GA Life/Health Ins Exam Questions

A Medicare Supplement policy must provide coverage for pre-existing conditions after the policy has been in force for a) 1 year b) 2 years c) 90 days d) 6 months

d) 6 months Pre-existing conditions must be covered after a policy has been in force for 6 months.

An insured receives an annual life insurance dividend check. What term best describes this arrangement? a) Reduction of Premium b) Annual Dividend Provision c) Accumulation at Interest d) Cash option

d) Cash option The cash option allows an insurer to send the policyholder an annual, nontaxable dividend check.

Which of the following statements regarding Business Overhead Expense policies is NOT true? a) Benefits are usually limited to six months. b) Premiums paid for BOE are tax-deductible. c) Any benefits received are taxable to the business. d) Leased equipment expenses are covered by the plan.

a) Benefits are usually limited to six months. Business Overhead Expense (BOE) insurance is sold to small business owners for the purpose of reimbursing the policyholder for business overhead expenses during a period of total disability. Premiums are tax-deductible for a business, but any benefits received are not tax-deductible. Overhead expenses, including equipment and employee salaries, are covered by the plan. Salaries and profits of the employer are not protected.

Which type of beneficiary is changeable at any point? a) Both Irrevocable and Revocable b) Tertiary c) Irrevocable d) Revocable

d) Revocable Revocable beneficiaries can be changed at any point. Irrevocable beneficiaries must give permission to the policyowner in order for the beneficiary to be changed.

All the following are Nonforfeiture options EXCEPT a) Reduced paid-up b) Interest only c) Cash surrender d) Extended term

b) Interest only Nonforfeiture values include cash surrender, extended term and reduced paid-up. Interest only is a settlement option.

Who does the sub-agent represents? a) The company b) The insured c) The agent d) The counselor

c) The agent An agent represents the company. A sub-agent represents the agent. A sub-agent cannot take or sign an application. A counselor receives a fee for advice, and can maintain a dual license as an agent and counselor.

Lucy has a major medical policy with a $500 deductible and 80/20 coinsurance. Lucy is hospitalized and sustains a $2,500 bill. What is the maximum amount that Lucy will have to pay? a) $900 (deductible + 20% of the bill after the deductible [20% of $2,000]). b) $500 (amount of deductible). c) $1,000 (deductible + 20% of the entire bill). d) $2,500 (the entire bill).

a) $900 (deductible + 20% of the bill after the deductible [20% of $2,000]). d) $2,500 (the entire bill). Lucy would first pay the $500 deductible; out of the remaining $2,000, the insurer will pay 80% ($1,600) and the insured will pay 20% ($400).

When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy? a) It is reduced to the amount of what the cash value would buy as a single premium. b) It is increased when extra premiums are paid. c) It decreases over the term of the policy. d) It remains the same as the original policy, regardless of any discrepancies in value.

a) It is reduced to the amount of what the cash value would buy as a single premium. In a reduced paid-up policy, the original policy's cash value is used as single premium to pay for a permanent policy with a reduced face amount from the original, hence the name. The new policy accumulates in cash value until its maturity or the insured's death.

Which of the following is NOT a feature of a noncancelable policy? a) The insurer may terminate the contract only at renewal for certain conditions. b) The premiums cannot be increased beyond the amount stated in the policy. c) The guarantee to renew coverage usually applies until the insured reaches certain age. d) The insured has the right to renew the policy for the life of the contract.

a) The insurer may terminate the contract only at renewal for certain conditions. The insurance company cannot cancel a noncancelable policy, nor can the premium be increased beyond what is stated in the policy. The insured has the right to renew the policy for the life of the contract; however, the guarantee to renew coverage usually only applies until the insured reaches age 65.

All of the following are true of Key Employee life insurance EXCEPT a) The death benefit is free from income taxes. b) The key employee has premiums deducted from his salary. c) The business is the owner and beneficiary of the policy. d) The key employee is the insured.

b) The key employee has premiums deducted from his salary. The business pays the premiums that are not deductible, but the death benefit is free from income taxes.

A medical expense policy establishes amount of benefit paid based on charges which fall within standard range of fees for a specific procedure by a doctor in that geographic area is known as a) Gatekeepers. b) Usual, customary and reasonable. c) Relative-value schedule. d) Benefit schedule.

b) Usual, customary and reasonable. 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.

What is a material misrepresentation? a) Any misstatement made by an applicant for insurance b) Any misstatement by the producer c) Concealment d) A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company

d) A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company A material misrepresentation is a statement that, if discovered, would after the underwriting decision of the insurance company.

