Life & Health
Waiver of premium rider
- prevent policy from lapsing for nonpayment of premium - if total disabled, relieved from paying premium (waiting period 90 days - 6 months, then refunded premiums) - Expires at specified age
AD&D Exclusions - will not cover
- sickness - injury while under drug/alcohol - occupational injuries ( covered by Work Comp) - loss of use of a limb, must be dismembered for coverage - loss of hearing - digits of toes & fingers
In an irrevocable beneficiary policy, the policy owner can't change
- the beneficiary - make a loan or cash surrender
An insured's consideration consists of the first premium payment, answers to the questions on the application to the best of their knowledge (representations), and the insured's signature on the application.
- the first premium payment, - answers to the questions on the application to the best of their knowledge (representations), - and the insured's signature on the application.
Settlement Options - Ways life insurance beneficiaries receive the death benefits
1. Lump-sum cash: one time whole amount 2. Interest-only: interest only for a period, then other options 3. Fixed-period: equal amount at regular intervals over fixed period 4. Fixed-amount: fixed amount as long as it lasts 5. Life income: guaranteed income for life
Traditional whole life policy types
1. Straight life : level premium, lowest cost in the long run
Types of annuities
1. single-premium; one time, tax-deferred interest 2. level premium: pays level amount 3. flexible premium: pays in whatever amount 4. immediate: pay-out right away 5. fixed: guaranteed rate of return, investment risk to insurer 6. variable: investment risk to annuitant, security license to sell 7. indexed: fixed, guaranteed principal & interest
When a corporation establishes a noncontributory Group Term contract, what percentage must be met for participation?
100%
Grace period for industrial life insurance
28 days
Grace period for individual life insurace & annuity
30 days
Grace period for group life insurance
31 days
If an insurance company fails to notify an applicant that a reinstatement application was not approved, insurance will be placed back in force within how many days?
45
For how long is insurer required to make Cash surrender available for industrial insurance ?
5 years
For how long do insurers can postpone payment of cash surrender after policyowners request payment of cash surrender?
6 months after policyowners request payment of cash surrender
How many days must an insured wait after submission of Proof of Loss before taking legal action against an insurance company
60
When a corporation establishes a contributory Group Term contract, what percentage must be met for participation?
75%
Which of the following would normally be classified as earned income for the purpose of calculating Disability Income benefits? I. Income from real estate holdings II. Income from stocks and bonds ANeither I nor II BI only CBoth I and II DII only
A, Neither I nor II Only "earned" income from your job is insurable on a Disability Income policy. Rental income, dividends and interest are unearned and you will continue to receive them even if you are disabled.
A client, who is a self-employed stockbroker, bought an Individual Disability Income policy that will pay him $1,500 a month. If he becomes disabled for one year, how much will be taxable: A0 B$18,000 C$12,000 D$9,000
A. 0 The question is about an Individual Disability Income policy, which insures the insured net income. Net income is not taxable!
In order to qualify for disability under Social Security, you must be expected to die or be disabled at least how long? A12 months B5 months C6 months D90 days
A. 12 months In order to qualify for disability under OASDHI, you must have contributed to Social Security for 40 quarters (fully insured status), you must be expected to die from your disability or be disabled at least 12 months. The "waiting period" on this policy is 5 months. Benefits begin in the sixth month.
The maximum probationary period on Long Term Care insurance is: A6 months B24 months C3 months D12 months
A. 6 months
Which of the following types of policies would you most likely purchase to cover your medical expenses when you are in between jobs? AAn Interim policy BA Point of Service plan CA Disability Income policy DA Critical Illness plan
A. An Interim policy
On a Disability Income policy, the waiting period or elimination period starts: AAt the onset of sickness or accident BAt the end of the probationary period COn the date of application DWhen the policy is delivered
A. At the onset of sickness or accident
Which of the following statements about the application form and the role of the producer in A&H insurance is/are true? I. In underwriting applicants, the producer must understand the importance of a moral hazard II. Problems with claims may occur because the producer failed to include all of the facts on the application form A. Both I and II B. I only C. Neither I nor II D. II only
A. Both I and II
Major Medical insurance is different than a Basic plan of Health insurance in that a basic plan: AHas no deductible BPays usual & customary charges CHas co-insurance DHas less limitations
A. Has no deductible Major Medical insurance has both a deducible and co-insurance. Major Medical offers coverage both in and out of the hospital. The Basic plan has coverage that is first dollar coverage (the insurer pays first), this is known as the inside limit. It has limited hospital coverage.
Sam has Life insurance on his own life with his mother as the beneficiary. When Sam gets married, he assigns the ownership in his policy to his wife, who makes no other changes. When Sam dies, the money will go to: AHis mother BHis wife CHis estate DHis heirs
A. His mother making a policy assignment transfers the owner's right, but in and of itself does not change who the beneficiary is.
