Life and Health - Chapter 14 North Carolina State Law Quiz

How long must an insurer keep a Policy Summary? Until the Commissioner issues the final report of the next examination after issuance 5 years after first use 3 years after issuance 3 years after last use

3 years after last use Each insurer's home or main office must maintain a copy of each document approved for use during solicitation for 3 years following the date of its last authorized use. Relevant content:14.2 undefined

When a person obtains a replacement life insurance policy the free look period is _____ days from the date the policy is delivered. 10 20 15 30

30 When a person obtains a replacement life insurance policy the free look period is 30 days from the date the policy is delivered. Relevant content:14.2 undefined

How much time does an insurer have to notify the Commissioner after an agent's appointment is terminated? 60 days 30 days The insurer is not required to notify the Commissioner 15 days

30 days An insurer that terminates a producer's appointment must notify the Commissioner within 30 days after the termination's effective date. The notice must state the cause for termination if the cause is also ground for license suspension, probation, revocation, or nonrenewal. Relevant content:14.1 undefined

Which of the following is NOT an acceptable grace period for late premium payments? 61 days for annual premiums 7 days for weekly premiums 31 days for quarterly premiums 10 days for monthly premiums

61 days for annual premiums The 31 day grace period applies to all policies with premium payment schedules other than weekly or monthly (including quarterly). Premiums may be 7 days late for weekly premiums and 10 days late for monthly premiums. Relevant content:14.3 undefined

Each life agent licensee must obtain how many insurance continuing education credits during each biennial compliance period? 12 24 15 20

24 Of the 24 credits, it is also required that 3 credits must be obtained by completing an ethic course. Relevant content:14.1 undefined

The Commissioner of Insurance may issue a temporary license, without regard to education, experience, or exam requirements, for up to ___ days, to specified persons, under certain circumstances. 270 180 210 240

180 The Commissioner of Insurance may issue a temporary license, without regard to education, experience, or exam requirements, for up to 180 days, to specified persons, under certain circumstances. Relevant content:14.1 undefined

Which of the following rules regarding PPOs is INCORRECT? A PPO contract is considered approved if not disapproved by the Commissioner within 90 days of filing A new PPO must give all health care providers in its market at least 30 days to request to be preferred providers A PPO may make exclusive contracts with health care providers so that they don't sign up with other PPOs A PPO must disclose to the Commissioner the relationship between the insurer and preferred providers on an annual basis

A PPO may make exclusive contracts with health care providers so that they don't sign up with other PPOs A PPO may not make exclusive contracts with health care providers; a provider may enter PPO contracts with multiple PPOs. The Commissioner has 90 to disapprove a PPO contract. Providers have 30 days to request contracts with a new PPO. The relationship between a preferred provider and an insurer must be reported to the Commissioner annually. Relevant content:14.3 undefined

Which of the following situations is subject to the replacement rules? Agent Steve is recommending that his client take a policy loan from an existing policy to buy a new one from a different insurer Agent Nathaniel is working with a client to upgrade her policy with a new policy from the same insurer Agent Jessica is making a presentation to employees covered by group life insurance Agent Roman's client is in the last 2 years of a 10-year non-convertible, non-renewable term policy

Agent Steve is recommending that his client take a policy loan from an existing policy to buy a new one from a different insurer A replacement is any transaction in which a life insurance policy or an annuity is to be purchased, and it is known that an existing contract will be lapsed, forfeited, surrendered, or terminated; converted to reduced paid-up insurance, continued as extended term insurance, or otherwise reduced in value by the use of nonforfeiture benefits or other policy values; amended to reduce the benefit or the term of coverage; reissued with a reduced cash value; or used in a financed purchase (e.g., subjected to borrowing). Relevant content:14.2 undefined

Which of the following individuals does not require an insurance agent's license in North Carolina? An agency clerk who maintains records for agents An individual who has earned the Chartered Life Underwriter (CLU) designation An individual licensed in Virginia wishing to sell insurance in Winston-Salem An individual wishing to represent purchasers of insurance

