PT 6
For purposes of small group health insurance, the minimum number of members that a group can have is: 20 ten one or two five
1-2
How many days does the insurer have to provide claim forms to the insured after receiving a notice of claim? 10 30 15 60
15
Who administers California's Health Insurance and Counseling Advocacy Program (HICAP)? U.S. Department of Health, Education, and Welfare (HEW) California Department of Aging California Department of Insurance U.S. Department of Health and Human Services (HHS)
California Department of Aging
Which of the following best characterizes the ownership of health insurance coverage? Most people are insured through a group plan. Most people are insured through an individually-owned plan. Most people do not have health insurance coverage. Most people are insured through a state or municipal plan.
Most people are insured through a group plan.
Which statement regarding adjustable life insurance is correct? The policyowner can increase the death benefit and keep the premium unchanged without hurting the policy's cash value. The policyowner can stop and start premium payments at any time. It offers five times higher cash value than whole life insurance. Premiums can increase or decrease to suit the policyowner's changing needs.
Premiums can increase or decrease to suit the policyowner's changing needs.
In a typical basic medical expense policy, how does the insurer reimburse covered expenses? Reimbursement is paid at up to 80 percent of covered expenses. Reimbursement is paid at up to 100 percent of covered expenses, subject to a maximum limit. Reimbursement is based on the maximum benefit per visit, injury, or illness. Reimbursement is based on a fee schedule.
Reimbursement is paid at up to 100 percent of covered expenses, subject to a maximum limit.
In California, the insurance business is regulated by which of the following? State and federal government National Association of Insurance Commissioners State government Federal government
State and federal government
The exclusion ratio applies until all principal in the annuity contract has been paid out. After that, what happens? The annuity contract is canceled. The annuity will be paid up, and no further taxes will apply. The full amount of future annuity payments is treated as taxable income. The full amount of future annuity payments is income tax free.
The full amount of future annuity payments is treated as taxable income.
What happens if a person submits an insurance application without the first premium? The insurer must make a counteroffer. The applicant made an offer to the insurer. The insurer must make an offer to the applicant. The applicant has made a counteroffer.
The insurer must make an offer to the applicant.
All the following statements regarding the automatic premium loan (APL) are correct, EXCEPT: The policy's cash value must be at least equal to the unpaid premium for the automatic premium loan to be made. Some policies prohibit automatic premium loans from paying any more than a total of 12 monthly premiums. Some policies prohibit automatic premium loans from paying consecutive premiums. Under the APL, a policy loan is created to pay a premium on its due date.
Under the APL, a policy loan is created to pay a premium on its due date.
A person who incurs a deductible medical expense is eligible for reimbursement from: an FSA the health care provider the person's employer a trust fund
an FSA
Which is NOT a typical source of health underwriting information? Attending Physician Statement (APS) credit report any other health insurance applications the applicant has completed producer (agent) report
any other health insurance applications the applicant has completed
Which form of health insurance bases benefits on the indemnification of the insured? HMOs and PPOs Medicare supplement policies managed care plans basic medical expense insurance
basic medical expense insurance
A producer owes a fiduciary duty to: the customer only the insurer only neither the insurer nor the customer both the insurer and the customer
both the insurer and the customer
A health insurance policy with an optionally renewable provision gives the insurer the right to: cancel the policy at any time increase the premium for anyone who is not in the optionally renewable class cancel the policy on a date specified in the contract increase the premiums at any time
cancel the policy on a date specified in the contract
HMOs that do NOT cover services outside their network are called: open panel point-of-service closed panel preferred provider organizations (PPOs)
closed panel
What must the insured pay for Part A coverage beyond the 60th day of hospitalization? nothing daily coinsurance or copayment amount deductible weekly coinsurance or copayment amount
daily coinsurance or copayment amount
The purpose of the insuring clause is to: describe the type and scope of coverage list the exclusions from coverage state the parties' consideration state the premium for the covered risks
describe the type and scope of coverage
Long-term care (LTC) insurance is NOT designed to provide coverage for: adult day-care services and residential community living services respite care services (providing temporary respite for a family member who has assumed caregiving responsibilities) nursing home services and home health care services health services for the poor
health services for the poor
What provision lets a policyowner return a policy for a refund of premiums paid for a certain period of time after the policy is issued? consideration right to examine (free look) grace period contestability period
right to examine (free look)
Grace's annuity pays her an income for her lifetime, regardless of how long she lives. When she dies, no further payments are made to anyone. Which type of settlement options does she have? straight, or pure, life income life income with period certain life income with guaranteed minimum (refund guarantee or life annuity certain) joint and survivor life income
