Health and Life
An annuity or pure endowment contract may be reinstated within __________ from the default in premium payments, unless the cash surrender value has been paid.
1 year
Required/Mandatory Provision 'Proof of Loss' indicates that except in the absence of the insured's legal capacity, if it was not reasonably possible for the insured to provide proof of loss as required in a policy, the latest time the proof of loss may be furnished is:
1 year
for life and disability insurance guaranty association, the maximum liability for all benefits, including cash values, for any one life is
300,000
If a policyowner paid $18,000 in premiums for a policy that is cashed in for $21,000, how much of the policy's cash surrender value would be subject to federal income tax?
3000
What is a waiver of premium?
A health insurance policy includes an endorsement indicating that the insurer will allow the policy to continue in force without further premiums if the insured is totally and permanently disabled. Which endorsement is attached to this policy?
adverse selection
A high-risk person benefits more from insurance, so is more likely to purchase it. ; when risks with high probability of loss are seeking insurance more often than other risks.
an accumulation unit
An accounting measure used to determine a contract owner's interest in the separate account of a variable annuity before payments begin is called
Which of the following would NOT be permitted as a Section 1035 policy exchange?
An annuity contract exchanged for a life contract
living benefits of life insurance
Loan values Retirement income Cash withdrawals Dividends
The main purpose of the spendthrift clause contained in a settlement option is to prevent the beneficiary from doing all of the following, except:
Purchasing a new car once the claim has been settled and proceeds have been paid out according to the beneficiary designations
Guaranteed Renewable means
Renewable with adjustable premiums, by classification only
Under what circumstances do major medical policies usually provide for restoration of benefits?
Restoration usually occurs after a specified dollar amount of benefits has been exhausted and after the insured has proved insurability
4 parts of Social Security: ****
Retirement Death/Survivor Disability Medicare
Comprehensive dental plans usually provide:
Routine dental care services without deductibles or coinsurance
Normally, Blue Cross/Blue Shield makes payments for medical expenses
directly to the providers
With an immediate annuity, payments to the annuitant begin when a period has elapsed that is
equal to the period between payments
three types of agent authority
express, implied, apparent
A policyowner allows a policy to lapse, and the insurance company converts the policy to the extended term option. Which of the following from the original policy will automatically carry over into the new policy?
face value
what two elements are necessary for a life insurance contract to have a legal purpose
insurable interest and consent
reserve
interest on premiums that will allow the insurance company to meet future death claims
A SEP uses employer funded _______ accounts.
ira
The cash value of a variable life policy
is determined by the investment experience of the separate account
What type of disability income insurance pays a benefit to a business to help in the search, cost, and hiring of a replacement when an employee becomes disabled and is unable to work for the company?
key employee
Which of these is a Mandatory Uniform Provision?
legal actions
Dread disease, travel accident, vision care, and hospital indemnity policies are all examples o
limited policies
A universal life policy with a back-end load
makes a service charge when the policy is surrendered
non financial reg. activities
market conduct
Money taken out of a modified endowment contract (MEC)
may be subject to unfavorable tax rules
The Medicare home health care benefit will provide for which of the following services
medical supplies
An annuity owner can change all of the following in an annuity, except:
mortality table
Producers selling variable life insurance
must have a valid life license and must be registered with FINRA
Which is the proper term for a company owned by its policy owners?
mutual
The Lucrative Lozenge Company provides a $5,000 monthly income to retirees who served as senior executives. This benefit is not available to other retirees of the company. This is an example of a
non - qualified plan
who isn't eligible for medicare?
people with life threatening illnesses
Warren and Wilma have a joint life policy. Warren dies, and the policy pays nothing. Later on, Wilma dies and the policy death benefit is paid to the beneficiary. This is called a
survivor ship, or second-to-die, policy
One of the greatest advantages of convertible and renewable term policies is that
the insured is not required to show proof of insurability in order to renew or convert
Should an insured become totally and permanently disabled two months before the cut-off date for the waiver of premium rider
the insured remains eligible for all provisions
A producer who is acting as an agent is representing
the insurer
A deferred annuity pays a death benefit to a beneficiary
when the annuity contract owner dies before the contract is annualized
A group deferred annuity or an individual deferred annuity would be most likely used:
To fund a defined benefit plan
Which of the following is a requirement for payment of Social Security disability benefits?
