an offset for social security benefits

D Plans must meet the general requirements established by IRS.

An investor buys a life policy on an elderly person in order to sell if for a life settlement. This is an example of A.) A prearranged funeral plan B.) A viatical settlement C.) Third-party ownership D.) A STOLI policy

D Stranger-originated life insurance (STOLI) policies are usually purchased by people who have no relationship with the insured with the intention of selling them for life settlements.

How soon following the occurrence of a covered loss must an insured submit written proof of such loss to the insurance company? A.) As soon as possible B.) Within 20 days C.) Within 60 days D.) Within 90 days or as soon as reasonably possible, but not exceed 1 year

D The "proof of loss" provision states the claimant must submit a proof of loss within 90 days; however, if it is not possible to comply, the time parameter is extended to 1 year. The one-year limit does not apply if the claimant is not legally competent to comply with this provision.

Which of the following statements is TRUE concerning the Accidental Death Rider? A.) It is also known as a triple indemnity rider B.) This rider is only available to insureds over the age of 65 C.) It is only available in group insurance D.) It will pay double or triple the face amount

D The Accidental Death Rider pays 2 or 3 times the face amount if death is the result of an accident as defined in the policy and occurs within 90 days of such an accident.

The Patient Protection and Affordable Care Act includes all of the following provisions EXCEPT A.) Right to appeal B.) No lifetime dollar limits C.) Coverage for preventive benefits D.) Individual tax deduction for premiums paid

D The Act does not offer tax deductions for health insurance premiums. The Act does offer a tax credit, which is different from a tax deduction. All other provisions are included in the Act.

Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process? A.) Insurance Index B.) Policy Summary C.) Illustrations D.) Buyer's Guide

D The Buyer's Guide is a consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process. It is a generic guide that does not address the specific policy if the insurer, instead explaining life insurance in a way that the average consumer can understand.

What is the name of a state-based organization that has been established to facilitate the purchase and sale of qualified health plans in Nevada? A.) The Medical Information Bureau B.) The Nevada Insurance Guarantee Association C.) The Affordable Care Exchange D.) The Silver State Health Insurance Exchange

D The Silver State Health Insurance Exchange (the Exchange) is a state-based health insurance exchange that facilitates the purchase and sale of qualified health plans in the individual market in Nevada.

Which of the following individuals must have insurable interest in the insured? A.) Beneficiary B.) Underwriter C.) Producer D.) Policyowner

D The policyowner must have an insurable interest in the insured (his/her own life if the policyowner and the insured is the same person), or in the life of a family member or a business partner.

For purpose of determining its financial condition, fulfillment of its contractual obligations and compliance with Nevada law, the Commissioner will examine the affairs of each insurer as often as deemed necessary. Each domestic insurer must be examined at least every _____ years. A.) Every year B.) Every two years C.) Every three years D.) Every five years

D The purpose and time parameters for insurance company examinations is established by the Insurance code.

Who is a third-party owner? A.) An insurer who issues a policy for two people B.) An employee in a group policy C.) An irrevocable beneficiary D.) A policyowner who is not insured

D Third-party owner is a legal term used to identify an individual or entity that is not an insured under the contract, but that has a legally enforceable right under it.

The expense for an autopsy covered under the physical exam and autopsy provision is paid by? A.) the state's autopsy fund B.) The limits of coverage under the health insurance policy C.) The estate of the insured D.) The insurer

D Where not forbidden by state law, the insurer, at its own expense, may cause an autopsy to be performed on a deceased insured.

Which of the following is called "second-to-die" policy? A.) Survivorship life B.) Family income C.) Juvenile life D.) Joint life

A Survivorship life (also referred to as "second-to-die" or "last survivor" policy) is much the same as joint life in that it insures two or more lives for a premium that is based on a joint age.

During a sales presentation a producer intentionally makes a statement which may mislead the insurance applicant. This describes A.) Coercion B.) Misrepresentation C.) Defamation D.) Twisting

B Making false or misleading statements with the intend to defraud another is misrepresentation.

