Final Exam - Virginia Life and Health Practice
An agent may be personally liable if he or she engages in acts
that are not part of the agency or agent contract
When testing for the Human Immunodeficiency Virus (HIV), Virginia law requires a consent form
that discloses who may receive a copy of the results
In order to contribute to a Health Savings Account (HSA),
the applicant must be enrolled in a High Deductible Health Plan (HDHP)
The insured's consideration given for a health insurance policy is
the first premium payment and the application
An arrangement where an individual is authorized to act on behalf of another person or company is established through
the law of agency
A nonparticipating whole life insurance policy was surrendered for its $20,000 cash value. The total premiums paid had totaled $16,000. What were the federal income tax consequences to the policyowner on receipt of the cash value?
$16,000 was received tax-free and $4,000 as ordinary income
An agent who willfully violates the insurance code may, after a hearing, pay up to ______ per violation as a penalty.
$5,000
If an individual violates a cease and desist order issued by the State Corporation Commission, the individual will be subject to a fine of
$5,000
Individual accident and health insurance policies must provide a minimum free-look period of __ days upon policy delivery.
10
The free look period provided in a life insurance policy is usually ___ days.
10
A licensee who must complete continuing education as a requirement for license renewal must do so every ___ year(s).
2
After an annuity has been in force for ___ year(s), it becomes incontestable.
2
In Virginia, once a life insurance policy has been in force for ___ year(s), it becomes incontestable.
2
An insured must notify an insurer of a medical claim within how many days after an accident?
20
An agent's commission for the sale of a Medicare supplement policy in the first year following its effective date cannot exceed ___ of the commission paid for selling or servicing the policy in the second year.
200%
n Virginia, an insurer must file a written notice of appointment with the State Corporation Commission within
30 days of the first insurance application submitted by the licensee
An agent has received the first year commission paid on a Medicare Supplement policy. Renewal commissions must then be provided for at least ___ years after the first year.
5
An agent must maintain customer records for ___ year(s) following the completion date of the insurance transaction.
5
One becomes eligible for Social Security disability benefits after having been disabled for
5 months
A life insurance policy can be backdated before the application date for up to ___ month(s).
6
How long can an insurer legally defer paying the cash value of a surrendered life insurance policy?
6 months
Which of the following combinations best describe a universal life insurance policy?
A flexible premium deposit fund and a monthly renewable term insurance policy
What is a juvenile life insurance policy?
A life policy that covers the life of a minor
Which benefit is normally payable to a life insurance policyowner when the insured's life expectancy has been severely limited?
Accelerated (living) benefit
Bathing, eating and transferring are all types of
Activities of daily living
Which of the following statements accurately describes the "time limit on certain defenses"?
After a stated period of time, claims cannot be denied due to material misrepresentation on the application
Which is an accurate description of the premium in a graded premium life insurance policy?
Annual increases in premium for a stated number of years then remains level
Carlos the agent has sold an insurance policy and will be sharing the commission with another individual. Which of the following individuals may Carlos share the commission with?
Another licensed but unappointed agent
An applicant submits a life insurance application where an investigative consumer report is used in the underwriting process. Which of these statements is true?
Applicant can determine which items in the report to leave out
Which of these statements regarding Major Medical Expense insurance is NOT true?
Benefits are paid on a capitation basis
The Change of Occupation provision in a Disability Income policy states that, in the event the insured changes to a less hazardous occupation, which of the following may apply?
Benefits can be increased in the event of a covered claim
Tina is insured under a business overhead expense insurance policy. Which of the following would be covered if she were to become disabled?
Business property rental expense
An agent recently replaced an existing Medicare Supplement policy with a new policy. The agent's compensation for the new policy
CANNOT exceed the renewal commission of the original policy
Before a Medicare Supplement advertisement is released to the public, it must first be approved by the
Commission
An accident and health insurance policy's premium requirements are set forth in which of the following provisions?
Consideration clause
What does a Mandatory Second Surgical Opinion provision provide to an employer-paid health insurance plan?