An agency clerk who maintains records for agents Employees of insurance producers do not require an agent's license as long as they do not receive commissions from policies written or sold in the state. An individual licensed in another state is required to get a nonresident license before selling insurance in North Carolina. An individual representing purchasers require a broker's license, but first must obtain and agent license. A CLU is exempt from the exam, not the licensing requirement. Relevant content:14.1 undefined

Which of the following action would NOT result in a misdemeanor penalty? An agent unknowingly acts as a third-party administrator for an unauthorized insurer An agent signed a blank contract An insurance agency employee embezzles $500 from the agency An agent makes a false statement on an insurance application

An insurance agency employee embezzles $500 from the agency Embezzlement up to $100,000 results in a Class H felony. The other actions would result in a misdemeanor. Relevant content:14.1 undefined

Which of the following action would NOT result in a misdemeanor penalty? An insurance agency employee embezzles $500 from the agency An agent unknowingly acts as a third-party administrator for an unauthorized insurer An agent signed a blank contract An agent makes a false statement on an insurance application

An insurance agency employee embezzles $500 from the agency Embezzlement up to $100,000 results in a Class H felony. The other actions would result in a misdemeanor. Relevant content:14.1 undefined

Which of the following is not a required health policy coverage? Birth defects Chemical Dependency Screening for prostate cancer Screening for cervical cancer

Birth defects Coverage of birth defects is an optional coverage for children. Relevant content:14.3 undefined

Which of the following is NOT prohibited from disclosing personal information about a client under the Insurance Information and Privacy Protection Act? Agency support personnel Agent Insurer Client

Client No insurers, agents, or agency support personnel may disclose any personal information about a client in connection with an insurance transaction, without having the client's written authorization before the disclosure occurs. The client owns the information about him/herself and is free to disclose it. Relevant content:14.1 undefined

Which of the following is a requirement for continuation coverage under a group health policy? The premium to continue coverage may not exceed 105% the group rate The employee must first secure comparable coverage within 31 days after termination of coverage under the group policy Continuation coverage includes medical, drugs, dental, and vision coverage Continuation of coverage lasts up to 18 months, so long as the (former) employee pays premiums

Continuation of coverage lasts up to 18 months, so long as the (former) employee pays premiums Continued coverage can last up to 18 months but terminates if the (former) employee fails to pay the premiums or becomes eligible for similar coverage under another group policy or if the employer terminates the policy for all employees. The right to continue coverage applies only to medical benefits, excluding dental, vision, or prescription drug benefits. The premium to continue coverage may not exceed 102% the group rate. Relevant content:14.3 undefined

Which of the following is covered by the Life and Health Insurance Guaranty Association? E has submitted a claim for $500,000 of medical expenses when GHI Insurance becomes insolvent Employer XYZ hires 123 Health Co. to administer its self-insured health plan for employees and 123 Health Co. becomes insolvent J has an a nonguaranteed contract with LMNO Insurance, which becomes insolvent O has a term life insurance contract for $300,000 on his life when RST Insurance becomes insolvent - O is still alive

E has submitted a claim for $500,000 of medical expenses when GHI Insurance becomes insolvent The Association will cover medical claims against an insolvent insurer of up to $500,000. Self-insurance and nonguaranteed benefits are not covered. Neither are claims for which the insolvent insurer would not have been liable (a claim under O's life insurance is not valid until O dies). Relevant content:14.1 undefined

Choose the passive unfair claim settlement practice. Misrepresenting pertinent facts or insurance policy provisions relating to the coverage Failing to promptly explain, based on applicable provisions or laws, a claim's denial Refusing to pay claims without conducting an investigation Telling an insured the policy of appealing arbitration awards

Failing to promptly explain, based on applicable provisions or laws, a claim's denial Failing to act promptly upon receiving a claim, failing to implement reasonable standards for the prompt investigation of claims, and failing to affirm or deny coverage within a reasonable time after receiving the proof of loss are also passive unfair claim settlement practices. Relevant content:14.1 undefined

Which one of the following actions would be considered a misdemeanor? For an agent or broker to knowingly use honest representations to transact insurance business To make a true statement to get a commission or benefit from an insurer For an agent to sign a blank contract To willfully make a true statement on an insurance application