Which of the following LTC Coverages would NOT encourage an insured to receive care at home? a) Respite Care b) Home Health Care c) Adult Day Care d) Residential Care

d) Residential Care Respite care, home health care, and adult day care are all coverages used to reduce the necessity of admission into a care facility.

Julie pays for her life ins annually. She has collected a nontaxable dividend check. Julie decided she would use the dividends to pay next premium. What option allows her to do this? a) Reduction of Premium option b) Dividend-to-Premium option c) Accumulation at interest d) Cash option

a) Reduction of Premium option The Reduction of Premium option allows the policyholder to apply dividends toward the next year's premium. The dividend is subtracted from the premium amount, yielding the new premium due for the next year.

An insurance contract must contain all of the following to be considered legally binding EXCEPT a) Consideration b) Competent parties. c) Beneficiary's consent d) Offer and Acceptance

c) Beneficiary's consent The four essential elements of all legal contracts are offer and acceptance; consideration; competent parties; and legal purpose.

Because an insurance policy is a contract between the insurer and the insured, it must conform to the state laws governing contracts which require all of the following elements EXCEPT a) Legal purpose. b) Offer and acceptance. c) Conditions. d) Competent parties.

c) Conditions. Conditions are part of the policy structure. Consideration is an essential part of a contract.

An applicant is denied insurance because of information found on a consumer report. Which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company? a) Consumer Privacy Act b) Conditional Receipt c) Disclosure Rule d) Fair Credit Reporting Act

d) Fair Credit Reporting Act The Fair Credit Reporting Act governs what information can be collected and how the information can be used.

A claiment wants to bring a recovery action against an insurance company for a loss claimed under a policy. The action must be brought a) Within 2 years. b) Within 3 years. c) Immediately. d) Only within 60 days.

b) Within 3 years. Some states require a provision limiting the time parameters in which a claimant may seek recovery from an insurer under a policy. Georgia requires legal action to be brought forth no sooner than 60 days and no later than 3 years after proof of loss.

Which is NOT true about uniform mandatory provisions for claims? a) Insured must give notice within 20 days. b) Insured is 2 years late in filing proof of loss, claim can be denied. c) Insured must notify insurer of claim on forms from insurer.

c) An insured must notify the insurer of a claim on forms prescribed by the insurer. If forms are not furnished, written proof of the occurrence, nature of the loss, and extent of loss must be submitted to the insurer.

In disability income coverage the policy covers the insured if he is unable to perform any job for which he is qualified. Total disability is defined as a) Own occupation - more restrictive b) Own occupation - less restrictive c) Any occupation - more restrictive d) Any occupation - less restrictive

c) Any occupation - more restrictive than other definitions. If total disability is defined as any occupation, it means the coverage will apply only if the insured cannot find any means of income whatsoever. This is more strict than own occupation, where a person merely has to prove that they cannot perform the job for which they were previously trained.

The life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the a) Insuring clause. b) Misstatement of Age clause. c) Incontestability clause. d) Reinstatement clause.

c) Incontestability clause. If an insurer wishes to contest any statements on an application, they must do so within the first two years.

Which nonforfeiture option has the highest amount of insurance protection? a) Conversion b) Decreasing Term c) Reduced Paid-up d) Extended Term

d) Extended Term The Extended Term nonforfeiture option has the same face amount as the original policy, but for a shorter period of time.

After a person's employment is terminated, it is possible to obtain individual health insurance after losing the group health coverage provided by the employer. Which of the following is NOT true? a) The employee can convert from group to individual insurance within 31 days of termination. b) The premium of the individual health insurance policy can be higher than the original policy. c) By law, the new, individual policy must provide the same benefits as the group insurance policy. d) Continuation of group coverage need not include dental, vision, or prescription drug benefits.

c) By law, the new, individual policy must provide the same benefits as the group insurance policy. Terminated employees have 31 days to convert to an individual health insurance policy, without having to provide proof of insurability. The insurer can adjust the new, individual health policy's premium as it sees fit, as long as coverage is provided. The new policy could offer lesser benefits than the original group health policy.

Which is INCORRECT concerning an MSA? a) If there is a balance at year end, employee can let it earn interest or withdraw the amount (as taxable income). b) The employee can use funds from the MSA to cover health ins deductibles during the year. c) MSAs are only available to group of 250+ employees.

c) Medical savings accounts are only available to group of 250 or more employees. Medical savings accounts are only available to groups of 50 or fewer.

