Maryland Life and Health General Exam Simulator

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What is an insurance contract that identifies individuals by relationship to a specific organization?

Group Insurance

Which of the following is NOT a dividend option for a life insurance policy?

Receiving the entire policy cash value

Which of these life insurance policies does NOT contain a cash value provision?

decreasing term life

When must insurable interest exist for a life insurance contract to be valid?

inception of the contract

Which of the following does NOT help determine group health insurance premiums?

income level of group members

Which of the following incidents would NOT be covered by an Accident Death and Dismemberment policy?

suicide

How is a collateral assignment used in a life insurance contract?

transfers specific ownership rights to a creditor

Which reinsurance contract between two insurers involves an automatic sharing of the risks assumed?

treaty reinsurance

Individuals who participate in an HMO plan are called

subscribers

First-time homebuyers are able to withdraw up to how much from their qualified IRAs without incurring the 10% early withdrawal penalty?

$10,000

An individual is insured under a major medical plan with a $1,000,000 lifetime benefit. The plan has a $500 deductible and an 80% coinsurance. If the insured suffers a $50,500 medical expense during the calendar year, what is the remaining lifetime benefit?

$960,000 $50,500 - $500 = $50,000 * 80% = $40,000 $1,000,000-$40,000 = $960,000

Medicare Part B excess charges are covered by

...

Qualified long-term care premiums are treated for tax purposes as

...

A "premature distribution from a modified endowment contract (MEC) incurs a penalty tax of

10%

Which tax would an IRA participant be subjected to on distributions received prior to age 59 1/2?

10% tax penalty for early withdrawal

Medicare will cover a maximum of how many days per benefit period in a skilled nursing facility?

100 days

John received a one-time distribution of $50,000 from his modified endowment contract (MEC). Prior to that, the contract's cash value was $150,000, the contract investment amount was $100,000, and the death benefit was $500,000. What percentage of the $50,000 distribution was taxable as ordinary income?

100% (funds withdrawn from an MEC are subject to last-first first-out (LIFO) tax treatment, which assumes that the investment or earning portion of the contract's values is withdrawn first)

Which of the following best describes the tax treatment of medical expense policies for the self-employed?

100% of medical expense plan premiums are tax deductible

The health insurance premiums paid for by each partner in a partnership is considered to be

100% tax deductible

What is the maximum Social Security Disability benefit amount an insured can receive?

100% of the insured's Primary Insurance Amount (PIA)

Bert's spouse passed away recently. Bert was covered under his spouse's group family health insurance plan but now is covered under COBRA. How much of the active-employee cost may be passed on to Bert for continued coverage?

102%

Part A Medicare includes coverage for all of the following services EXCEPT

120 days of skilled nursing facility care

Under HIPAA, medical plan late enrollees may be excluded for pre-existing conditions for a maximum of

18 months

How many employees must an employer have for the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) to apply?

20 or more

Mary has a Health Savings Account (HSA). Distributions that have been made for anything other than qualified medical expenses are considered taxable and subject to a penalty of

20%

How long can an insurer legally defer paying the cash value of a surrendered life insurance policy?

6 months

Larry wants to purchase an individual disability income policy to provide continuous income while disabled. He is also covered by a two-month wage continuation benefit from his employer. What should the policy elimination period be for his individual policy?

60 days

At what age do most people become eligible for Medicare?

65

According to ERISA regulations, a Summary Plan Description must be provided to a new plan member within ____ days of the member's eligibility date.

90 days

What is a major difference between private commercial insurers and HMO's?

An HMO combines medical care delivery and funding in one organization

Which is an accurate description of the premium in a graded premium life insurance policy?

Annual increases in premium for a stated number of years then remains level

A description of a qualified plan's insurance contract may be found in which ERISA reporting form?