Total and permanent disability for at least 5 months , Expected disability of 12 months or longer or ending in death, AND Being fully insured and disability insured
When medical expense policies do NOT state specific dollar benefit amounts but instead base payments on the charges for like services in the same geographic area, benefits are designated as which of the following?
Usual, customary, and reasonable charges
When medical expense policies do not state specific benefit dollar benefit amounts, but instead base payments upon the charges for like services in the same geographical area, benefits are designated as which of the following?
Usual, customary, and reasonable charges
Which of the following statements is NOT true concerning a coordination of benefits situation?
Where children are involved, the primary group insurer is the insurer for the parent who is oldest by age at the time of claim
Carry Over Provision
Which provision allows medical expenses from the last 3 months of a calendar year to be used during the next calendar year to meet a deductible?
The money paid by the insured to the insurance company for insurance protection is called the
consideration
Jack has a variable annuity in a separate account that has a portfolio valued at $5 million. There are 500,000 outstanding accumulation units for the account. What's the value of 1 unit?
$10
INSURANCE CONTACT PARTS (4)
1. agreement ( offer and acceptance ) 2. consideration 3. competent parties 4. legal purpose
The Commissioner of Insurance may conduct hearings regarding unfair trade practices by giving how many days' notice to the parties involved?
10 days
for life and disability insurance guaranty association, the maximum liability for cash values for any one life is
100,000
An insurance company, upon receiving proof of death, may not delay a death claim settlement beyond a period of:
2 months
A Short-Term Disability Policy generally is for a disability lasting for:
2 years
When a group plan is contributory, what percentage of employees must want and be willing to pay for coverage?
75%
Buy Sell
A ___ funded plan provides that premiums are not deductible, but benefits will be received by the business tax-free.
inside limits
A certain major medical policy states a maximum number of days for which convalescent care will be paid as well as a maximum number of X-rays that will be paid for under any one claim. These are examples of:
Speculative Risk
A chance of loss, no loss, or gain. (sports betting)
Spendthrift Clause
A clause that prevents the debtors of a beneficiary from collecting the benefits before he/she receives them.
A domiciled company
A company that is licensed to sell insurance in a particular state is
Which of the following could initiate the Accelerated Benefits Provision or Rider of a life policy?
A condition that is terminal
Rider
A form changing the provisions and attached to the policy
indeterminate premium policy offers
A low initial premium with succeeding premiums based on the company's investment return, mortality and expenses
A rollover refers to which of the following?
A transfer of funds from one IRA to another
Each of the following is a source of life insurance policy dividends, except:
A. Additional interest earnings B. Guaranteed cash value accumulations C. Reductions in operating expenses D. Savings in mortality ANWSER IS : B
All of the following statements about noncancellable policies are true, except: A The insurer may choose not to renew the policy, but only on the policy renewal or anniversary date B A noncancellable policy is also called a noncancellable and guaranteed renewable policy C The insurer may regain the right to cancel or not to renew when the insured reaches an age specified in the policy D The only right to cancel the noncancellable policy is for nonpayment of premium
A; the insurer may choose not to renew the policy, but only on the policy renewal or anniversary date
With a modified premium whole life contract, premium payments
ARE LOWER IN THE EARLIER YEARS OF THE CONTRACT
Fair Credit Reporting Act
Act that protects privacy of background information and ensures that information supplied is accurate.
indemnity rights
An indemnity contract arises when one individual takes on the obligation to pay for any loss or damage that has been or might be incurred by another individual.
The applicant, if other than the proposed insured, must have
An insurable interest in the life of the insured
Which of the following IS NOT a type of illustration under the Alabama regulation governing life insurance illustrations?
Annualized Illustration. IT is only BASIC. SUPPLIMENTAL. IN FORCE.
Distributions from a qualified retirement plan:
Are received tax-free only if they result from previously taxed contributions
Which of the following might be eligible to participate in an MSA?
Charles, who works for a small bakery with only 15 employees
With regard to life insurance policies, loading refers to
Assignment of the appropriate share of the company's operating expenses to each policy
Term insurance differs from permanent insurance in that term
Builds no cash value, pays a death benefit only ( premiums are only there to provide a death benefit to your beneficiaries if you die during a specified term )
Which of the following policies would allow the business to deduct premiums paid?
Business overhead expense insurance
Not-for-Profit HMO's are often referred to as
Consumer Cooperatives.