The cash value under a MEC accumulates a) On an income-taxable basis. b) On a post-tax basis. c) On a tax-deferred basis. d) On a LIFO basis.

c) On a tax-deferred basis. The cash value of a Modified Endowment Contract accumulates on a tax-deferred basis. Taxation occurs only when any of the cash value is distributed to the policyowner (i.e., withdrawals and surrenders).

Carol is insured under her employer's group life insurance plan at her place of employment. All of the following statements about her coverage are true EXCEPT a) Carol would not need to prove insurability for a conversion policy. b) If Carol quits, she may, within 31 days, request that her coverage be converted to an individual policy. c) Should Carol convert her coverage, the premium will be based upon her attained age. d) Carol could choose what type of insurance her conversion policy provided (Term or Permanent).

d) Carol could choose what type of insurance her conversion policy provided (Term or Permanent). When group coverage is converted to an individual policy, the insurer will determine the type of coverage, (usually permanent insurance).

A claimant wants to bring a recovery action against an insurance company for a loss claimed under a policy. The action must be brought a) Only within 60 days. b) Within 2 years. c) Within 3 years. d) Immediately.

c) Within 3 years. Some states require a provision limiting the time parameters in which a claimant may seek recovery from an insurer under a policy. Gerogia requires legal actions to be brought forth no sooner than 60 days and no later than 3 years after proof of loss.

Which of the following would NOT be an exclusion in a long-term care policy? a) Treatment payable by Medicare b) Alcoholism c) A pre-existing condition d) Alzheimer's disease

d) Alzheimer's disease While normally mental and nervous disorders or disease are excluded in long-term care policies, Alzheimer's disease is not. The rest are all possible exclusions.

An insured needs extraordinary medical care and sells his policy to a viatical settlement company. This is an example of a) A collateral assignment b) An assigned premium c) An insurable interest d) An absolute assignment

d) An absolute assignment Absolute assignment involves transferring all rights of ownership to another person or entity, which is what happens in a viatical settlement.

Which of the following is true regarding a term health policy? a) It is conditionally renewable. b) It is guaranteed renewable. c) It is noncancelable. d) It is nonrenewable.

d) It is nonrenewable. In term health policies, the owner has no rights of renewal. He or she must purchase another policy.

Brandon is rendered totally disabled for half a year. Which type of insurance would help him pay for expenses of the company during the time of his disability? a) Business Expense Policy b) Employer's Disability Provision c) Business Disability Policy d) Business Overhead Expense Policy

d) Business Overhead Expense Policy Business Overhead Expense (BOE) insurance is sold to small business owners for the purpose of reimbursing the policyholder for various business overhead expenses during a period of total disability. Benefit payments are typically limited to one of two years. Expenses such as rent, utilities, and employee salaries are covered. The employer's actual salary and profits are not compensated under this provision.

Under the uniform required provisions, proof of loss under a health insurance policy normally should be filed within a) 30 days of a loss. b) 60 days of a loss. c) 90 days of a loss. d) 20 days of a loss.

c) 90 days of a loss. Under the Uniform Required Provisions, proof of loss under a health insurance policy normally should be filed within 90 days of a loss.

Which life policy is designed to provide the policyowner a hedge against the effects of inflation? a) Modified life b) Variable life c) Ordinary life d) Graded premium whole life

b) Variable life Because variable life policies invest in the insurer's separate accounts and allow the policyowner to choose specific investment strategies, the interest rates will fluctuate depending upon the performance of the investments. The policy value, therefore, should reflect the effects of inflation up the economy.

Teresa pays a monthly premium of $100 for her health insurance. What would be the duration of the grace period under her policy? a) 60 days b) 7 days c) 10 days d) 31 days

c) 10 days The grace period is seven days if paid weekly, 10 days if paid monthly, 31 days for all other modes.

Describe the deductible in a comprehensive major medical policy? a) There is no deductible, the insurer pays coinsurance only. b) Comprehensive major medical have deductibles on all benefits. c) Comprehensive major medical do not have deductibles. d) Policies have a corridor deductible.

d) Most policies have a corridor deductible. Most comprehensive major medical policies have corridor deductibles. The plan will provide first-dollar coverage for basic medical benefits, but a deductible may be applied to the major medical benefits.

Ron joins PPO provided by his employer. If Ron goes to a physician who is not a PPO provider, what will happen? a) PPO won't pay.. b) Ron will pay a higher deductible. c) The PPO will pay the same benefits as if Ron had seen a PPO physician. d) The PPO will pay reduced benefits.

d) The PPO will pay reduced benefits. Ron's health insurance will not pay the full amount charged by the non-PPO doctor.