Containment of the employer's premium cost
Which of the following reduces the opportunity for overinsurance?
Coordination of benefits provision
Major medical plans typically exclude coverage for which of the following benefits?
Custodial care
Mike applied for life insurance and was issued a conditional receipt. He is later found to be insurable and is issued a policy. When does his coverage become effective?
Date of issuance of the conditional receipt
In what way is a life insurance policy affected by an accelerated benefit payment?
Decreases the death benefit
Which of these life insurance policies does NOT contain a cash value provision?
Decreasing term life
An agent who makes derogatory remarks about another insurance company during the sale of insurance has engaged in
Defamation
In a speech to a local association, an agent incorrectly stated that XYZ Insurance Company is in financial difficulty and not paying claims. The agent may be guilty of
Defamation
Which of these is NOT an Unfair Claims Settlement Practice?
Denying unsubstantiated claims on a timely basis
Which of the following is NOT guaranteed in a whole life policy?
Dividend scale
Under which circumstance may an insurer discontinue a small employer group medical plan?
Employer fails to pay the premium prior to the end of the grace period
Which of these is NOT considered a type of limited payment whole life insurance?
Endowment at age 70
Which of the following health insurance provisions requires that the application becomes part of the policy?
Entire Contract clause
A policyowner fell behind on the premium payments of a whole life policy and is now in the grace period. How much will the beneficiary receive if the insured dies during this grace period and the policy also contains an outstanding policy loan?
Face amount minus the loan balance and past-due premium
Which life insurance settlement option pays a stated monthly benefit until both principal and interest are exhausted?
Fixed amount installment option
Major Medical policies are typically characterized by which of the following?
Flat deductible
Which of these is NOT a factor during the health insurance underwriting process?
Former residence
An insured may be required to sign which document at policy delivery to ensure there has not been any adverse medical conditions since the time of the application?
Good health statement
According to the Affordable Care Act (ACA), insurers can no longer deny health coverage due to pre-existing conditions unless that plan is a(n)
Grandfathered plan
Terry receives long-term physical therapy at her residence. What type of insurance would cover this service?
Home health care
Which of the following is NOT subject to the promise to pay in an insuring clause?
How the premium is calculated
The Medical Information Bureau consists of members from which group?
Insurance companies
Who is protected with the "other insurance with this insurer" provision?
Insurance company
Which of the following provisions permits an insurer to return a portion of the premium and pay benefits on a pro rata basis if it finds that an insured has duplicate coverage?
Insurance with other insurers
Which health policy clause specifies the amount of benefits to be paid?
Insuring
Which of these statements is NOT true regarding a cash value loan against a life insurance policy?
Interest payments made by policyowner are deductible
The initial premium for a life insurance policy is typically paid in what way?
It is typically obtained by the producer and forwarded to the insurer
What is the guaranteed cash value of a whole life insurance policy when the insured turns 65 years old?
Less than the policy's face amount
Which of these is NOT a common life insurance nonforfeiture option?
Life income annuity
Which of these would NOT likely qualify as a presumptive disability?
Loss of sight in one eye
Defamation can be best defined as
Making a statement that is false or maliciously critical of the financial condition of an insurer
According to the Affordable Care Act (ACA), the proportion of premium revenues spent on clinical services and quality improvements is called the
Medical loss ratio
Which of the following is excluded in a medical expense plan?
Military duty
Which of the following does NOT meet the requirements of "skilled nursing care"?
Must be provided exclusively in a hospital
Which of the following health insurance plans charges a premium that cannot be increased?
Noncancelable
A disability income insurance policy was recently issued with a rating. What does this mean?
Policyowner will be charged a reduced premium
Which of the following guidelines does NOT apply under the pregnancy provision of the Civil Rights Act?
Post-termination extensions of medical benefits must apply equally to pregnancy
The agreement in which hospitals and physician groups in a specific area contract with an insurance company to provide medical care at predetermined costs is
Preferred Provider Organization (PPO)
How is the insured protected if a payor benefit rider is attached to the life insurance policy?