Annual return/report (Form 5500) (Form 5500 is a disclosure document that employee benefit plans use to satisfy annual reporting requirements under ERISA)

If a disability income policy contains a cost-of-living adjustment rider, benefits must typically be increased

At least once per year from when benefits began

When does the insured stop making payments under a thirty-payment whole life policy?

At the time of death or 30 years after the policy's inception, whichever comes first

Which statement regarding the cash value of a whole life insurance policy is correct?

Available to the policyowner when policy has been surrended

A policyowner pays the first annual premium for a $50,000 life insurance policy and dies one month after the policy effective date. Which of these statements is normally true?

Beneficiary receives $50,000 income tax-free

Which of these is NOT considered to be a cost connected with an individual's death?

Business expenses

For employees covered in multiple states under a group health plan, jurisdiction rules cannot alter

COBRA laws

Which of the following is NOT an allowable exclusion for long-term care insurance policies?

Care for incurable conditions

Which of the following can be used to avoid the mandatory withholding tax on qualified plan distributions?

Conduit IRA (a holding tank for funds that originally came from a qualified plan and are on their way to another qualified plan)

An accident and health insurance policy's premium requirements are set forth in which of the following provisions?

Consideration clause

Jill has a group health plan with an employer that covers employees in more than one state. Which of the following aspects is NOT affected by the state regulatory jurisdiction established for this plan?

Continuation of coverage under COBRA

Linda is covered with long-term care insurance and has early-stage Alzheimer's. She is still able to reside in her home while receiving primary care, as opposed to moving into a nursing home. All of the following long-term benefits encourage home health care EXCEPT

Custodial care (custodial care is typically associated with the services provided at a nursing home)

Which annuity allows contributions to an IRA?

Deferred

Health Maintenance Organization (HMO) wellness programs may include each of the following EXCEPT

Diagnostic testing services

Which life insurance policy option allows the policyowner to have coverage equal to the net death benefit of the lapsed policy?

Extended term nonforfeiture option

A Policyowner fell behind on the premium payments of a whole life policy and it is now in the grace period. How much will the beneficiary receive if the insured dies during this grace period and the policy also contains an outstanding policy loan?

Face amount minus the loan balance and past-due premium

when a ceding insurer transfers a portion of risk to an assuming insurer on a case by case basis, this process is referred to as

Facultative reinsurance

Emily is disabled. In order to become eligible for Social Security disability income benefits, she must be

Fully insured, according to Social Security

Which of the following statements is NOT true concerning the relationship between group health insurance plans and Medicare? (assuming the business has more than 20 employees)

Group health coverage is NOT available for workers over the age of 65

What is the name of the rider that provides an additional purchase option in a life insurance policy?

Guaranteed Insurability Rider

An organization that requires healthcare services to be provided by a network of physicians and hospitals is known as a(n)

HMO

Which of the following health plans pay benefits on a pre-paid basis?

HMO

A family counseling benefit is typically offered under which of these coverages?

Hospice care

Which of the following is NOT subject to the promise to pay in an insuring clause?

How the premium is calculated

Tom has a qualified retirement plan with his employer that is currently considered to be 80% "vested". How can this be interpreted?

If Tom's employment is terminated, 20% of the funds could be forfeited

A single premium deferred annuity sometimes contains a bailout feature. Which statement regarding this feature is correct?

If the interest rate falls below a specified level, the surrender charge is waived

When group benefits under COBRA have expired, a fully insured group policy can be converted to a(n)

Individual health policy After expiration of group benefits under COBRA, a fully insured group policy can be converted to an individual health insurance policy.

Which statement regarding the certificate of insurance is accurate?

It indicates evidence of an employee's insurance coverage

Ken is age 65 and has 2 years until he receives Social Security retirement benefits. At his current age, which is true about Medicare Part A Hospital Insurance coverage?

It is available through application to Social Security

Which of these is NOT a common life insurance nonforfeiture option?

Life income annuity

Skilled nursing facility expenses are sometimes covered by _____, but ONLY if the insured was hospitalized prior to entering the facility.