Which or the following is TRUE regarding the annuity period? A.) It is also referred to as the accumulation period B.) It is the period of time during which the annuitant makes premium payments into the annuity C.) It may last for the lifetime of the annuitant D.) During this period of time the annuity payments grow interest tax deferred

C The "Annuity period" is the time during which accumulated money is converted into an income stream. It may last for the lifetime of the annuitant or for a shorter specified period of time depending on the benefit payment option selected.

What is a foreign insurer? A.) An insurer with a home office in another country B.) An insurer with licensed agents doing business in other countries C.) An insurer with licensed agents who are citizens in more than one country D.) An insurer with a home office in another state

D A domestic insurer's home office is in this state, a foreign insurer's is in another state, and an alien insurer's is in another country.

Which two terms are associated directly with the premium? A.) Fixed or variable B.) Term or permanent C.) Renewable or convertible D.) Level or flexible

D A level premium is one in which the premium payment never changes. A flexible premium is found in Universal life policies where the insured changes their premium payment.

A woman obtains health coverage through the Marketplace on October 1. Two weeks later she finds out that she is 3 months pregnant. Which of the following is true about coverage for pregnancy? A.) Pregnancy will only be covered if additional premium is paid B.) Pregnancy will not be covered as a pre-existing condition C.) Pregnancy may be covered with the insurer's special approval D.) Pregnancy will be covered immediately

D All health insurance Marketplace plans must cover pregnancy and childbirth, even if pregnancy begins before the coverage takes effect.

Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance? A.) Reinstatement rule B.) Conversion rule C.) Disclosure rule D.) Replacement rule

D Anytime a new policy is issued that replaces or modifies existing insurance, a replacement form must be submitted to the ceding company.

Which of the following protects the insured form an unintentional policy lapse due to a nonpayment of premium? A.) Extended term B.) Reinstatement C.) Reduced paid-up option D.) Automatic premium loan

D Automatic premium loan provision is not required, but is commonly added to contracts with a cash value at no additional charge. This is a special type of loan that prevents the unintentional lapse of a policy due to nonpayment of the premium.

Which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance? A.) Undercutting B.) Twisting C.) Slandering D.) Defamation

D Defamation is making statements that are false as to the financial condition of an insurer and which are calculated to injure any person engaged in the business of insurance.

What is the penalty for transacting insurance without a proper license? A.) $10,000 B.) $500 C.) $1,000 D.) $5,000

A Anyone that transacts insurance without a license is subjected to an administrative fine of $1,000 for each violation.

An employee is injured in a construction accident, rendering him unable to work for a year. Which of the following plans would provide him with medical expense coverage and income assistance? A.) Works Compensation B.) Major Medical Insurance C.) Long-term Care D.) Social Security Disability

A Workers Compensation provides employees with medical, income, death, and rehabilitation benefits in the event of work-related injury.

The annual contribution limit of a Dependent Care Flexible Spending Account is set by? A.) The insurer B.) The insured C.) The IRS D.) The employer

C The IRS sets limits for the annual contribution for Dependent Care Accounts

A policy with a 31-day grace period implies A.) The policy will not lapse for 31 days if the premium is not paid when due B.) The policyholder may return the policy for a full refund within 31 days C.) The policy is incontestable after 31 days of delivery D.) The policy benefits must be paid within 31 days after a claim is submitted

A A mandatory provision of life insurance policies requires a grace period be provided. The grace period is the period of time after the premium due date in which premiums may still be paid before the policy lapses for nonpayment of the premium.

A typical Accidental Death & Dismemberment policy covers all of the following losses EXCEPT A.) Income B.) Eyesight C.) Limb D.) Life

A Accidental Death & Dismemberment policies cover loss of body parts or life only.

Accoriding to the PPACA metal levels classification, if a health plan is expected to cover 90% of the cost for an average population, and the participants would cover the remaining 10%, what type of plan is that? A.) Platinum B.) Bronze C.) Silver D.) Gold

A Bronze level benefit plans pay 60% of expected health care costs; silver level plans pay 70%; gold level plans pay 80%; and platinum level plans pay 90%.

