Insurance

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?

"Own occupation" - less restrictive than other definitions

An employee quits her job where she has a balance of $10,000 in her qualified plan. If she decides to do a direct transfer from her plan to a Traditional IRA, how much will be transferred from one plan administrator to another and what is the tax consequence of a direct transfer?

$10,000, no tax consequence

A noncontributory group disability income plan has a 30-day elimination period and offers benefits of $2,000 a month. If an employee is unable to work for 7 months due to a covered disability, the employee will receive

$12,000, all of which is taxable.

What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act?

$2500

What is the maximum amount that the Nevada Life & Health Insurance Guaranty Association may be obligated to pay with respect to life insurance death benefits for one life?

$300,000

What is the typical deductible for basic surgical expense insurance?

0$

A life producer applying for a viatical settlement broker license may be exempt from the prelicensing education and examination requirement if the producer has held an active life license for at least how many years?

1 year

A producer who has allowed his or her license to lapse may reinstate the license without retaking the examination within what maximum time period?

12 months

The Commissioner must give reasonable notice to all interested parties as to the time, place and purpose of a hearing within the minimum of how many days of the hearing?

20 days

A Medicare supplement must have a free look provision of at least

30 days

How soon from the delivery of a Medicare Supplement policy may the insured return it for a full refund?

30 days

In the event a policy lapses due to nonpayment of premium, within how many days would the policy be automatically reinstated once the outstanding premium is paid?

45 days

Once the person meets the stringent requirements for disability benefits under Social Security, how long is the waiting period before any benefits will be paid?

5 months

To attain currently insured status under Social Security, a worker must have earned at least how many credits during the last 13 quarters?

6

For how long is an insurance company allowed to defer policy loan requests?

6 months

What is the waiting period on a Waiver of Premium rider in life insurance policies?

6 months

How many days after the death of an insured does an insurer have to pay group life insurance policy benefits?

90 days

An insured pays a monthly premium of $100 for her health insurance. What would be the duration of the grace period under her policy?

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 of the following riders would NOT increase the premium for a policyowner?

The impairment rider excludes a specified condition from coverage, therefore, reducing benefits. An insurance company will not charge extra for a rider that reduces benefits.

Who bears all of the investment risk in a fixed annuity?

The insurance company

Which of the following provides coverage on a first-dollar basis?

A basic expense policy will provide coverage on a first-dollar basis (no deductible). After the limits of the basic policy are exhausted, the insured must pay a corridor deductible before the major medical coverage will pay benefits.

A client has a new individual disability income policy with a 20-day probationary period and a 30-day elimination period. Ten days later, the client breaks their leg and is off work for 45 days. How many days of disability benefits will the policy pay?

A probationary period refers to the amount of time that coverage is not available for illness-related disabilities, so it would not apply to a broken leg. The elimination period, however, is the time that must elapse between the onset of the disability and when benefits will start being paid. In this case, the individual is considered disabled for 45 days, and the benefits will start to be paid after 30 days. So, the client will receive benefits for 15 days.

Disability income policies can provide coverage for a loss of income when returning to work only part-time after recovering from total disability. What is the benefit that is based on the insured's loss of earnings after recovery from a disability?

A residual disability will pay an amount to make up the difference between what the insured would have earned before the loss.

Under the 401(k) bonus or thrift plan, the employer will contribute

An undetermined percentage for each dollar contributed by the employee.

The LEAST expensive first-year premium is found in which of the following policies?

Annually Renewable Term

A Universal Life Insurance policy is best described as a/an

Annually Renewable Term policy with a cash value account.

Which of the following actions by an insurance company will cause an examination by the Commissioner?

Application for an initial Certificate of Authority.

Employer contributions made to a qualified plan

Are subject to vesting requirements. Qualified plans must have a vesting requirement.

An individual is insured under his employer's group Disability Income policy. The insured suffered an accident while on vacation that left him unable to work for 4 months. If the disability income policy pays the benefit, which of the following would be true?

Benefits that are attributable to employer contributions are fully taxable to the employee as income.

What does "liquidity" refer to in a life insurance policy?

Cash values can be borrowed at any time.

Which of the following is issued by the state Department of Insurance to show that the insurer has power to write insurance contracts in that state?

Certificate of Authority

Which of the following must an insurer obtain in order to transact insurance within a given state?

Certificate of authority

When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is

Conditional.

Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as

Contracts of adhesion.

The gatekeeper of an HMO helps

Control specialist costs.

What happens when a policy is surrendered for its cash value?

Coverage ends and the policy cannot be reinstated.