Some major medical policies begin with basic first-dollar coverage that pays up to its limits, then the insured must pay a certain dollar amount of expenses before the major medical portion steps in. Which of the following terms applies to the dollar amount the insured must pay between the basic policy and the major medical coverage?
Corridor deductible
In a universal life policy, the two adjustments usually made to the cash value account are
Cost of insurance protection is charged and current interest is credited
The head of the state department of insurance has all of the following powers, except:
Creating and establishing new premium rates for insurance companies operating in the state
A variable life policy
Death benefit varies to reflect the investment results of the underlying separate account, but never falls below a guaranteed minimum
Al purchases an estate builder (jumping juvenile) policy for his 5-year-old son, Donald. When Donald reaches age 21, his father presents him with the policy as a gift. Which of the following statements is NOT correct?
Donald does not have to continue to make the premium payments to keep the policy in force.
STOP LOSS is NOT used as a means to control costs because this is the part of the plan that, upon reaching the stop loss limit, the insurer pays 100% of the remaining expenses up to the policy limit.
EXAMPLE: An insured has a major medical policy with a $500 deductible, 80% coinsurance, and $1,000 Stop Loss. If the insured incurs a surgical cost of $5,500, they are responsible for the first $1,000, which represents the Stop Loss. After reaching the Stop Loss limit, the insurance company pays the remaining balance of the medical expense. The stop loss normally includes the insureds deductibles and the insured's coinsurance percentage up to the stop loss limit.
Aleatory Contract
Equal value is not given by both parties to the contract
Which of the following situations most likely calls for the purchase of term insurance?
George has 2 years of medical school to complete. He and his wife have 1 child.
The Coordination of Benefits Provision is designed to:
Give insureds as much coverage as possible while eliminating overinsurance
Which of the following waives the elimination period in a disability policy?
Hospital confinement rider
key points, BC/BS:
Is set up as not-for-profit Is government regulated Pays directly to the providers Pays on a fee for service basis Is considered to be a producer cooperative
Why should a policyowner be especially careful when deciding to increase the amount of an outstanding policy loan?
If the outstanding loan balance, plus interest, equals or exceeds the cash value of the policy, the company could cancel the insurance
An insurer can deny an otherwise valid claim under a long-term care insurance policy solely on the basis of a misrepresentation that is material to the acceptance for coverage:
If the policy has been in force for less than 6 months
Which of the following Annuities can it be said that it has 'upside potential, but no downside risk' when it comes to the stock market overall?
Indexed
Which of the following is taxable as income?
Interest paid on policy dividends
A Medicare SELECT policy differs from a regular Medicare Supplement (Medigap) policy in that it:
Is a managed care version of the traditional Medicare Supplement policy
All of the following are true regarding the States Second Injury Fund, except:
It is used to relieve the state of any burden for Workers' Compensation benefits
group disability income policies are generally
Less costly and have more liberal provisions
Which of the following is NOT one of the categories of benefits incorporated by State Workers' Compensation Laws?
LTC
medicare does not cover
LTC, custodial ADLs or IADLs care, dental care or dentures, routine foot care, hearing aids, or eyeglasses.
A Taft-Hartley Trust is established by one or more:
Labor unions or associations
The factors that determine the amount of each payment under the fixed period settlement option are:
Length of the fixed period, face amount of the policy and interest
Which of the following can be listed on a life insurance illustration?
Non Guaranteed projections
Which part of Medicare requires premium payments by most eligible participants?
Part B, Medical insurance / outpatient
Know what differentiates the 2 types of Buy-Sell agreements.
Policy ownership, the business owners own Cross Purchase. The Entity Plan is owned by the business itself.
Twisting involves which of the following?
Policy replacement
Case Management Provisions
Precertification, Mandatory Second Surgical Opinion, and Concurrent Review are provisions in health insurance policies known as:
Under Part D individuals MUST pay:
Premiums • Annual Deductibles • Co-Pays per prescription filled The national average premium for a Part D PDP is about $31 per month. There is a lifetime cumulative premium penalty of 1% per month for each month a person delays enrollment after they become eligible. he Part D beneficiary enters the "donut hole" which is a gap in coverage. During this gap, the beneficiary will receive a discount on prescription drugs but must meet an additional out-of-pocket limit. (4700)
the cost basis of a life insurance policy is __________.
Premiums paid less dividends or withdrawals
Which of the following statements about long-term care policies is CORRECT?
Present policies are more likely to pay benefits regardless of the level of care required by the insured.