Which of the following statements is NOT correct concerning the COBRA Act of 1985? A.) It requires all employers, regardless of the number or age of employees, to provide extended group health coverage. B.) It covers terminated employees and/or their dependents for up to 36 months after a qualifying event C.) It applies only to employers with 20 or more employees that maintain group health insurance plans for employees D.) COBRA stands for Consolidated Omnibus Budget Reconciliation Act

A COBRA Act applies to only employers with 20 or more employees.

All of the following long-term care coverage's would allow an insured to receive care at home EXCEPT? A.) Skilled care B.) Custodial care in the insured's house C.) Respite care D.) Home health care

A Custodial care, respite care, home health care, and adult day care are all coverages used to reduce the necessity of admission into a care facility. Skilled care is almost always provided in an institutional setting.

An organization that operates on a lodge system and provides a formal life insurance plan to its members is classified as a A.) Fraternal insurer B.) Mutual company C.) Stock company D.) Reciprocal association

A Fraternal insurers operate on the basis of a lodge or charitable organization, but they may also sell formal insurance plans for the benefit of their members. Reciprocal insurers are also associations that provide insurance for their members, but they are formed only for the purpose of providing insurance.

Which of the following provisions would prevent an insurance company from paying a reimbursement claim to someone other than the policyowner? A.) Payment of claims B.) Change of beneficiary C.) Entire Contract Clause D.) Proof of Loss

A The Payment of Claims provision states that the claims must be paid to the policyowner, unless the death proceeds need to be paid to a beneficiary.

Nonforfeiture values guarantee which of the following for the policyowner? A.) That the death benefit will be paid in a lump sum B.) That the policy premiums will never increase C.) That the cash value will not be lost D.) That the dividends will be paid annually

C Because permanent life insurance policies have cash values, there are certain guarantees built into the policy that cannot be forfeited by the policyowner. Nonforfeiture values give the insured the right to the cash value even if the policy lapses or is surrendered.

Which of the following types of insurance policies is most commonly used in credit life insurance? A.) Whole life B.) Equity indexed life C.) Decreasing term D.) Increasing term

C Credit insurance is a special type of coverage written to insure the life of the debtor and pay off the balance of a loan in the event of the death of the debtor. It is usually written as decreasing term.

The Commissioner must give reasonable notice to all interested parties as the the time, place and purpose of a hearing within the minimum of how many days of the hearing? A.) 10 days B.) 15 days C.) 20 days D.) 30 days

C The Commissioner shall give a reasonable notice to all interested parties, by registered mail, as to time, place and purpose of a hearing within 20 days.

Which of the following provisions would prevent an insurance company from paying a reimbursement claim to someone other than the policyowner? A.) Entire Contract Clause B.) Proof of Loss C.) Payment of Claims D.) Change of beneficiary

C The Payment of Claims provision states that the claims must be paid to the policyowner, unless the death proceeds need to be paid to a beneficiary.

Which of the following is issued by the sate Department of Insurance to show that the insurer has power to write insurance contracts in that state? A.) Certificate of Insurance B.) Binder C.) License D.) Certificate of Authority

D A Certificate of Authority is issued by the state Department of Insurance and shows that the insurer has power to write insurance contracts in that state.

Which of the following is required for a producer to transact business on behalf of an insurer? A.) A business entity license B.) A Certificate of Authority C.) Only the producer's active license D.) An agent appointment

D A producer cannot transact insurance on behalf of an insurer until the producer is appointed by the insurer.

When a producer was reviewing a potential customer's insurance coverage that is written by another company, the producer made several oral statements that were maliciously critical of that other insurer. The producer could be found guilty of A.) Misrepresentation B.) Discrimination C.) Nothing, unless the remarks were in writing D.) Defamation

D A producer or broker who makes oral or written statements intended to injure another producer or insurer is guilty of the unfair trade practice of defamation.

A brain surgeon has an accident and develops tremors in her right arm. Which disability income policy definition of total disability will cover her for all losses? A.) "Own occupation" - less restrictive than other definitions B.) "Any occupation" - less restrictive than other definitions C.) "Any occupation" - more restrictive tan other definitions D.) "Own occupation" - less restrictive than other definitions

D In theory, the brain surgeon could find other work but because her disability income policy specifies that she is covered for her own occupation, she will be wholly covered.