A Health insurance policy lapses but is reinstated within an acceptable timeframe. How soon from the reinstatement date will coverage for accidents become effective?

Coverage for accidents is immediate when reinstatement occurs, but coverage for sickness may have a waiting period of about 10 days.

What is another name for interest-sensitive whole life insurance?

Current assumption life

The death benefit in a variable universal life policy

Depends on the performance of a separate account.

Social Security disability definition includes all of the following EXCEPT

Disability expected to last for at least 6 months. - has to be 12

In a disability policy, the probationary period refers to the time

During which illness-related disabilities are excluded from coverage.

Concerning group Medical and Dental insurance, which of the following statements is INCORRECT?

Employee benefits are tax deductible the year in which they were received.

All of the following statements are true regarding tax-qualified annuities EXCEPTa)Withdrawals are taxed.b)Employer contributions are not tax deductible.c)Annuity earnings are tax deferred.d)They must be approved by the IRS.

Employer contributions are not tax deductible.

What does "level" refer to in level term insurance?

Face amount

If an insured is not required to pay a deductible, what kind of coverage does he/she have?

First dollar

All of the following are dividend options EXCEPTa)Reduction of premium.b)Paid-up additions.c)Fixed-period installments.d)Accumulated at interest

Fixed-period installments is a settlement option, and not one of the dividend options.

wo attorneys operate their practice as a partnership. They want to start a program through their practice that will provide retirement benefits for themselves and three employees. They would likely choose

HR-10 (Keogh Plan).

Fixed annuities provide all of the following EXCEPT

Hedge against inflation

A partnership buy-sell agreement in which each partner purchases insurance on the life of each of the other partners is called a

In a Cross-Purchase Plan each partner involved purchases insurance on the life of each of the other partners. With a cross-purchase plan, each partner is the owner, premium-payor, and beneficiary of the life insurance on the lives of the other partners. The amount of the life insurance is equal to each partner's share of the purchase price of the deceased partner's interest in the business.

The Patient Protection and Affordable Care Act includes all of the following provisions EXCEPT

Individual tax deduction for premiums paid.

Which of the following is NOT true of a major-medical health insurance policy?

It is designed to pay on a first dollar of expense basis.

In a group health policy, a probationary period is intended for people who

Join the group after the effective date.

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?

Level term

What are the "living benefits" of whole life insurance?

Loan values and retirement income

In a Disability Income policy, all of the following are considered presumptive disabilities EXCEPT

Loss of one eye.

On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are

Not taxable since the IRS treats them as a return of a portion of the premium paid.

Medicare Part A services do NOT include which of the following?

Outpatient Hospital Treatment

Which of the following provisions would prevent an insurance company from paying a reimbursement claim to someone other than the policyowner?

Payment of Claims

Presumptive Disability

Presumptive Disability plans offer full benefits for specified conditions. These policies typically require the loss of at least two limbs (Loss of use does not qualify in some policies.), total and permanent blindness, or loss of speech or hearing. Benefits are paid, even if the insured is able to work.

Which of the following answers does NOT describe the principal goal of a Preferred Provider Organization?

Provide medical services only from physicians in the network

Shelia has an embolism in her brain. After a week-long hospitalization and subsequent bed rest, she is allowed to work again. Three months later, she develops a second brain embolism. Which provision would determine whether a new set of benefits would cover the second embolism?

Recurrent Disability Provision

Which provision states how much time must pass between two like illnesses in order for the second one to be covered under a new set of benefits?

Recurrent Disability Provision

Which nonforfeiture option provides coverage for the longest period of time?

Reduced paid-up

An insured committed suicide 6 months after his life insurance policy was issued. The insurer will

Refund the premiums paid.

Which health insurance provision describes the insured's right to cancel coverage?

Renewal provision

The owner of a viatical settlement contract rescinds the contract 5 days after receiving the payment, and then unexpectedly dies 2 days later. This life settlement contract is considered to be

Rescinded, subject to repayment of the life settlement proceeds.

Which of the following would be considered a nonqualified retirement plan?

Split-dollar plan

Children's riders attached to whole life policies are usually issued as what type of insurance?

Term

Nonforfeiture values guarantee which of the following for the policyowner?

That the cash value will not be lost

An employee becomes insured under a PPO plan provided by his employer. If the insured decides to go to a physician who is not a PPO provider, which of the following will happen?

The PPO will pay reduced benefits.

A 60-year-old participant in a 401(k) plan takes a distribution and rolls it over to an IRA within 60 days. Which of the following is true?

The amount of the distribution is reduced by the amount of a 20% withholding tax.

Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy?