Medicare

Medicare Part A coinsurance payments are covered by

Medicare Supplement Plan A

Which of these is a type of private insurance that covers the cost-sharing amounts under Medicare?

Medicare supplement

Medicare Part B excess charges are covered by

Medicare supplemental insurance

What is considered a valid reason for an insurer's refusal to pay policy proceeds directly to a minor?

Minors are normally not capable of handling money in a reasonable manner

Which of the following health insurance plans charges a premium that cannot be increased?

Noncancelable

Which of the following is NOT an example of risk retention?

Not doing a business deal after deciding it would be too risky

Julie is an employee with a group health plan that contains the Mandatory Second Surgical Opinion provision. What is to be expected with this provision in place?

Out-of-pocket expenses are lower when a second surgical opinion is obtained as opposed to having only one

Which of the following can be defined as a cause of a loss?

Peril

Which of these plans allow a participant to choose either a network or non-network provider at the time when medical care is needed?

Point-of-service

Which of the following guidelines does NOT apply under the pregnancy provision of the Civil Rights Act?

Post-termination extensions of medical benefits must apply equally to pregnancy

The agreement in which hospitals and physician groups in a specific area contract with an insurance company to provide medical care at predetermined costs is

Preferred Provider Organization (PPO) (a collection of health care providers who offer their services to certain groups at prearranged prices)

How is the insured protected if a payor benefit rider is attached to the life insurance policy?

Premium payments are waived in the event the premium payor dies or becomes disabled

When must a producer provide disclosure about information practices to an applicant?

Prior to or at the time of signing the application

Which of these occurrences could improve an insurer's ability to reduce premiums?

Rate of earnings on investments increase

Which of the following would most likely purchase an immediate annuity?

Retiree having a lump sum to invest

What kind of arrangement gives the policyowner the right to change the beneficiary?

Revocable designation

Switching Life insurance policies without tax consequence is permitted under

Section 1035 rules

Laura is a new employee and will be obtaining non-contributory group Major Medical insurance from her employer. Which of the following actions must she take during the open enrollment period?

Sign an enrollment card

Ch 2 Health Insurance Providers Flashcards | Quizlet quizlet.com › Social Science › Business › Insurance If an individual would like to enroll in Medicare or seek public information about Medicare, which federal agency handles this?

Social Security Administration

If an individual would like to enroll in Medicare or seek public information about Medicare, which federal agency handles this?

Social Security Administration

How are monthly life annuity benefit payments treated under a tax sheltered annuity (TSA)?

Taxed as ordinary income in the year received

When a ten year renewable term life insurance policy issued at age 45 is renewed, the premium rate will be the current rate for

Ten year term insurance for a person aged 55

which statement regarding the joint and survivor life insurance settlement option is NOT true?

The amount of each installment is larger than the single life income option

Peter, age 50, surrenders his modified endowment contract (MEC). How is the gain treated in terms of federal income taxes?

The gain is treated as taxable income and a penalty tax is imposed on the gain

Which of the following is true regarding a person receiving a waiver of premium benefit?

The insured must be disabled for a period of time

Which of the following is a true statement regarding a Medicare Supplement policy purchased during the open enrollment period?

The policy will be issued regardless of health

A life insurance policy that includes a return of premium rider will pay the beneficiary how much upon the insured's death?

Total premiums paid plus the policy face amount

What is the face amount of a $50,000 graded health benefit life insurance policy when the policy is issued?

Under $50,000 initially, but increases annually until fully insured

Which of the following statements about universal life insurance is NOT true?

Universal life insurance normally has a minimum guaranteed cash value for duration of the policy

How do birthing centers reduce medical costs?

Using certified nurse midwives

An agent gives a conditional receipt to a client for an insurance policy after collecting the initial premium. When will the policy become effective?