Premium payments are waived in the event the premium payor dies or becomes disabled
Which statement regarding the life insurance premium for a children's rider is true?
Premium remains the same no matter how many children
Which of the following does NOT fall under "hospital care" in a typical health maintenance organization (HMO) plan?
Private duty nursing
When a producer submits an application that discloses personal information regarding the applicant, who supplies the privacy notice?
Producer
Which statement regarding a fixed period settlement option is correct?
The installment payment amount is determined by the total number of installments
What is considered interstate travel under the Federal Fraud and False Statements Act?
Puerto Rico
Which of these occurrences could improve an insurer's ability to reduce premiums?
Rate of earnings on investments increase
Which of the following actions may result in an agent's license being suspended?
Rebating a portion of the commission to the insured
Which of the following is NOT a dividend option for a life insurance policy?
Receiving the entire policy cash value
Omar is covered by a disability income policy. He is hurt while performing an occupation more hazardous than the occupation listed in his policy. The policy's change of occupation provision will have what effect?
Reduce the benefit level
Which of these is NOT an Unfair Claims Settlement Practice?
Refusing to pay persons bringing false or fraudulent claims
The inability to perform SOME of the duties of one's own occupation is known as a
Residual disability
Which of the following entities does NOT establish regulations for variable insurance products?
State attorney general
Under a deferred annuity, which contract feature initially charges a 5-10% fee that eventually reduces to $0 after a stated amount of time?
Surrender charge
All parts of the Medicare program (except for public information and enrollment) are administered by which federal agency?
The Centers for Medicare and Medicaid Services
What is payable to the policyowner if a whole life policy is surrendered prior to its maturity date?
The cash value
K is an agent who takes an application for individual life insurance and accepts a check from the client. He submits the application and check to the insurance company, however the check was never signed by the applicant. If the application is approved, when will coverage be effective?
The date the agent delivered the policy, collected the initial premium, and obtained a good health statement from the insured
Peter, age 50, surrenders his modified endowment contract (MEC). How is the gain treated in terms of federal income taxes?
The gain is treated as taxable income and a penalty tax is imposed on the gain
An insured, age 67, is covered under a disability income policy. What will the insurer normally require in order for the insured to continue coverage?
The insured must be actively at work for a specified number of hours per week
The Optionally Renewable provision allows what party to cancel the contract?
The insurer
Which of the following statements about the installments for a fixed period settlement option in life insurance policies is NOT true?
The periodic payment amount is determined by the beneficiary's age
An advantage of owning a flexible premium life insurance policy would be
The policyowner can make policy changes without difficulty
How is an insured's accident and health claim handled by an insurer if it occurs during the policy's grace period?
The unpaid premium may be subtracted from the reimbursement
When does the owner's contractual rights begin under an individual annuity contract?
Time of purchase
Which of the following best describes the purpose of HIPAA?
To reduce a pre-existing condition waiting period when coverage is sought for a new medical plan
All of the following are typically covered under dental insurance EXCEPT
Treatment which began before the eligibility date
Insurance crimes which affect interstate commerce are prosecuted by the
US Attorney General
Which of the following is NOT considered to be an expense for surviving family members of a deceased wage earner?
Unemployment tax expenses
How do birthing centers reduce medical costs?
Using certified nurse midwives
Laura has an employer-based preventative health care plan that focuses on an enrollee's problems, such as drug abuse or stress. These plans are called
Wellness programs
When does the producer give a premium receipt for a life insurance application?