The insuring clause in a life insurance policy states which of the following? I. The location where the application was completed II. The promise that the insurance company will pay benefits in accordance with the terms of the policy AII only BI only CNeither I nor II DBoth I and II
A. II only
Which of the following statements about group A&H provisions and practices is/are true? I. Insurance company practices are generally less liberal under Group policies than under Individual policies II. Experience rating is generally utilized under Group policies AII only BI only CNeither I nor II DBoth I and II
A. II only
A client purchased Major Medical from you last month and would now like to add AD&D coverage. As a producer, you should: AMeet with the client personally and have them complete the application BUse the information you already have on file to complete the application CComplete by telephone, signing the client's name DMail out the new application, making it effective upon return
A. Meet with the client personally and have them complete the application
Under the Time Payment of Claims provision, insurers must send out checks to insureds that are totally disabled at least: AMonthly BSemi-annually CWeekly DQuarterly
A. Monthly
Which of the following is not true regarding Equity-indexed Annuities? AProducers must also have a FINRA or NASD license BThey have a guaranteed minimum rate of return CThey are designed to keep up with inflation DTheir performance is usually linked to the S&P 500 stock index
A. Producers must also have a FINRA or NASD license
If an insured has a PPO plan and sees a doctor outside the network, what will happen? AReduced payment of claim BDenial of claim CFull payment of claim DPolicy is voided
A. Reduced payment of claim
A doctor, who was totally disabled, goes back to work making only 50% of his former earnings due to his disability. His policy will continue to pay his loss if he has what type of disability coverage:
A. Residual
Upon continuation of group coverage, the employer must give the employee info regarding all, EXCEPT: ASummary of group coverage BPremium payments schedule CWhere to pay premium DNew premium amount
A. Summary of group coverage Given the fact the employee is still covered by the same group, it is not necessary to give the employee another summary of the group coverage. It is required, when an employee elects to stay in the group, that the employee be told the new premium amount, when the premium payment is due and where to pay the premium.
Consideration for the insured consists of the answers to the questions on the application and which of the following? AThe first premium BAll premiums CThe free look DThe contract
A. The first premium Consideration for the insured consists of the answers to the questions on the application, which are called representations, as well as the first premium paid. In order for coverage to exist the client must pay the first premium payment. All premiums are not required to be paid in order for the client to have fulfilled the consideration clause.
All of the following are correct regarding the insurer conducting an autopsy, EXCEPT: AThe insurer can always conduct an autopsy BThe insurer can conduct an autopsy, unless forbidden to do so by law CAn autopsy is sometimes necessary to determine cause of death DInsurers have the right to conduct an autopsy, most of the time
A. The insurer can always conduct an autopsy
If an insurer issues a policy based upon an incomplete application, which of these statements is CORRECT: AThey have waived some of their rights under the incontestability clause BThey have issued a contract of adhesion CThey maintain all of their rights under the incontestability clause DThey have issued a unilateral contract
A. They have waived some of their rights under the incontestability clause
To which of the following may an insurer disclose an applicant's MIB information? ATo the applicant's doctor BTo the applicant's son CTo the producer DTo the local newspaper
A. To the applicant's doctor
Your client owns Life insurance on his daughter. He has added the Payor Benefit rider to this policy. When does this rider expire? AWhen the child reaches age of majority, 18 or 21 BWhen the payor dies CWhen the child is 100 DThen the child graduates from high school
A. When the child reaches age of majority, 18 or 21
On Health insurance, if the insured has a claim in the grace period and the premium has not been paid, which of the following statements would be correct? AOverdue premiums will be subtracted from amount paid BThe insurer will pay the claim in full CThere is no coverage DThe insurer will pay the claim, if the insured pays the premium first
AOverdue premiums will be subtracted from amount paid
A Life insurance rider that allows a terminally ill client to obtain part of his death benefit while he is still living is called:
Accelerated Benefits rider
Corporate owned life insurance proceeds may be used for the following purposes: I. To find, replace, and train a new employee or executive II. To fund other corporate debt obligations III. To redeem the deceased employee's stock
All of the above
A client wants his spouse to receive monthly payments from his policy when he dies, and then his children to receive the face amount of the policy when she dies. He should select which of the following settlement options? ALump sum cash BInterest option CFixed period DFixed amount
B, Interest option She can get some monthly income in the meanwhile. The only payout option that preserves the face amount of the policy until some point in the future is to choose the interest option. The interest on the face amount is paid out monthly to the wife, and the interest is taxable. When she dies, the kids will get the face amount of the father's policy.
Workers' Compensation provides what type of coverage? ANon-occupational coverage BOccupational no-fault coverage CNo fault, non-occupational coverage DCoverage only if the worker was injured, accidentally, at work
B, Occupational no-fault coverage No fault means that it doesn't matter if the worker was ignoring the safety procedures or following them, the worker is covered no matter what. Workers' Compensation will not cover self-inflicted injuries.
If the insured changed to a less hazardous occupation, the insurer will: ADeny coverage BRefund unearned premium on a pro rata basis CPay a greater benefit DDo nothing
B, Refund unearned premium on a pro rata basis
A client buys AD&D with a $10,000 principal sum and a $5,000 capital sum. He dies in a plane crash 2 years later. How much will the policy pay? A$15,000 B$10,000 C$7,500 D$5,000
B. $10,000 AD&D has two parts. -The principal sum: paid if the insured dies in an accident. - The capital sum: paid for dismemberment. Never add these two numbers together!
The USA PATRIOT Act, which is designed to help detect money laundering and the international financing of terrorism, requires that a currency transaction report being filed with FinCEN for each wire financial transaction over which amount? A$10,000 B$3,000 C$2,000 D$9,000
B. $3,000 the USA PATRIOT Act requires that a currency transaction report be filed with FinCEN for each wire financial transaction over $3,000. If the question did not specifically mention "wire transaction", the best answer in that case would have been $10,000.