When the conditions of the receipt are met.(A conditional receipt indicates that certain conditions must be met in order for the insurance coverage to go into effect)

Medicare supplement insurance that provides a preventative medical care benefit will often cover

Yearly Physical Examinations

Which of these is NOT an advantage of term life insurance?

a cash benefit will be provided if the insured is alive at the end of the policy period

Medicare can be described as

a federal health insurance program for individuals over the age of 65 or permanently disabled

Short-term group disability income benefits are

a percentage of weekly earnings up to a stated maximum

Which of the following best describes a point-of-service (POS) plan?

a plan which combines indemnity plan features with those of an HMO

Which of these is an accurate statement regarding the fixed period settlement option on a life insurance policy?

a portion of the payments paid to beneficiary comes from interest calculated on the proceeds of the policy

A prepaid dental plan has an agreement in place with a network of dentists which

accepts an established amount as payment in full for the dental services rendered

Mike recently lost sight in both eyes. He has a policy that pays a lump sum benefit for this injury. What type of insurance does Mike have?

accidental death and dismemberment

Which of the following is NOT covered by a comprehensive long-term care policy?

acute care

Which of the following statements accurately describes the "time limit on certain defenses"?

after a stated period, claims cannot be denied due to material misrepresentation on the application

An agent's authority to bind an insurer to an insurance contract may be granted in the

agent's contract and the insurance company's appointment

The absolute assignment of a life insurance policy results in

all incidents of ownership transferred to the assignee

The elimination period of an individual disability insurance policy refers to the

amount of time a disabled person must wait before benefits are paid

An individual who purchases a modified life insurance policy expects

an improvement in future income

Which of the following is not a reason for a business to buy key person life insurance?

an increased pension liability if the key employee dies

Many deferred annuity contracts waive the surrender charge when the

annuitant dies or becomes disabled

Use of XYZ Insurance Company brochures, business cards, and rating guides is an example of

apparent authority

In what situation could an insurance policy's coverage be modified?

applicant is a substandard risk

When there is a named beneficiary on a life insurance policy, the death benefits

are paid directly to the beneficiary without interference from the insured's creditors

Insurance is NOT characterized as which of the following?

as the number of insured increase the number of losses decrease

If a disability income policy contains a cost-of-living adjustment rider, benefits must typically be increased

at least once per year from when benefits begin

In the event of premium default, which life insurance provision will use the cash value to keep the policy in force?

automatic premium loan

The Coordination of Benefits provision is added to a group health plan in order to

avoid overinsurnance

Which of the following statements BEST describes a double indemnity provision in travel accident insurance?

benefits are doubles under certain circumstances state in the policy

Tim had an on-the-job accident and collects benefits from his individual disability income policy. Which factor could possibly reduce these benefits?

benefits he receives from workers compensation

A preferred provider plan and an indemnity plan are similar in what way?

both pay on a fee-for-service basis

A disabled business owner who has payroll and business expenses paid for has what kind of insurance policy?

business overhead expense

The guarantee of insurability option provides a long-term care policyowner the ability to

buy additional coverage at a later date

Which of the following types of insurers limits the exposures it writes to those of its owners?

captive insurer

Which of these is NOT a true statement of the war exclusion?

civil insurrections apply

Prepaid dental plans differ from most other types of dental plans in what way?

closed panel of dentists can only be used

The principal source of information concerning an applicant's identity, age, and marital status is found in the

completed applications

Chris has a single major medical contract which covers all medical expenses. His plan is considered to be

comprehensive (a single major medical contract which covers all medical expenses)

The courts will normally interpret a policy in favor of the insured when the meaning of the policy is not clear. This is because an insurance policy is a(n)

contract of adhesion

An insurance application requires an applicant to make a full, accurate disclosure of the risk factor involved. Using this criteria, an insurance policy is considered what type of contract?

contract of utmost good faith

In what situation would disability income insurance premiums be a deductible expense?