If a corporation owns an annuity, what is the tax ramifications?
There is no tax deferral benefit on any earnings
Which of the following statements is NOT true about the tax treatment of Social Security?
Self-employed people must pay both the employer and the employee share of Social Security taxes B Employee paid payroll deductions for Social Security are tax deductible to the employee C Taxes to finance Social Security benefits are paid equally by employees and employers D Employers may take a tax deduction for contributing on behalf of their employees ANWSER : B
What type of disability income policies are most likely used to cover only nonoccupational disability as opposed to both occupational and nonoccupational?
Short-term disability policies
Incidental limitations refer to which of the following?
The amount of life insurance that may be included in a qualified retirement plan
Under a credit health policy, what is the maximum amount of any accidental death benefit included?
The amount of outstanding indebtedness at any given time
Medicare Part B
The part of the Medicare program that pays for physician services, outpatient hospital services, durable medical equipment, and other services and supplies.
3 parts to the entire contract:
The policy The riders Any attached papers such as the application
To what does the statement "spreading the result of financial loss created by an individual's death among many persons so the cost for each individual is small" refer?
The principle of life insurance
Convertible Term Insurance
The type of policy that can be changed from one that does not accumulate cash values to one that does is a
you MUST have a ____ in order to have a Health Savings Account (HSA).
a High Deductible Health Plan (HDHP)
The type of health insurance policy most likely used to cover all students attending a large university is known as
a blanket policy
The difference between a customer and a consumer under the Gramm-Leach-Bliley Act is that
a customer has an ongoing relationship with the insurer, whereas a consumer does not
Postmortem Dividend
a dividend earned, but not paid, in the year of the insured's death. it is payable with the death claim
The usual payment arrangement under a preferred provider organization contract is
a fee for each service
An indeterminate premium policy offers
a low initial premium with succeeding premiums based on the company's investment return, mortality, and expenses
Pure Risk
a risk that presents the chance of loss but no opportunity for gain (premature death, disability)
If a group insurance plan is noncontributory
all individuals become immediately covered after completing the probationary period
Insurable interest for life insurance is necessary only at the time of:
application
Premium payments made into a variable universal life policy
are invested in one or more investment portfolios at the policyowner's option
A universal life policy may be surrendered for its cash value
at any time
Split Dollar Plan
at death, employee ( term ) receives death benefit and employer receives cash value of plan
Employer-paid premiums for employee group health insurance are generally
both tax deductible to the employer and nontaxable to the employees
On which of the following policies would any proceeds be taxable? A A disability policy that is used to fund a buy-sell agreement B A key employee disability income policy paid for and owned by the business and the business is the beneficiary C The death benefit proceeds of an individually purchased life insurance policy paid to a beneficiary D Business overhead expense insurance
business overhead expense insurance
Medigap policies were standardized to
help consumers make informed decisions
A plan in which employees select health benefits from a variety of coverage options, based on their individual coverage needs is a:
cafeteria plan
The cash value accumulation in a life insurance policy
can be used for loans or later as retirement income
Premiums for a variable universal life policy
can vary in amount and payment schedule
The health maintenance organization concept that service providers are paid a fixed monthly fee for each member is called
capitation
extra premium charged for the waiver of premium rider does not apply to the policies ...
cash value
Permanent insurance differs from term insurance with regard to
cash value accumulation
peril
cause of loss
is issued to each individual covered by the group insurance
certificate of insurance
If an insured currently has a policy with a waiver of premium rider and should change to a more hazardous occupation, the insurance company will
continue, do not raise.
The main benefit of 501(c)9 trusts is:
contributions can be deducted immediately
George, who has a group policy, may, upon leaving his place of employment
convert it to permanent insurance without proof of insurability, within a specified period
domiciles
foreign, domestic, alien (different country)
Each of the following would be found in the insuring clause of an insurance policy, except
general info about the insured
The current rate of interest paid to the cash value account of a universal life policy consists of
guaranteed interest plus excess interest
An insured with an individual LTC policy is deducting the premiums he is paying for the plan on his income taxes. Once he begins to receive benefits from this plan, what will be the tax consequences on this income?
not taxable
Under an annuity with a Joint Life Payment Option, what will the survivor receive upon the death of the first annuitant?