When buying a new individual Medical Expense policy, the maximum probationary period is which of the following? A30 days B1 year C2 years D10 days
B. 1 year
blic school employees are uniquely eligible for: AKeogh plans B403b TSAs CIRA D401ks
B. 403b TSAs Internal Revenue Code 403b describes the TSA (Tax Sheltered Annuity) that is available for public school employees, including teachers. It is a type of qualified plan.
Automatic Premium Loan is not available on which of the following types of Life insurance policies: ATraditional Whole Life B5 year Level Term C20 Pay Life DLife Paid-Up at age 65
B. 5 year Level Term term life has no cash value, so there is no loan
Multiple indemnity is associated with which rider? AWaiver of Premium BAccidental Death Benefit CGuaranteed Insurability DPayor Benefit
B. Accidental Death Benefit
How are benefits usually stated in a Hospital Expense policy? I. Daily Room and Board benefits are expressed as a stated amount per day with a maximum number of days paid II. Miscellaneous Expense benefits are expressed as a multiple of the Daily Hospital benefit AI only BBoth I and II CII only DNeither I nor II
B. Both I and II
Which of the following statements about Accidental Death coverage in Life insurance is/are true? I. It does not increase the non-forfeiture values of the basic policy or the dividends under a participating policy II. Benefits are payable when the death of the insured is the result of an accident A. Neither I nor II B. Both I and II C. I only D. II only
B. Both I and II The ADB (Accidental Death Benefit) rider pays double or triple indemnity if the insured dies as a result of an accident. Death < 90 days of the accident or it is termed to be from natural causes and only single indemnity is paid. The extra premium charged for this rider does not go toward cash-value accumulation and it must be shown separately from the Life insurance premium. It has nothing to do with the amount of dividends that a policyholder, who has a "participating" policy, may receive. A participating policy is one issued by a mutual insurance company; dividends paid out by mutual insurance companies are considered to be a return of overpayment of premium in the first place and therefore not taxable according to the IRS.
All of the following are true about Traditional IRAs, EXCEPT: A. Anyone with earned income can have an IRA B. Distributions must begin at age 65 1/2 C. Contributions must cease by age 70 1/2 D. Cash distributions prior to age 59 1/2 are subject to a 10% penalty
B. Distributions must begin at age 65 1/2 distributions must begin by no later than April 1st of the year after you turn 70 1/2. If you don't begin distribution you will be subject to an IRS penalty of 50% of the required minimum distribution amount.
Which non-forfeiture provision gives the insured the most protection? APaid-up Additions BExtended Term CAutomatic Premium Loan DReduced Paid up
B. Extended Term term policy with the same face amount
Which of the following statements about a Waiver of Premium provision in a Whole Life policy written on a standard risk is/are true? I. It increases the policy's cash value II. It must be continued by the insurance company when the insured changes from a low-hazard to a high-hazard job A. Neither I nor II B. II only C. Both I and II D. I only
B. II only
Which of the following provides coverage for Long Term Care (LTC)? AAid to dependent children BMedicaid CMedicare DSocial Security Disability Income benefits
B. Medicaid
Adjusting the premium for service fees is permitted under the: AAssignment provision BMode of Payment provision CAutomatic Premium Loan provision DReinstatement provision
B. Mode of Payment provision The more often an insured pays the premium, the more expensive it is because the insurer will charge service fees for handling the premium payment.
A life policy that is guaranteed to have $480 of cash value per $1,000 of face amount in the 20th year is what type of policy: AIncreasing Term BStraight Whole Life CVariable Life DUniversal Life
B. Straight Whole Life premium is fixed
Which of the following Life insurance contracts has a fixed premium? AAdjustable Life BVariable Life CUniversal Life DVariable/Universal Life
B. Variable Life
Which of the following Life insurance contracts has a fixed premium? AAdjustable Life BVariable Life CUniversal Life DVariable/Universal Life
B. Variable Life Universal Life has a flexible premium, allowing the insured to debit the cash value to pay the premium. Adjustable Whole Life is sold to clients with fluctuating incomes, allowing the insured to pay in less or more as necessary. Variable Life has a fixed premium. What is variable is the rate of return that is earned in the separate account. Variable/Universal Life has a flexible premium like Universal Life.
A client wants cash value Life insurance with a flexible premium and an adjustable death benefit that will allow him to self direct where the cash value is invested in the separate account. He should buy: AVariable Life BVariable/Universal Life CVariable Annuity DTraditional Whole Life
B. Variable/Universal Life
An agent sends a completed application along with the check for the initial premium to the underwriter, who notices that the applicant forgot to sign the check. When does coverage begin? AWhen the company received the application and unsigned check BWhen the agent delivers the policy and picks up a new check along with a statement of continued good health CThe date of the conditional receipt DOn the day the application was filled out
B. When the agent delivers the policy and picks up a new check along with a statement of continued good health
Which of the following regarding Universal Life is INCORRECT? AA corridor of protection must be maintained under tax regulations BWhen the cash value is used to pay the premium, a loan is created CIt has a minimum guaranteed rate of interest on cash value accumulation DInsured has a choice of two types of death benefits
B. When the cash value is used to pay the premium, a loan is created On a Universal Life policy, so long as the premium associated with death benefit Option A, the Term Insurance side of the equation pays the full face amount. Anytime the insured would like to debit the cash value to pay the premium, they may, this is not a loan. There are two death benefit options, A and B. If the cash value grows too quickly, the policy becomes a MEC (Modified Endowment Contract), which is a tax category created by the IRS, where the insurance policy loses its tax benefits.