corporation paying for group disability income coverage for its employees

Reductions in coverage are one feature of ____ in Health insurance policies

cost containment

Jerry has an indemnity plan which covers dental expenses. Typically, these type of plans

cover preventative care once every six months

What does the rehabilitation benefit cover in a disability income policy?

covers the approved cost of the rehabilitation necessary to help a disabled insured return to work

Which of the following is NOT an intended use of an annuity?

create new funds upon the death of a wage-earner

Which of the following disability buy-sell agreements is best suited for businesses with a limited number of partners

cross-purchase agreement

What happens to the purchasing power of benefit payments from a fixed life annuity when the cost of living goes up?

decreases

What effect does interest income have upon insurance premiums?

decreases premium

In what way is a life insurance policy affected by an accelerated benefit payment?

decreases the death benefit

Which of the following is generally a form of group credit life insurance?

decreasing term insurance

Individuals covered with employer-paid group health plans will normally receive tax-free benefits under all of these plans EXCEPT

disability income

For purposes of Disability Income insurance, earned income would include all of the following EXCEPT

dividends

An HMO prescription drug plan is generally characterized by

drugs dispensed through participating pharmacies

In long-term care insurance, what is the length of time for which claims will be paid?

elimination period

Which of the following would permit an insurer to delay a covered disability policy claim?

elimination period

When using the needs approach for life insurance planning, a lump sum may be created to provide for all of the following EXCEPT

employee benefits

Which of the following statements BEST describes employer contributions for employer provided health insurance?

employer contributions are deductible

Notice of information practices must be given to a policyholder at least

every three years

Which statement concerning an adjustable life insurance policy is FALSE?

evidence of insurability is required when there is a change in premium

The difference between a doctor's actual charges and the amount approved by Medicare is referred to as a(n)

excess charge (the amount above and beyond what Medicare approves for a specific procedure/doctor visit)

Employer-paid qualified long-term care insurance premiums are typically

excluded from the employee's gross income

An officer for a corporation takes out numerous unsecured loans from the company's qualified retirement plan. Which of these rules is the plan in violation of?

exclusive benefit rule

How are benefit payments from individually-owned medical expense policies treated for tax purposes?

exempt from income taxes

The powers directly given to a producer in an agency contract are called

express

An annuitant is paid $495 per month until the contract value is exhausted at some undetermined date in the future. Which type of annuity payout option is this?

fixed amount

Tori has an annuity that pays her a $500 per month income benefit for life or for ten years, whichever is longer. What kind of annuity is this?

fixed life annuity with period certain

Major Medical policies are typically characterized by which of the following?

flat deductible

What are premiums for group credit life insurance based on?

flat rate unrelated to the borrower's age

Rick owns a variable universal life policy and chooses a variable death benefit option. What will typically happen to the death benefit as a result of this selection?

fluctuate with changes in the cash account

What is considered a valid reason for small businesses to insure the lives of its major shareholders?

fund a buy-sell agreement

Kyle is an insured who disregarded an accident and health insurance policy provision that requires him to seek a second surgical opinion. What will the end result be?

he may be reimbursed for the surgical procedure at a reduced benefit level

Lamont has a point-of-service plan and is seeking to obtain health services outside the network. What will likely be the end result?

higher out-of-pocket costs

A medical fee schedule shows the amount an insurer will pay for a given procedure. This amount is considered to be the

highest amount payable

A family counseling benefit is typically offered under which of these coverages?

hospice care

An annuity which starts paying monthly benefits within a month after issuance is called a(n)

immediate annuity

XYZ Insurance Company gives direct authority to its producers to sell insurance through an agency contract, but nothing is stated regarding the collection of premiums. Which authority grants the producer the right to collect premiums?

implied authority

Which life insurance clause prohibits an insurance company from questioning the validity of the contract after a stated period of time has passed?