nothing
What must an individual have to do to begin receiving Medicare Part A ( HOSPITAL INSURANCE ) benefits? benefit period begins first day of hospitalization. days 1-60. benefit period ends after patient out of hospital or skilled nursing facility for 60 consecutive days. 60 life time reserves pay - after day 90. if discharged to a skilled facility- medicare will pay 100% for 20 days if you have been hospitalized for 3 days.
nothing. covers some or all of cost of hospitalization. DOES NOT COVER PHYSICIANS
Mutual Insurance Company
owned by policyholders
An annuitant has a temporary annuity certain and dies shortly after the payments start but before the certain period of 10 years has elapsed. Benefit payments will now typically be
paid to the beneficiary for the rest of the certain period
three types of hazards ( chance of loss )
physical , moral ( conceal health info , morale ( docent lock doors to house when gone)
Once a policy has lapsed, the insured usually can reinstate the policy, provided proof of insurability is shown, if all back premiums due
plus interest have been repaid and fewer than 3 years have elapsed
With a 401(k) plan, employee contributions to the plan
pre tax basis
If an insured pays a premium that is lower than others that are in the same class, this insured is considered to be rated as?
preferred
Which of the following classification of risks would typically have the lowest premium payment?
preferred risks
which of the following classifications of risks and premiums
preferred risks
A flexible premium annuity provides for a flexible______
premium payment amount
- Insurer is fined up to 3 times the ______ paid for accepting business from a non-licensed producer. - Producer is fined up to 3 times the ______ paid for violating this regulation.
premiums and commissions
An annuity is a contract that
provides a lifetime income through periodic payments to the annuitant
The benefits of an individual disability income policy are
received tax free and generally limited to a percentage of monthly income
Paul dies before his annuity has paid out an amount at least equal to the purchase price of the annuity, so Paul's beneficiary continues to receive annuity payments until that amount has been reached. This type of annuity is a
refund life
The type of annuity that guarantees to pay total income at least equal to the purchase price of the contract is a
refund life
A limited pay life policy
requires premium payments for a specified number of years or until a specified age is reached
Waiver of Premium Rider
should the owner be disabled and cant earn an income, after 6 months, all premiums will be paid by the insurer during the disability period; After 6 months, the premiums will be repaid
Insurable Interest
something of value that, if lost, would cause you financial harm
Whole Life Insurance Policy
the cash value is greatest at the end of the policy period, and the insurance protection is greatest at the start of the policy. endows at age 100. - lowest premium.
In health maintenance organizations, the use of a primary care physician, or PCP, is common as part of
the gatekeeper system
In group insurance, the evidence of a contract between the insurer and the employer or association is:
the policy
Refund Life Annuity
the type of annuity that guarantees to pay total income at least equal to the purchase price of the contract is a:
permanent policies are required to have some cash value by end of
third year
The type of annuity in which the values grow according to the performance of the investment medium, and in which benefits may fluctuate according to market performance, is called a
variable annuity
When Jonas died, it was discovered that he was actually 6 years older than he had claimed when applying for an insurance policy. As a result of this discovery, the insurance company
will pay only the amount of insurance that Jonas' premiums would have purchased at his correct age
In a universal life policy, the death benefit remains at the policy face value amount
with the Option 1 death benefit option
The head of the state department of insurance has all of the following powers EXCEPT
writing and approving state laws related to insurance
An applicant who fails two examinations for the same line of authority must wait ______ to take another examination for that line of authority.
3 months
Required Provision 'Reinstatement' addresses reinstatement of a lapsed policy. According to this provision, when an insured applies for reinstatement and receives a conditional receipt, how long does the insurer have to approve or deny reinstatement before the policy will be automatically reinstated?
45 days from the date of the conditional receipt
A Medicare supplement policy may not limit benefits for losses incurred more than ________ from the effective date of coverage because they involve a preexisting condition.
6 months
An insurer may reserve the right to defer the payment of a cash surrender value for up to _________ months after demand is made and the policy is surrendered.
6 months
The waiver of premium rider normally expires at age:
60
how long the insurer has to provide a death settlement payment upon receiving proof of death.
60 days
Which of the following is not true of Medicare Part B? A It is optional coverage for those eligible for Part A B Provides coverage for outpatient services C All recipients pay a monthly premium D All retirees are automatically covered
all retirees are automatically covered
The nonforfeiture option that provides the most life insurance protection is the
extended term option
To make insurance more affordable and protect the insurance company from paying out too much in claims, insurers will
reinsure the risk