Survivorship Life is often purchased to: AProvide money for kids BHelp with estate planning CFund a retirement DProvide money for the spouse
BHelp with estate planning
Insurance may be considered to be in force when the: AProposed insured signs an application and a medical examiner acceptable to the insurance company completes an examination of the proposed insured BInsurance company mails a policy to the producer and the producer delivers it to the proposed insured and collects the first premium CAgency manager deposits the initial premium check into an escrow account DProducer completes the application and the proposed insured signs it
BInsurance company mails a policy to the producer and the producer delivers it to the proposed insured and collects the first premium
If you are worried about the possible total disability of your business partner, you should purchase a:
Business Disability Buyout policy
All are true about Medicare Supplement policies, EXCEPT: AThey have a 30-day free look BThey have a 6-month probationary period CThey have a 12-month probationary period DYou may never sell a client more than one Medicare Supplement policy
C, They have a 12-month probationary period 6 months
What type of insurance contract is measured in units? ADeferred Annuity BImmediate Annuity CVariable Annuity DFixed Annuity
C, Variable Annuity
In the absence of fraud, Health insurance policies are incontestable after: A1 year B5 years C2 years D3 years
C. 2 years
An optionally renewable policy is renewable: A.If a physical exam is passed B. Must be renewed C. A.t the option of the insurer D. At the option of the insured
C. A.t the option of the insurer
Which of the following statements is correct concerning the Guaranteed Insurability Rider: AIt is free BIt is offered to your over age 60 clients CAllows coverage to be increased without a physical DAllows coverage to be increased with a physical
C. Allows coverage to be increased without a physical
Which of the following statements is incorrect? A.As a health producer you may collect an application and not collect the initial premium B, As a health producer you are the front-line underwriter and must sign the application C. As a health producer you will be able to bind an applicant's coverage D. As a health producer you may give out a conditional receipt
C. As a health producer you will be able to bind an applicant's coverage Health insurance producers never are able to bind coverage. Binding coverage is only done on Property and Casualty policies.
Which of the following statements about Group Disability Income benefit schedules is/are true? I. The most widely used benefit schedule is one that bases the amount of insurance on employees' earnings II. The Position Schedule specifies the amounts of insurance coverage for employees depending upon their employment positions A. II only B. I only C. Both I and II D. Neither I nor II
C. Both I and II Group Disability Income benefits are usually based upon your earnings. In some cases, benefits are based upon job titles or positions. The higher your position, the higher the coverage.
Which of the following policies has tax deductible premiums and pays out taxable benefits? AIndividual Disability Income BKey Person Disability Income CBusiness Overhead Expense DBusiness Disability Buyout
C. Business Overhead Expense
An employee's evidence of participation in a Group Life plan is the: A. Policy B. Master contract C. Certificate D. Proof of employment
C. Certificate the employer is master policyholder. The employee only receives the Certificate of insurance
If an insured designates an irrevocable beneficiary on their Life insurance policy, they could do which of the following without the consent of that beneficiary: AAppoint a new primary beneficiary BTake cash surrender CChange a dividend option DTake a policy loan
C. Change a dividend option
In a situation where a policy is assigned to an irrevocable beneficiary, the policy owner has the right to do which of the following? AStop paying premium BSurrender the policy for cash CChange the beneficiary with the existing beneficiary's written consent DTake out a policy loan
C. Change the beneficiary with the existing beneficiary's written consent
Which Health insurance policy provision may enable you to be covered by both your own group plan as well as the group plan of your spouse? ARelations of Earnings to Insurance clause BTime Limit on Certain Defenses clause CCoordination of Benefits provision DTime Payment of Claims provision
C. Coordination of Benefits provisionCCoordination of Benefits provision
A person selling Variable Life insurance must be registered with the: ANAIC BAARP CFINRA DNALU
C. FINRA
A client wishing to set up a Health Savings Account (HSA) must already have which of the following? A. Individual Sickness & Accident policy B. Flexible Spending Account (FSA) C. High Deductible Health Plan D. Health Reimbursement Account (HRA)
C. High Deductible Health Plan
Which of the following statements about Renewable Term policies is/are true? I. An insurance company can limit the number of renewals by policy provision II. The policy owner can choose to renew with premiums based on original age or attained age ABoth I and II BNeither I nor II CI only DII only
C. I only
Which of the following statements about underwriting selection is/are true? I. Insurance companies may use family history to rate an applicant, if the history reveals a family characteristic that also appears in the applicant II. An applicant is required to furnish proof of age at the time he applies for insurance A. II only B. Both I and II C. I only D. Neither I nor II
C. I only
Which of the following statements about the 10-day Free Look provision in an A&H policy is/are true? I. It allows the applicant to review the policy at no cost II. The 10-day period begins on the date of application A. Both I and II B. II only C. I only D. Neither I nor II
C. I only Free look starts at DELIVERY
Which of the following policies can be written on a Non-cancelable and Guaranteed Renewable basis? I. A Major Medical Expense policy II. A Disability Income policy ANeither I nor II BBoth I and II CII only DI only
C. II only
