Life/Health - A.D. Banker - Chapter 14 - North Carolina

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

A. 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.

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

A. 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.

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

A. 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.

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

A. 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.

Which one of the following regarding the Life and Health Insurance Guaranty Association of North Carolina is false? A. It is funded by the State through the collection of insurance premium taxes B. It protects residents, who have rights under a contract providing benefits of life or health or both, against financial loss due to insurer impairment or insolvency C. It consists of all authorized insurers writing Life and Health policies in North Carolina D. It assists in detecting and preventing insurer impairment or insolvency

A. Member insurers each pay an assessment to fund the Life and Health Insurance Guaranty Association of North Carolina.

All of the following are duties of the producer when involved in a replacement transaction, except: A. Notify each existing insurer within 5 business days and, upon request, furnish a copy of any proposals and comparison statements B. Submit a signed statement about whether the applicant has existing policies C. Leave a copy of all sales material with the applicant D. Obtain a notice regarding replacement signed by the applicant

A. Notifying each existing insurer within 5 business days and, upon request, furnishing a copy of any proposals and comparison statements is a duty of the replacing insurer not the replacing producer.

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

A. Of the 24 credits, it is also required that 3 credits must be obtained by completing an ethic course.

Which of the following statement regarding North Carolina insurance law is FALSE? A. The Commissioner is appointed by the Governor B. A licensee must notify the Commissioner of a change of address within 10 days of the change C. During a hearing, all parties may examine and cross-examine witnesses D. 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. The Commissioner of Insurance is elected by North Carolina residents for a 4-year term.

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: A. Viator B. Viatical settlement provider C. Viatical settlement broker D. Viatical settlement purchaser

A. 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.

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

B. 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.

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

B. Embezzlement up to $100,000 results in a Class H felony; the other actions would result in a misdemeanor.

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

B. 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.

Which of the following is covered by the Life and Health Insurance Guaranty Association? A. J has an a nonguaranteed contract with LMNO Insurance, which becomes insolvent B. E has submitted a claim for $500,000 of medical expenses when GHI Insurance becomes insolvent C. Employer XYZ hires 123 Health Co. to administer its self-insured health plan for employees and 123 Health Co. becomes insolvent D. Employer XYZ hires 123 Health Co. to administer its self-insured health plan for employees and 123 Health Co. becomes insolvent

B. 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).

All of the following are duties of the Commissioner EXCEPT: A. Extending times for filing proofs of loss in declared disaster areas B. Selling contracts of insurance C. Issuing licenses to insurance agents D. Arresting any person suspected of violating insurance laws

B. 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.

The viator may rescind the viatical settlement contract within _____ business days after receiving the viatical settlement proceeds. A. 15 B. 10 C. 20 D. 30

B. The viator may rescind the viatical settlement contract within 10 business days after receiving the viatical settlement proceeds.

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

B. 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."

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

C. 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).

Which of the following is not a required health policy coverage? A. Nervous Disorders B. Screening for prostate cancer C. Birth defects D. Screening for cervical cancer

C. Coverage of birth defects is an optional coverage for children.

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

C. 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.

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

C. It is prohibited to disclose personal information about an individual in connection with an insurance transaction, but there are many exceptions.

Offering a premium discount not specifically included in the policy is called: A. Misrepresentation B. Twisting C. Rebating D. False information

C. Rebating is offering any rebate, discount of premium, advantage, or valuable consideration not specified in the policy, but does not include a bonus, reduction in premium for mailing premium, and readjusting group rates based on claims experience.

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

C. 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.

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

C. 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.

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

D. 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.

A person must be at least ______ years of age to enter into an insurance contract or an annuity. A. 18 B. 17 C. 16 D. 15

D. A person must be at least 15 years of age to enter into an insurance contract or an annuity.

An insurance professional who represents the insured is which of the following? A. Insurance Producer B. Agent C. Limited Representative D. Broker

D. An insurance broker is a person who places insurance with an authorized insurer that has not appointed the person, and is deemed to represent an insured.

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

D. 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.

An insurer must pay interest on death benefits not paid within _____ days after receiving proof of loss. A. 60 B. 45 C. 90 D. 30

D. An insurer must pay interest on death benefits not paid within 30 days after receiving proof of loss.

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

D. 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.

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

D. 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.

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

D. 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.

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

D. 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.

Which one of the following types of policies are exempt from standard policy replacement rules? A. Universal life insurance policies B. 30-year renewable term life insurance policies C. Traditional whole life insurance policies D. Non-convertible, non-renewable term policies with less than 5 years of coverage remaining

D. Non-convertible, non-renewable term policies with less than 5 years of coverage remaining are exempt from standard policy replacement rules.