incontestable clause

The type of health insurance in which underwriting procedures are the most restrictive is

individual

All of these are considered features of whole life insurance EXCEPT

initial premium is lower than for an equivalent amount of term insurance

Which of these procedures is NOT designed for ambulatory care centers?

inpatient surgery

Who must sign a rider attached to a health insurance policy in order for it to be valid?

insured and producer

Which of these statements reflects an accurate portrayal of Medicare SELECT

insured uses preferred providers in exchange for paying lower premiums

When premiums are determined, one factor would be the expenses of the

insurer

Which statement is INCORRECT about the interest-only settlement option in a life insurance policy?

interest on proceeds must be paid by the beneficiary

Which of these statements is NOT true regarding a cash value loan against a life insurance policy?

interest payments made by policyowner are deductible

In what way are insurance policies said to be aleatory?

involves the potential for the unequal exchange of value

The death proceeds of a credit life insurance policy are typically paid to the

lender

How much is normally paid to a policyowner in a life (viatical) settlement?

less than the death benefit

A policyowner has a life insurance policy where she had listed her age on the application as 5 years younger than her actual age. If she dies and the insurer discovers the misstatement of age, how much will the insurance company pay?

less than the face amount

What is the guaranteed cash value of a whole life insurance policy when the insured turns 65 years old?

less than the policy's face amount

During the early years of a whole life insurance policy, the cash value will normally be

less than the total premiums paid

What type of premiums are associated with individual mortgage protection life insurance policies?

level premiums

After the extended term life nonforfeiture option is chosen, the available insurance will be

level term for a stated period of time

Group life insurance is typically issued as

level term insurance

what is another term used for a "pure" life annuity?

life income

What is covered under a limited accident and health insurance policy?

limited perils and amounts

Joe is a life insurance policyowner who has failed to pay interest on his policy loan. What will result from this nonpayment?

loan amount is increased to reflect the amount of interest due

Care coverage is typically found in a(n)

long term care policy

Custodial care is normally covered under

long-term care insurance

The annuitant in a single premium deferred annuity (SPDA)

makes only one premium payment

A MET third-party administrator may NOT perform which of the following functions?

marketing the plan

Which of the following relationships demonstrates insurable interest in the absence of economic interest?

marriage partners

Which of the following statements accurately describes the financial impact of total disability?

may be worse than the financial impact of death

A life policy that has premiums that are lower than normal during the early years is called

modified life

Periodic health claim payments MUST be made at least

monthly

All of the following are covered under most dental plans EXCEPT for

mouth cancer

Medicaid will pay for nursing home expenses under what condition?

must have financial need (Medicaid is a federal and state funded program for those whose income and resources are insufficient to meet the cost of necessary medical care)

Which of these is NOT used as selection criteria in the underwriting process of a life insurance application?

national origin

specialty care is provided by which of the following health maintenance organization (HMO) providers?

neurologist

Medicare Supplement insurance requires an individual to be at least how old for open enrollment?

no minimum age

When funds are transferred directly from one IRA to another IRA, what percentage of the tax is withheld?

none

An agent whose actions exceed the authority granted by contract is

not backed by the insurer

Sarah, age 88, is a life annuitant who has lived beyond her life expectancy. The funds for additional benefit payments will be derived primarily from funds that were

not distributed to life annuitants who died before life expectancy

Which element of a contract constitutes a definite and unqualified proposal by one party to another?

offer

All of these statements correctly describe an aleatory contract EXCEPT

only one party makes any kind of legally enforceable offer

Most prepaid dental plans cover

oral examinations

The authority to change the beneficiary in an individual annuity lies with the

owner

Which type of deductible must be satisfied again for each illness or accident in a major medical plan?

per-cause (a deductible that is assessed for each new sickness or accidental injury)

A life insurance guaranteed insurability rider gives the insured the right, without proving insurability, to

periodically purchase additional insurance

A life insurance policy's contingent beneficiary is the

person who receives the death benefits if the primary beneficiary dies before the insured