An accountant bought a Disability Income policy in 1985. After he retired in 1990, he became totally disabled. How much would the policy pay? AThe policy limits, since he continued to pay the premium BNothing, since he had no earned income after retirement CNothing, but all premiums since he retired would be returned DNothing, but all premiums would be returned
C. Nothing, but all premiums since he retired would be returned
Which of the following is INCORRECT regarding a Disability Income policy? AOn a group policy you have a taxable benefit BOn a group policy you insure your gross income COn an individual policy you have a taxable benefit DOn an individual policy you insure your net income
C. On an individual policy you have a taxable benefit
On submittal of application, when delivering policy: AProducer should loan the applicant the premium BCOD submittal application is not allowed CProducer should get 1st premium and statement of continued good health DYou should make sure that no matter the insured's health you get their money
C. Producer should get 1st premium and statement of continued good healt
What is the policy provision that applies after a policy has lapsed and the insured wants to try to get it back? AConversion BRenewability CReinstatement DHIPAA
C. Reinstatement
Which of the following is based upon your Primary Insurance Amount (PIA)? AMedicaid BMedicare CSocial Security Disability Income benefits DAid to dependent children
C. Social Security Disability Income benefits
Policy coverages and benefits are stated in which part of the policy? AIncontestability clause BThe exclusions CThe Insuring agreement or clause DConsideration clause
C. The Insuring agreement or clause
A policy that allows for changes in premiums, cash values and death benefits based on changes in mortality, expenses and interest rates is: AVariable Life BAdjustable Life CUniversal Life DIncreasing Term
C. Universal Life
Group Life is convertible to which type of policy? AAnnuity BTerm CWhole Life DRetirement account
C. Whole Life Group Life insurance is usually Term. Term is convertible into a Whole Life insurance policy, regardless of the insured's health, at their current age, up to the face amount that they have with the group policy.
Term conversion is based upon: AAge 30 BOriginal age CCurrent age DCurrent health
C.Current age
Under a Guaranteed Renewable A&H policy, the insurance company may: AReduce the amount of insurance, if the insured's health declines BCancel the contract because of too many claims CChange premium rates, if all other policies in that class within that state are changed DChange any policy provision during the time the policy is in force
CChange premium rates, if all other policies in that class within that state are changed Nothing may be changed on a Guaranteed Renewable A&H policy except the rates by "class" only. Classes are defined in the policy, such as age group classes or occupational classes. Individual rates may not be changed.
3 Non-forfeiture Options
CER 1. Cash surrender 2. Extended Term 3. Reduced Paid-up
All of the following may be included in the Accelerated Death Benefit Rider, EXCEPT: AHospice Care BCancer Insurance CLong-term Disability DNursing home benefits
CLong-term Disability the Accelerated Death Benefit (also known as the Living Benefits Rider), the insured gets an advance of the face amount in the event of a terminal illness. This money must be used for the illness. So, of the choices, long-term Disability makes the least sense.
The part of a HMO policy, which provides for the claim to be shared between the insurer and the insured, is known as which of the following?
Co-pay
After a covered claim, Critical Illness insurance will pay: ALump sum benefit to the doctor BDoctor bills CLump sum benefit to the insured DDaily rate in hospital
Critical Illness plans, such as a Cancer Insurance policy, pay benefits directly to the insured.
A 30-year old wants cash value Life insurance that will cover him until he dies, but that he can pay up before he retires at age 60. Which of the following policies would be most appropriate? AEndowment BTraditional Whole Life C30-year Level Term D30 Pay Life
D. 30 Pay Life
An insured may bring legal action against an insurer if they have not paid a claim within: A15 days B90 days C20 days D60 days
D. 60 days
Which of the following best describes a Keogh plan? AA qualified plan for corporate officers BA non-qualified plan for teachers CA non-qualified plan for key employees DA qualified plan for the self-employed and their employees
D. A qualified plan for the self-employed and their employees
When a policy is issued with a surcharge or exclusion, what should the producer do? AMail the policy out with a note asking the client to call BRefund the client's money, since it is unacceptable to the underwriter CDo not mention the surcharge or exclusion, since the applicant can read and will probably notice it sooner or later DDeliver the policy in person, explain the change and advise the client that they can either accept the new policy or reject it
D. Deliver the policy in person, explain the change and advise the client that they can either accept the new policy or reject it
For A&H, which of the following is federally subsidized health care? ADisability Income BIndemnity plan CPPO DHMO
D. HMO
A standard-risk male is insured under a Whole Life policy with a typical Accidental Death Benefit provision. Which of the following statements about the benefit is/are true? I. The Accidental Death Benefit amount is usually equal to or twice the face amount of the policy II. If the insured dies in an accident at age 72, the Accidental Death Benefit is payable ABoth I and II BNeither I nor II CII only DI only
D. I only Accidental Death Benefit (ADB, or Double Indemnity) is a rider that may be attached to any Life insurance policy by paying an extra charge. It pays double only in the event of accidental death. Death must occur within 90 days of the accident, or it is considered to be natural causes and the company will only pay single indemnity. As with most riders, the ADB rider automatically drops off of most policies by age 60 or 65, since the chance of accidental death has increased dramatically. Of course, the extra premium charged for the rider also drops off.