The type of term insurance that provides increasing death benefits as the insured ages is called? A.) Increasing term B.) Flexible term C.) Interest-sensitive term D.) Age-sensitive term

A Increasing term insurance provides an increase in the death benefit each year. The coverage is usually structured to provide a death benefit equal to the cash value accumulation in a permanent policy; however, it can be written as a stand-alone policy for the individual that has a need of increasing amounts of insurance.

A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this? A.) Ordinary life policy B.) Limited pay whole life C.) Level term D.) Term to specified age

C A 20-year term policy is written to provide a level death benefit for 20 years.

For what time period can coverage be excluded on permissible pre-existing conditions applicable to a Medicare supplement insurance policy? A.) 2 months after the effective date of the policy B.) 3 months after the effective date of the policy C.) 6 months after the effective date of the policy D.) 30 days after the effective date of the policy

C A policy, not purchased during the open enrollment period and which does not replace an existing Medicare supplement policy, can exclude coverage on permissible pre-existing conditions for a period of up to 6 months.

A producer who has allowed his or her license to lapse may reinstate the license without retaking the examination within what maximum time period? A.) 30 days B.) 6 months C.) 12 months D.) 2 years

C A producer who has allowed his/her license to lapse may reinstate the license no later than 12 months after the due date of the renewal fee, without being required to pass a written examination.

What is the purpose of the buyer's guide? A.) To list all policy riders B.) To provide information about the issued policy C.) To allow the consumer to compare the costs of different policies D.) To provide the name and address of the agent/producer issuing the policy

C The buyer's guide provides generic information about life insurance policies and allows the consumer to compare the costs of different policies. The policy summary provides specific information about the issued policy, as well as the insurer's information.

Which of the following will vary the length of the grace period in health insurance policies? A.) The length of time the insured has been insured B.) The term of the policy C.) The mode of the premium payment D.) The length of any elimination period

C The grace period is 7 days on a policy with a weekly premium mode, 10 days if a monthly premium mode, 31 days on other premium modes.

In individual health insurance coverage, the insurer must cover a newborn from the moment of birth, and if additional premium payment is required, allow how many days for payment? A.) Within 10 calendar days B.) Within 15 working days C.) Within 31 days of birth D.) Within a reasonable period of time

C The insured must notify the insurer of a newly born dependent, and if additional payment is required, pay within 31 days.

While a claim is pending, an insurance company may require? A.) The insured to be examined only once annually B.) An independent examination only once every 45 days C.) An independent examination as often as reasonably required D.) The insured to be examined only within the first 30 days

C While a claim is pending, an insurance company may require an independent exam as often as reasonably required.

Which of the following statements about occupational vs. nonoccupational coverage is TRUE? A.) Disability insurance can be written as occupational or nonoccupational. B.) Group medical expense policies and individual medical expense policies always cover both occupational and nonoccupational injuries C.) Individual disability policies never cover nonoccupational injuries D.) Only group disability income policies can be written on an occupational basis

A All disability income polices can be written on either an occupational or nonoccupational basis.

An insured submitted a notice of claim to the insurer, but never received claim forms. He later submits proof of loss, and explains the nature and extend of loss in a hand-written letter to the insurer. Which of the following would be true? A.) The insurer will be fined for not providing the claim forms. B.) The insured must submit proof of loss to the Department of Insurance. C.) The insured was in compliance with the policy requirements regarding claims. D.) The claims most likely will not be paid since the official claims form was not submitted.

C If claims forms are not furnished to the insured, the claimant is deemed to have complied with requirements of the policy if he or she submits written proof of the occurrence, nature of the loss, and extent of loss to the insurer.

In long-term care (LTC) policies, as the benefit period lengthens, the premium A.) LTC Premiums are not based on benefit periods B.) Decreases C.) Increases D.) Remains unchanged

C LTC policies define the benefit period for how long coverage applies, after the elimination period. The longer the benefit period, the higher the premium will be.

Which nonforfeiture option provides coverage for the longest period of time? A.) Extended term B.) Paid-up option C.) Accumulated at interest D.) Reduced paid-up

D The reduced paid-up nonforfeiture option would provide protection until the insured reaches 100, but the face amount is reduced to what the cash would buy.