Which action will trigger a penalty tax on premature distributions from a modified endowment contract (MEC)

policy loans

What happens to a life insurance policy when the policy loan balance exceeds the cash value?

policy will no longer be in force

The standard provisions of an accident and health insurance policy require that the

policy, endorsements, and attached papers constitute the "entire contract"

Dividends from a mutual insurance company are paid to whom?

policyholders

A disability income insurance policy was recently issued with a rating. What does this mean?

policyowner will be charged an additional premium

What typically changes at the re-entry option date found in some term life policies?

premium (re-entry gives the insured the opportunity to provide evidence of insurability at the end of the term to qualify to renew the policy at a lower premium)

Which statement regarding the life insurance premium for a children's rider is true?

premium remains the same no matter how many children

Alan is an enrollee of a health maintenance organization (HMO) which uses a gatekeeper system. If there ever comes a time when he needs emergency health services, what should he do?

proceed to the nearest emergency room

A certificate of coverage for a group health policy is best described as

proof of coverage for the employee

The dental specialty which deals with the replacement of missing teeth is called

prosthodontics

A Medicare Supplement policy is required to do which of the following?

provide a 30 day free-look period

Which of the following would NOT be a reason for purchasing life insurance on a child's life?

provide benefits for the child if the parents die

Which of the following could be a future use of the cash value that builds in a recently-purchased whole life insurance policy?

provide supplemental income in 35 years

Which of these statements is NOT a characteristic of the law of large numbers?

rates can be calculated to compensate for losses (law of large numbers states that larger groups provide better loss predictions, the high the exposure the more likely the event can be predicted)

What effect can a long-term care benefit rider have on a life insurance policy?

reduced death benefit

Which of the following statements BEST describes the HIPAA portability rules for an individual who changes from one group medical plan to another?

reduces or eliminates any pre-existing conditions excluded under the new plan

Which type of policy pays benefits to a policyholder covered under a Hospital Expense policy?

reimbursement

How can an insurance company minimize exposure to loss?

reinsuring risks

A life insurance policy's waiver of premium rider has the ability to

relieve the insured of premium payments following an initial waiting period after the insured becomes totally disabled

Ron recently purchased an immediate, straight life fixed annuity. His benefit payments will

remain a constant dollar amount for the duration of the annuity period

Which of the following is NOT a basic underwriting action for accident and health insurance?

removing uniform policy provisions

What is considered the accounting measurement of an insurance company's future obligations to its policyowners?

reserves

The inability to perform SOME of the duties of one's own occupation is known as a

residual disability

What is the insurer responsible for when a producer is acting within the scope of authority granted in the agency contract?

responsible for acts by the producer that are authority only

What kind of arrangement gives the policyowner the right to change the beneficiary?

revocable designation

A group-owned insurance company that is formed to assume and spread the liability risks of its members is known as a

risk retention group

Which of the following describes the act of insuring a risk against possible loss?

risk transfer

What does a fixed life annuity offer protect against?

savings depletion due to longevity

Third-party administration has become fairly common in accident and health insurance due to the growth of

self-funding of benefits

Which of these factors does NOT influence an applicant's need for life insurance?

self-maintenance expenses

Assets that back the non-guaranteed values of variable life insurance products are held in which account?

separate account set up by the insurer

When issuing disability income coverage on a substandard risk, an insurance company may

shorten the benefit period

which life insurance policy provision prohibits beneficiary from "commuting, encumbering, withdrawing or assigning" any portion of the proceeds prior to actual receipt from the company?

spendthrift

An insurer will typically assess a back-end load on a deferred annuity that is cancelled during the early contract years. What is this back-end load referred to as?

surrender charge

How does the cost for a survivorship policy compare to the cost of combining two separate individual life insurance policies?