When the initial premium has been paid with the application
An agent is holding a meeting with a potential client about replacing an existing group health insurance policy. The topic that should be included in the conversation is
a comparison of benefits between the current and proposed plans
Short-term group disability income benefits are
a percentage of weekly earnings up to to a stated maximum
Life insurance replacement can be best defined as
a transaction in which a new life insurance policy is purchased and an existing life insurance policy is surrendered
A statement MUST be signed by the _________ for any illustrations used in the sale of a life insurance policy.
agent
According to the Pregnancy Discrimination Act of 1978, employers must treat pregnancy in the same manner as
any other medical disability
Before an individual is permitted to act as an insurance agent, he/she must hold a valid insurance license and be _________ by an authorized insurer.
appointed
Long-term care policies sold in Virginia may offer coverage in which
benefits are based on an individual's ability to perform activities of daily living
An accident and health insurer has just received written proof of loss from one of its insureds. The insured must now wait 60 days before
bringing legal action against the insurer
Voluntarily terminating an insurance policy is also known as
cancellation
An employee welfare plan exempt from ERISA regulations would be
church plans
An agent MUST notify the Bureau of Insurance for
conducting business under an assumed name
Jerry has an indemnity plan which covers dental expenses. Typically, these type of plans
cover preventative care once every six months
Death benefits from a life insurance policy are normally considered to be
exempt from federal income tax
The "Notice to buyer" on the first page of each long-term care policy delivered in Virginia
explains that some long-term care costs may not be covered
The powers directly given to a producer in an agency contract are called
express
A(n) ________ insurance company conducts business in a state outside the one in which it is domiciled.
foreign
Insurable interest in one's own life is legally considered as
generally unlimited
If a group is considering applying for a group life policy, it MUST
have a minimum number of eligible persons
Trade association groups that are eligible for group medical benefits normally are
in the same industry
A business may purchase an annuity for all of the following reasons EXCEPT
informally funding a non-qualified deferred compensation plan
Group life insurance is typically issued as
level term insurance
The ________ is required to notify the Bureau of Insurance of a licensee's change of name or address
licensee
Inpatient psychiatric care is covered under Part A Medicare for 190 days per
lifetime
An employer that offers a qualified retirement plan (as opposed to a non-qualified plan) to its employees is eligible to
make tax-deductible contributions to the plan
Field underwriting by a producer
may result in the disclosure of hazardous activities of the applicant
Periodic health claim payments MUST be made at least
monthly
Paul is an agent who is licensed in Virginia but a resident of Maryland. Paul is considered to be a(n) ______ agent.
nonresident
Rick the agent handles insurance premiums in an untrustworthy manner. His actions could find him guilty of
not acting as a fiduciary
An insured is covered with a health insurance policy. If the insured would like to cancel the policy, he/she must
notify the insurance company in writing
The authority to change the beneficiary in an individual annuity lies with the
owner
When an insurer discovers (during the claim process) that the insured's age was accidentally misstated on the life insurance application, the insurer will likely
pay an amount the premiums would have purchased at the insured's actual age
A life insurance guaranteed insurability rider gives the insured the right, without proving insurability, to
periodically purchase additional insurance
A signed good health statement may be collected by a producer at the time of
policy delivery
A Guaranteed Renewable provision allows
premiums which can only be increased per rate class
A cease and desist order issued against an agent
prohibits a specific practice listed in the order
Chuck and Shaquille are both licensed agents in the same line of insurance. Chuck provides Shaquille with a referral that results in a sale. Commissions on this sale will likely be
shared by both agents
Long-term care policies sold in Virginia may NOT exclude coverage for
senile dementia
A life insurance agent has the authority to
solicit, receive and forward applications to the insurer
Kelly purchases a health insurance policy issued on a conditionally renewable basis. The insurance company has a right to refuse renewal of the policy for
specific reasons stated in the contract
Rick provides a notice of claim to his health insurer. If he does not receive a claim form within 15 days, he may comply with the proof of loss provision by
submitting written proof of loss
The premiums paid by an employer for his employee's group life insurance are usually considered to be
tax-deductible to the employer
Every ____ year(s), an agent's license in Virginia must be renewed.
two
Misrepresenting pertinent policy provisions relating to coverage after a loss is a(n)
unfair claims settlement practice
An agent's insurance records must be provided to the State Corporation Commission
upon request of the State Corporation Commission
The conversion option for group term insurance may be exercised by an employee
within 31 days of terminated employment
The following are all elements of a valid contract EXCEPT
written evidence