The business cannot take a tax deduction for the expense of the premium. However, if the key employee dies, the benefits paid to the business are usually received tax free.

Which of the following definitions would make it easier to qualify for total disability benefits?

The more liberal "own occupation"

Which of the following statements is correct regarding a whole life policy?

The policyowner is entitled to policy loans.

Under an extended term nonforfeiture option, the policy cash value is converted to

The same face amount as in the whole life policy.

How are contributions to a tax-sheltered annuity treated with regards to taxation?

They are not included as income for the employee, but are taxable upon distribution.

Assuming that all of the following people are covered by a High Deductible Health Plan and are not claimed as dependents on anyone's tax returns, which would NOT be eligible for a Health Savings Account?

To be eligible for a Health Savings Account, an individual must be covered by a High Deductible Health Plan (HDHP), must not be covered by other health insurance except for specific injury, accident, disability, dental care, vision care, or long-term care insurance, must not be eligible for Medicare (usually age 65), and can't be claimed as a dependent on someone else's tax return.

Hospice care is intended for

Under certain conditions, hospital insurance can help pay for hospice care for terminally ill insureds, if the care is provided by a Medicare-certified hospice.

An insured and his wife are both involved in a head-on collision. The husband dies instantly, and the wife dies 15 days later. The company pays the death benefit to the estate of the insured. This indicates that the life insurance policy had what provision?

Under the Uniform Simultaneous Death Law, Common Disaster provision, the law will assume that the primary beneficiary dies first in a common disaster as long as the beneficiary dies within this specified period of time following the death of the insured (usually 30 days). This provides that the proceeds will be paid to either the contingent beneficiary or the insured's estate, if no contingent beneficiary is designated.

An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have?

Universal Life policies allow for policyholders to withdraw a limited portion of the policy's cash value. Each withdrawal, however, is usually charged, and the amount and frequency of withdrawals are usually limited.

Which of the following types of policies allows the policyowner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount?

Universal life

Which type of life insurance policy allows the policyowner to pay more or less than the planned premium?

Universal life

Which of the following is a key distinction between variable whole life and variable universal life products?

Variable whole life has a guaranteed death benefit.

Social Security Supplement (SIS) or Social Security Riders would provide for the payment of income benefits in each of the situations below EXCEPTa)When used to replace or supplement benefits payable under other social insurance programs.b)When the insured is eligible for Social Security benefits but before the benefits begin.c)If the insured has been denied coverage under Social Security.d)When the amount payable under Social Security is more than the amount payable under the rider.

When the amount payable under Social Security is more than the amount payable under the rider.

The benefits for individual disability plans are based on

a flat amount

The president of a manufacturing company has offered one of the company's officers a special individual annuity plan that is unavailable to lower-echelon employees. This plan would be funded with before-tax corporate dollars, and it does not meet government approval standards. This annuity plan is

a non qualified annuity plan

SIMPLE Plans require all of the following EXCEPT

at least 1000 employees

An individual has been making periodic premium payments on an annuity. The annuity income payments are scheduled to begin after 1 year since the annuity was purchased. What type of annuity is it?

deferred

In health insurance, if a doctor charges $50 more than what the insurance company considers usual, customary and reasonable, the extra cost

is not covered

Variable Whole Life insurance is based on what type of premium?

level fixed

Which of the following settlement options in life insurance is known as straight life?

life income

An insured is involved in a car accident. In addition to general, less serious injuries, he permanently loses the use of his leg and is rendered completely blind. The blindness improves a month later. To what extent will he receive Presumptive Disability benefits?

no benefits - Presumptive Disability plans offer full benefits for specified conditions. These policies typically require the loss of use of at least two limbs, total and permanent blindness, or loss of speech or hearing. Benefits are paid, even if the insured is able to work. Because the insured's blindness was only temporary and the loss of use in only 1 leg, he does not qualify for presumptive disability benefits.

Which of the following explains the policyowner's right to change beneficiaries, choose options, and receive proceeds of a policy?

owners rights

Which type of retirement account does not require the owner to start taking distributions at age 72?

roth ira

Which of the following is TRUE of a qualified plan?

t has a tax benefit for both employer and employee.

Your client wants to know what the tax implications are for contributions to a Health Savings Account. You should advise her that the contributions are

tax deductible

The primary beneficiary of her husband's life policy found that no settlement option was stated in the policy on the date of her husband's death. Who will select the settlement option in this case?

the beneficiary

What is the purpose of establishing the target premium for a universal life policy?

to keep the policy in force

An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have?

universal life

What is the timeframe for filing relevant Suspicious Activity Reports?

within 30 days of initial discovery