survivorship life policy is lower

If an employer pays for accidental death and dismemberment insurance for its employees, the amount paid by the employer is generally

tax deductible to the business

The interest credited to the cash values of personally-owned non-qualified annuities is considered

tax-deferred

Under a key person disability income policy, benefits will be received as

tax-free income to the business

Which of the following statements is TRUE if the owner of an IRA names their spouse as beneficiary, but then dies before any distributions are made?

the account can be rolled into the surviving spouse's IRA

Which statement concerning the Entire Contract provision in an individual accident and health insurance policy is TRUE?

the agent doesn't have the authority to change the policy or waive its provisions

Which factor determines the maximum disability income benefit that can be purchased by an applicant?

the applicant's income

What is payable to the policyowner if a whole life policy is surrendered prior to its maturity date?

the cash value

All of these statements concerning group credit life insurance are false EXCEPT

the face amount is based on the outstanding loan balance

Medicare Part A does NOT provide coverage for

the first 3 pints of blood

The insured's consideration given for a health insurance policy is

the first premium payment and the application

What would be considered an advantage of purchasing term life insurance?

the initial premium is lower compared to an equivalent amount of whole life coverage

Which statement regarding a fixed period settlement option is correct?

the installment payment amount is determined by the total number of installments

Under the Law of Agency, the principal is considered to be

the insurer (the agent)

Who may terminate coverage under a cancelable health insurance policy?

the insurer or the insured

Which of these is a typical result of a concurrent review?

the length of time spent in the hospital is monitored

Rick recently died and left behind an individual IRA account in his name. His widow was forwarded the balance of the IRA. The widow qualifies for the

the marital reduction

Who is normally considered to be the owner of a 403(b) tax-sheltered annuity?

the participating employee

What is considered the collateral on a life insurance policy loan?

the policy's cash value

Which of these statements regarding the extended term insurance nonforfeiture option in a life policy is accurate?

the premium to purchase the coverage comes from the policy's cash value

A material change in a modified endowment contract (MEC) results in

the seven pay test, adjusted for cash value, applies again

How is an insured's accident and health claim handled by an insurer if it occurs during the policy's grace period?

the unpaid premium may be subtracted from the reimbursement

Under HIPAA requirements, eligibility for the pre-existing conditions exclusion waiver under new coverage is lost if

there is a break in coverage of more than 63 days

The major medical deductible carryover period normally applies to expenses incurred during the last ___ months of the plan year.

three

When does the owner's contractual rights begin under an individual annuity contract?

time of purchase

The reason for backdating a policy is

to obtain a premium rate based on an earlier age

A business becoming incorporated is an example of risk

transfer

A hold-harmless clause is an example of risk

transfer

Typically, states will permit the grouping of two or more small employers in the same industry for obtaining group health insurance at a favorable rate. This grouping of employers is known as a multiple employer

trust

In an individual retirement account (IRA), rollover contributions are

unlimited by dollar amount

When does interest income for a flexible premium deferred annuity get reported for federal income taxes?

upon receiving distributions from the contract

Extended term option

uses the policy's cash value to purchase a level term insurance policy in an amount equal to the original policy's face value, for as long a period as the cash value will purchase

Which type of life insurance policy allows a policyowner the choice of investments along with flexible premium payments?

variable universal life

A policyowner with a terminal illness who sells his life insurance policy to a third party is called a

viator

Which of the following best describes the presumptive disability provision?

waives the typical total disability requirements

A contract is considered void in all of the following situations EXCEPT

when consideration is unequal

Under what circumstance does an accident and health insurer have the right to request an autopsy?

when not prohibited by state law

Which event triggers a deferred annuity to start making benefit payments to the annuitant?

when the contract is annuitized

When would evidence of insurability be required for a person already covered with a variable universal life policy?

when the death benefit is increased

When does the producer give a premium receipt for a life insurance application?

when the initial premium has been paid with the application

a policyowner is permitted to take out a policy loan on a whole life policy at what point?

when the policy has a cash value


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