For an agent to sign a blank contract It is a misdemeanor for an agent or limited representative to sign a blank contract. Relevant content:14.1 undefined

Which of the following properly states a requirement of a group health policy? An association group must have 100 members and be in existence for at least 5 years An employer group may cover executives only A credit policy may require evidence of individual insurability if less than 75% of new debtors become insured If a group policy is replaced within 15 days of being terminated, the replacing insurer must cover everyone covered under the policy being replaced

If a group policy is replaced within 15 days of being terminated, the replacing insurer must cover everyone covered under the policy being replaced An association group must have at least 500 members. A creditor group must receive 100 new debtors yearly. The association group must also be organized for purposes other than getting insurance. An employer group must cover all employees, not just executives. If a group policy is terminated then replaced within 15 days, the new policy must cover everyone covered under the old policy. Relevant content:14.3 undefined

Which of the following disclosures is prohibited under the Insurance Information and Privacy Protection Act? Information disclosed in an audit of the insurer Information about an individual in connection with an insurance transaction Information provided to a group policyholder for reporting claims experience Information given to a medical provider in order to provide care

Information about an individual in connection with an insurance transaction It is prohibited to disclose personal information about an individual in connection with an insurance transaction, but there are many exceptions. Relevant content:14.1 undefined

The Commissioner of Insurance may suspend, place on probation, revoke, or refuse to renew a license for all of the following reasons, except: Committing dishonest or fraudulent practices in the insurance business Cheating on an insurance exam Knowingly accepting business from an appropriately licensed broker Forging another's name on an insurance document

Knowingly accepting business from an appropriately licensed broker Knowingly accepting business from an unlicensed or inappropriately licensed broker would be a reason the Commissioner of Insurance may suspend, place on probation, revoke, or refuse to renew a license. Relevant content:14.1 undefined

All of the following are unfair claims settlement practices, except: Making known to insureds or claimants a policy of appealing arbitration awards Promptly explaining, based on applicable provisions or laws, a claim's denial Not attempting in good faith to promptly, fairly, and equitably settle a claim in which liability has become reasonably clear Compelling insureds to sue to recover amounts due by offering substantially less than the amounts typically recovered in actions brought by legal process

Promptly explaining, based on applicable provisions or laws, a claim's denial Failing to promptly explain, based on applicable provisions or laws, a claim's denial is an unfair claims settlement practice. Relevant content:14.1 undefined

Which of the following coverage provisions is NOT permitted in a health policy? Coverage for prostate cancer screening Coverage for diabetes treatment is required OB-GYN coverage required for a minor dependent with referral of primary care physician Coverage for annual mammogram for a woman age 50 and over

OB-GYN coverage required for a minor dependent with referral of primary care physician Any woman age 13 or older must be covered for obstetrician-gynecologist services without a referral from the primary care physician. Coverage for diabetes, mammograms, and prostate cancer screening is required. Relevant content:14.3 undefined

Which of the following has an insurable interest in the other? An employee in an officer or director of his/her employer An employee in a fellow employee (nonkey, nonmanagerial) One business partner in his/her partner Life insurance company in an independent agent

One business partner in his/her partner Business partners have insurable interests in each other. Employees don't generally have insurable interests in their employer or in each other. But an employer may have an insurable interest in an employee, if notice is given. Relevant content:14.2 undefined

A viatical settlement broker is required to inform the viator of all of the following, except: Proceeds may jeopardized eligibility for Medicaid Proceeds could be subject to tax liability Proceeds are exempt from creditor claims Accelerated death benefits or policy loans are possible alternatives to a viatical settlement

Proceeds are exempt from creditor claims Proceeds might be subject to the claims of a viator's creditors. The life insurance death benefit, however, would be paid to the viator's beneficiaries free of creditor claims. Relevant content:14.2 undefined

The Commissioner may revoke an agent's license for all of the following, except: Making a material misstatement on a licensing application Failing to pay court ordered child support Reporting a crime from another jurisdiction to the Commissioner Mishandling funds received while transaction insurance business