Generally, Health insurance excludes all, EXCEPT: ATreatment in a military hospital BElective cosmetic surgery CIntentional self inflicted injury DInjury while traveling as a fare paying passenger on a regularly scheduled airline
D. Injury while traveling as a fare paying passenger on a regularly scheduled airline
On Health insurance, if your doctor charged $50 more than what is usual, customary and reasonable, the $50: AMust be covered by the insurer BCounts toward deductible CCounts toward co-insurance DIs not covered
D. Is not covered
What is true about the Change of Occupation provision? AIt is not an optional provision BIt allows the insurer to void coverage CIt never applies DIt allows the insurer to adjust benefits, if the insured changes to a more hazardous occupation without notifying the insurer
D. It allows the insurer to adjust benefits, if the insured changes to a more hazardous occupation without notifying the insurer
You buy a Major Medical policy with 80/20 co-insurance and a $500 deductible. What would be the effect of adding a $500 Supplemental Accident Rider to your policy? AIt would require you to pay a $500 additional premium if you were involved in an accident BIt would waive the deductible and co-insurance up to $500 for injury or sickness CIt would limit coverage to $500 for accidental injury DIt would waive the deductible and co-insurance up to $500 for accidental injury
D. It would waive the deductible and co-insurance up to $500 for accidental injury
Which of the following policies would most likely contain a deductible? AHMO BBasic Hospital CPPO DMajor Medical
D. Major Medical Major Medical policies include both a deductible and co-insurance
Jim buys a Health insurance policy that only he can cancel and the coverage cannot be changed. What type of policy is it? AConditionally renewable BGuaranteed renewable COptionally renewable DNon-cancelable
D. Non-cancelable
When may the application be changed? AAnytime BWith verbal permission CNever DOnly if the applicant initials the change
D. Only if the applicant initials the change
Max wants to purchase $25,000 of Whole Life on his spouse and add $10,000 in Term coverage to the policy to cover himself. Which rider is necessary? AFamily Maintenance policy BAlternate Insured rider CFamily Income rider DOther Insured rider
D. Other Insured rider Anytime you add a Term Insurance policy to a Whole Life policy on a different insured, you do so by means of the Other Insured rider. If both the Whole Life and Term were on the same insured, you would add the Term to the Whole Life by means of a Term Insurance rider.
The rider that will pay the premium on a child's policy if a parent becomes disabled is: AGuaranteed Insurability rider BCost of Living rider CWaiver of Premium rider DPayor Benefit rider
D. Payor Benefit rider
Large major medical expenses may be subject to: ACo-insurance BDeductibles CCo-pays DPre-approval
D. Pre-approval require pre-approval by the insurer for large medical expenses, such as surgeries
Social Security Disability Income benefits are based upon: AYour need BYour health CYour age DPrimary Insurance Amount
D. Primary Insurance Amount (PIA) The PIA is a formula that takes into account how long you have been in the system, how much you have paid in, how old you are when you need your benefit and determines how much you will receive.
A health policy is delivered on August 1st and returned by the insured on August 9th, the insurer will: ABegin coverage as of August 9th BContinue coverage CReturn all of the premiums under the grace period DRefund all premiums under the free look
D. Refund all premiums under the free look
Ron applied for Life insurance on July 1st. The insurer approved his application on July 15th and the agent delivered his new policy on August 1st. Ron returned the policy to the insurer on August 9th, but died before they received it. What will the company do? ADeny the claim entirely BPay half the claim CPay the claim to Ron's beneficiary DRefund the premium to Ron's estate
D. Refund the premium to Ron's estate the producer would never deliver a policy without receiving the premium payment, either on date of application or date of delivery. What starts at policy delivery? The free look. What does the insured have to do to exercise the free look? Return the policy to the insurer or the producer. Which is what the insured did, on August 9th Ron returned the policy, indicating that he did not want it. Too bad for his beneficiaries that he then died. The insurance company is only obligated to return the premiums paid.
Contributions to Social Security are made by all of the following, EXCEPT: AEmployees BEmployers CSole proprietors DThe Federal Government
D. The Federal Government
Marie sent in a change of beneficiary to her Life insurance company, but died before they received it. Which of the following is true? AThe change is null and void due to her death BThe change was effective upon mailing CThe change is effective when the company received it DThe change is effective when a company officer accepts it
D. The change is effective when a company officer accepts it
Which of the following is not found in the insuring clause? AThe insurer BThe insured CThe policy effective date DThe exclusions
D. The exclusions The exclusion are not found on the first page of the policy. The exclusions are found towards the back of the policy.
What is the main purpose of purchasing an Annuity? ATo have tax free earnings BTo send your child to college CTo make sure that in the event of your total disability you get paid monthly DTo have some money in case you live too long
D. To have some money in case you live too long
An agent completes a Life insurance application and sends it to the underwriter who approves it. When is coverage effective? AImmediately BOn the day the underwriter approves the application COn the day the application was filed out DWhen the agent delivers the policy and picks up the premium
D. When the agent delivers the policy and picks up the premium 1st premium needs to be paid
Life insurance coverage becomes effective when: AThe insurer receives the application in their office BThe agent signs the application CThe applicant writes the check and receives a conditional receipt DThe conditions in the conditional receipt are satisfied
D.The conditions in the conditional receipt are satisfied
Which of the following statements about Surgical Expense benefits is/are true? I. The amount on the benefit schedule is typically expressed in terms of the maximum benefit payable II. The benefits are typically subject to deductibles of $250 or more AII only BNeither I nor II CBoth I and II DI only
DI only
Every insurance policy or contract has four parts
Declarations: effective date and namesf the parties to the contract Insuring Clause or Agreements : states the coverage Conditions: require the parties to the contract to do certain things Exclusions: things that are NEVER covered, such as death due to a dangerous hobby (acronym: DICE)
Which of the following is the clause that prevents the insurer from changing a policy after issue?
Entire Contract
Which law governs the gathering of an applicant's investigative consumer report?
Fair Credit Reporting Act
Which law requires the applicant be notified before a consumer report is ordered:
Fair Credit Reporting Act
Policies written on a third-party ownership basis are usually written to cover:
Family members or business needs
3 types of renewability: guaranteed, conditional and optional.
Guarantee: must be renewed, up to age 65. The only reasons for non-renew is non-payment of premium, or fraud. conditional optional
A policy that must be renewed up to a certain age or date unless specified things occur is known as:
Guaranteed Renewable
Which A&H policy requires you to see a Dr. on their premises?
HMO (in-network)
HMOs vs PPOs
HMOs are required to stress prevention due to their eligibility for federal loans. HMOs usually utilize co-pays and provide in-network coverage.
Permanent life insurance policies always have two components. What are they? I. Death benefit II. Cash value III. Living Benefits IV. Conversion Benefit
I. Death benefit II. Cash value
The Waiver of Premium benefit covers disabilities resulting from which of the following? I. Sickness or accident II. Sudden and permanent non-occupational injury
I. Sickness or accident II. Sudden and permanent non-occupational injury
Insurance policies are conditional contracts. Which of the following is correct regarding this concept? AFuture actions must occur BConditions must be met by the insurer only CFuture actions must be avoided DCoverage is guaranteed
Insurance policies are conditional. Conditions apply to both the insured and the insurer. Most conditions have to do with claims. Conditional means that future actions must occur.
Which party to the contract makes an enforceable promise?
Insurer
If a Life insurance policy does not permit the policy owner to change the beneficiary, the beneficiary is:
Irrevocable
The IRS classifies a policy whose cash value builds too fast according to IRS rules as which of the following?
MEC
Which of the following is prohibited in setting rates for a Life insurance policy?
Marital status
Reduce-Paid up Option
Nonforfeiture option for whole life cash value insurance. cash value is used to buy a single-premium whole life policy at face amount < original face amount
Which Health policy provision states to whom a claim may be paid?
Payment of Claims
The purpose of the probationary period is to:
Prevent coverage for specified illness that occurred prior to the policies effective date
The purpose of a Grace Period provision is to:
Protect the policy owner against unintentional lapse First policy provision to apply if the premium is not paid on time
If a proposed insured has a hazardous occupation, the insurance company may:
Rate the insured (surcharge)
What type of Health insurance policy utilizes a "relative value" schedule? ABasic Hospital BDisability Income CBasic Surgical DAD&D
Relative value is associated with the Basic Surgical (Surgical Expense) policy. This is when the insurer lists the limit as a dollar amount for the most expensive surgery that is covered. All other listed surgeries are covered at an amount relative to the most expensive, usually listed as a percentage of the most expensive.
When you return to work and continue to receive disability income payments based upon a proportionate formula that compares what you used to make to what you make now, your disability income benefits are considered to be:
Residual
insurance contracts are considered to be Unilateral contracts
Since only one party to an insurance contract makes an enforceable promise, (the insurer)
If a three-person business partnership wants to buy Life insurance to fund a cross-purchase buy-sell agreement, how many policies would you have to sell?
Six In this example, a producer would have to sell 6 policies in order to make this work. For example, Partner A would have to buy policies on both Partners B and C. Partner B would have to buy policies on both Partners A and C, and Partner C would have to buy policies on both Partners A and B. Premiums would not be tax deductible, and proceeds payable upon death would not be taxable.
Adjustable Life insurance is a combination ?
Term and Whole Life
insuring clause
The insurer has the legally enforceable promise to pay. The insured has to pay premium This is found on the first page of the policy in the insuring clause.
an irrevocable beneficiary the owner loses most of the owner's rights
The owner MUST pay the premium, the owner can NOT take out a policy loan, owner can NOT surrender the policy for cash. The only way the owner could change the beneficiary is with the existing beneficiary's written consent (which may be hard to get).
Mr. Jones bought a $100,000 Term Life insurance policy on July 1, 2006 by paying an annual premium of $200. He died on July 15, 2007 without paying his renewal premium. How much will the policy pay, if any? AZero B$99,800 C$100,000, less any loans outstanding D$100,000
This is a question about the grace period. He paid his annual premium on July 1st, 2006. It is due again on July 1st, 2007. The grace period on an individual policy is 30 days. He died on July 15th, 2007, during the grace period. If the insured dies during the grace period, the insurer will pay the policy face amount minus the earned premium, to the beneficiary. This is not a loan, besides this was a Term Insurance policy. Hence, $100,000 minus the $200 premium, for $99,800.
What Health policy provision allows the insurer to contest claims for a period of time after the policy has been issued?
Time Limit on Certain Defenses (2 years of contestability) after 2 years constestable for fraud
On a Major Medical plan, the purpose of co-insurance is
To prevent overutilization
Which of the following best describes representations?