Reporting a crime from another jurisdiction to the Commissioner If an agent is prosecuted for a crime in any jurisdiction, he/she is required to report it to the Commissioner within 30 days after the initial court appearance. The other answer options are grounds for license revocation. Relevant content:14.1 undefined

All of the following are duties of the Commissioner, except: Issuing licenses to insurance agents Selling contracts of insurance Arresting any person suspected of violating insurance laws Extending times for filing proofs of loss in declared disaster areas

Selling contracts of insurance The Commissioner administers the state's insurance laws. This included issuing certificates of authority and licenses, various actions to stop violations of the law (including arresting the suspected violators), declaring disasters and arranging for orderly administration of claims during disasters. The Commissioner does not sell insurance. Relevant content:14.1 undefined

Which of the following statements regarding North Carolina insurance law is FALSE? The Commissioner is appointed by the Governor During a hearing, all parties may examine and cross-examine witnesses A contract of insurance is an agreement that obligates an insurer to pay an insured for a loss of something in which the insured has an interest A licensee must notify the Commissioner of a change of address within 10 days of the change

The Commissioner is appointed by the Governor The Commissioner of Insurance is elected by North Carolina residents for a 4-year term. Relevant content:14.1 undefined

All of the following are standard provisions of an individual life insurance policy, except: The grace period for late payment of premiums is 45 days The policy is incontestable after 2 years Errors in age or gender of the insured may be corrected by adjusting premiums or benefits A lapsed policy may be reinstated within 5 years

The grace period for late payment of premiums is 45 days The grace period for late payment of premiums is 31 days, during which the policy remains in force. A policy is incontestable after being in force for 2 years from the issue date. It must specify the method for adjusting premiums, benefits, or both to correct a misstatement of age or gender on the application. A lapsed policy may be reinstated within 5 years by providing evidence of insurability and by paying all overdue premiums, indebtedness, and interest. Relevant content:14.2 undefined

Which of the following would be a violation of a health plan policyholder's right to choose the provider of service? The plan requires the use of a network provider to obtain a higher level of benefits The plan requires certification of a disability by a duly licensed medical professional before approving a disability claim The plan denies a claim because the services were performed by a registered nurse The plan pays for treatment by a licensed chiropractor

The plan denies a claim because the services were performed by a registered nurse A plan man not deny a claim if services were performed by a registered nurse or physician's assistant. A plan may require the use of network providers to obtain benefits, or to obtain a higher level of benefits. It may also require certification of a disability claim by a licensed medical professional, and it may not deny or decrease benefits for treatment provided by a duly licensed chiropractor. Relevant content:14.3 undefined

Which of the statements about a utilization review is FALSE? The review may not request information that is unnecessary to certify the health care services under review The insurer must disclose utilization review procedures to insureds The insurer must notify an insured and the provider of a claim denial within 5 business days Utilization reviews must be overseen by the accounting department

Utilization reviews must be overseen by the accounting department An insurer is required to have qualified medical professionals oversee its utilization reviews. A reviewer may request only that information that is necessary to certify health care services. An insurer must notify an insured and his/her provider of a claim denial, stating the reason for denial, within 5 business days, and must disclose utilization review procedures to insureds. Relevant content:14.3 undefined

Z is terminally ill and is looking to find someone who will buy Z's life insurance policy to get funds to pay for care. Z is a: Viatical settlement purchaser Viatical settlement provider Viator Viatical settlement broker

Viator The viator is the sick person who needs funds. The broker helps the viator find a provider who will enter into a viatical settlement contract, which will provide the funds. Relevant content:14.2 undefined

Which of the following is considered 'twisting'? Accepting premiums by credit card but charging a fee for the service Discriminating between individuals of the same class in the amount of premium charged or benefits paid Willfully misrepresenting or incompletely comparing the terms of an insurance policy to induce the policyholder to replace it Refusing to approve a loan unless the applicant buys insurance from an affiliated insurer

Willfully misrepresenting or incompletely comparing the terms of an insurance policy to induce the policyholder to replace it Twisting is giving prospects misleading information or comparisons about an insurance policy in order to sell them a replacement policy. The other choices describe prohibited practices, but they are not called 'twisting.' Relevant content:14.1 undefined