Truth to the best of your knowledge
Which of the following policies does not have a guaranteed interest rate or cash value? AUniversal Life BEquity-indexed Life CVariable/Universal Life DInterest Sensitive Whole Life
Variable/Universal Life insurance invests the client's money into the stock market. The stock market does not have a guaranteed interest rate.
LP 65
Whole Life : premium paid in shortened period. premiums are payable until the age of 65. Cash value equals face amount at age 100.
What type of notice is used to show all of the services or supplies that were billed to Medicare during a 3-month period, what Medicare paid, and what the patient may owe the provider? a. MSN b. CPT c. OPPS d. HCPCS
a. MSN A MSN, or Medicare Summary Notice, can also be checked for any changes to a patient's claims.
The "elimination period" or "waiting period"
acts like a deductible on a Disability Income Policy. The longer it is, the lower the premium. It is selected by the insured and varies from 7 days to 180 days. Do not confuse it with the Probationary Period (or Preexisting Condition Clause), which starts at policy inception or reinstatement.
misstatement of age give the insurance company the right to ?
adjust the benefits payable if it had been the right age
"waiting period" for The Waiver of Premium rider for Disability
always 6 months
2 Underwriting (risk selection) question?
applicant - insurable? applicant & insured are different - insurable interest exists?
John, who had a life insurance policy with a death benefit, died on August 31st, after a long bought with cancer. He had been hospitalized for a month before his death. His wife contacted the insurance company to file her claim for the death benefit on September 5th, after John's burial, and after she had time to collect her emotions to deal with her personal loss. The insurance agent filed the papers to process the claim with his supervisor, and the death benefit was settled on October 30th. Were any laws violated in this scenario? a. No, the agent filed the paperwork within 30 days of the claim. b. Yes, the claim was not settled within 30 days of the claim. c. No, there are suspicions around the death of John. d. Yes, the claim was not settled within 15 days of the claim.
b. Yes, the claim was not settled within 30 days of the claim. Although it typically takes approximately two weeks to settle death benefit claims, insurance companies are required to settle such claims within 30 days. Some claims may require additional time if they require additional investigation. Here, there is nothing suspicious about John's death.
Interim policy ( short term Medical Expense policy) when you are in between jobs. Interim policies generally have high deductibles and high co-insurance. Interim policies are generally non-renewable policies as well.
buy when you are in between jobs. Interim policies generally have high deductibles and high co-insurance. Interim policies are generally non-renewable policies as well.
The "deductible" in a long-term care insurance policy is referred to as the __________. a. Deductible b. Coinsurance c. Elimination period d. Copayment
c. Elimination period
An agent is in need of generating business. He gets an idea of asking his client to let his policy lapse so that the agent can sell him a new similar policy. Is this permissible and, if not, what is this action called? a. No; Rebating b. No; Bait and switch c. No; Twisting d. Yes; it is perfectly acceptable
c. No; Twisting Twisting involves an agent suggesting that an individual let their current insurance coverage lapse in order to purchase a new policy, typically with similar benefits. It is a prohibited activity. In this case, the new policy does not necessarily benefit the client, however, the agent will likely receive a commission on the sale of the new policy.
Whole life insurance rider to add coverage for a child ?
child term rider or other insured rider
On a health insurance claim form, the exact procedures that were performed for the insured are represented by standard codes that are referred to as __________. a. RVU codes b. AMA codes c. HCPCS codes d. CPT codes
d. CPT codes
As a marketing tool, Ted, a health insurance agent, offered to send an applicant and his wife on a weekend vacation to a local resort to induce the applicant to purchase a policy. Is this practice permitted and, if not, what is it called? a. No; Misrepresentation b. No; Twisting c. Yes; it is perfectly acceptable d. No; Rebating
d. No; Rebating Rebating is the act of offering an applicant an inducement to purchase insurance. It is prohibited as an unfair trade practice. Another example would be returning a portion of the applicant's policy premium from the agent's commission
decreasing term insurance vs. increasing term insurance
death benefits (face value) decrease/increase over the policy's term
AD & D covers
death or injuries in an accident airplane/ travel accident insurance is AD &D
Living benefits on a life insurance policy can be typically be accessed via: a. Lump sum b. Regular installments c. Loan d. All of the above e. Both a and b
e. Both a and b lump sum or installments
For how long is insurer required to make Cash surrender available for ordinary whole life insurance ?
first 3 years
The USA PATRIOT Act, which is designed to help detect money laundering and the international financing of terrorism, requires that a currency transaction report being filed with FinCEN for each financial transaction over which amount?
over $10,000
Recurrent Disability
recurs within 90 days of when the insured returned to work after a disability. When the disability is considered recurrent, the insured does not have to satisfy a second elimination period. The insurer will treat the disability as a continuation of the first occurrence.
Answers given by applicants to questions on applications for A&H insurance are considered?
representations, NOT warranties
Health insurance can't be paid in what kind of mode
single
All of the following are parties to a life insurance contract EXCEPT: Insurer Underwriter Beneficiary Owner Insured
underwriter, beneficiary, insured A beneficiary and the underwriter are not parties to a life insurance contract. An insured may be, but is not necessarily a party. A wife (owner) can take a policy out on her husband (insured), yet the husband is not a party to the insurance contract.
Extended-term Option
use cash value to buy a term insurance policy at face amount = original