straight, or pure, life income
A producer owes a fiduciary duty to: the customer only the insurer only neither the insurer nor the customer both the insurer and the customer
the insurer only
When paying death benefits, life insurance companies must consider all of the following, EXCEPT: the order of beneficiaries and their succession the relationship between the insured and beneficiary the share of the death benefits that goes to each beneficiary, if the insured has named more than one the succession of beneficiaries
the relationship between the insured and beneficiary
After a viatical settlement agreement is signed, which party owns the life insurance policy? the viatical settle broker the insured the viator the vaitical settlement provider
the vaitical settlement provider
Emily, age 48, withdrew $8,000 from her SIMPLE plan to buy a car. How much penalty tax will she owe? $800 $0 $1,600 $4,000
$800
How long must the free-look period be for long-term care insurance policies sold in California? 7 days 10 days 30 days 20 days
30 days
What is another name for Medicare supplement policies? major medical Medigap Medicaid Original Medicare
Medigap
Though not specifically cited in the producer's contract, the producer is expected to telephone prospects on the insurer's behalf to arrange sales appointments. This is an example of what kind of producer authority? express authority apparent authority perceived authority implied authority
implied authority
Which of the following is most designed to discourage deferred annuity contract owners from surrendering their annuity and moving the money to a new annuity when rates are rising? a variable annuity traditional fixed annuities market-value adjusted annuities an indexed annuity
market-value adjusted annuities
From an insurance risk perspective, an applicant engaging in adverse selection is demonstrating which type of hazard? morale hazard legal hazards moral hazard physical hazard
moral hazard
Which one of the following most correctly describes the process that occurs when a group annuity member retires? The employer buys a variable annuity, which pays the benefits promised retirees in the group contract. The retiree converts his or her accumulated share of the group contract into an individual annuity. The group annuity begins paying the monthly income amount directly from the group contract. An individual annuity contract is issued to the retiring member using funds from the group contract.
An individual annuity contract is issued to the retiring member using funds from the group contract.
Which of the following statements about backdating life insurance applications is correct? Only the insurance company, not the producer, can authorize the backdating of specific applications. The purpose for backdating an application is to qualify for a better underwriting classification. Backdating has no impact on the policy's premium, but it does result in the policy being issued with a cash value. Insurers normally allow an applicant to backdate a policy by up to 2 years.
Only the insurance company, not the producer, can authorize the backdating of specific applications.
Which statement is correct about the taxation of premiums for business disability income insurance? Premiums for disability buy-out insurance are deductible by the business. Premiums for business disability insurance are always an ordinary and necessary business expense. Premiums for business overhead expense insurance are not deductible by the business. Premiums for key person disability income insurance are not deductible by the business.
Premiums for key person disability income insurance are not deductible by the business.
What happens if a person submits an insurance application without the first premium? The applicant has made a counteroffer. The applicant made an offer to the insurer. The insurer must make an offer to the applicant. The insurer must make a counteroffer.
The insurer must make an offer to the applicant.
Why do endowment contracts not enjoy the same favorable tax treatment as life insurance? Their cash values equal the contract's death benefit when the policy is issued. They do not pay benefits if the insured dies before the contract matures. They do not build cash values. They mature before age 120.
They mature before age 120.
Statements made on a life insurance application are considered: representations conditional promises warranties unconditional promises
representations
In general, all settlement options with a life contingency base payments on which of the following? a specific period selected by the owner or beneficiary the beneficiary's life expectancy a specific monthly payment amount selected by the owner or beneficiary the insurance company's declared dividend schedule
the beneficiary's life expectancy
How is a primary insurer defined? an insurer that is domiciled in California but is certified to transact insurance in other states the insurer that accepts ceding business and assumes a part of another insurer's loss exposure the insurer that transfers its loss exposure to another insurer in a reinsurance transaction an insurer that writes only one line of coverage
the insurer that transfers its loss exposure to another insurer in a reinsurance transaction
Basic surgical expense insurance policies determine benefits on the basis of: a percentage of the amount charged by the surgeon the amount charged by the hospital the usual, customary, and reasonable (UCR) fee for the procedure performed a maximum annual limit per procedure
the usual, customary, and reasonable (UCR) fee for the procedure performed
Which best defines "total disability" for purposes of qualifying for Social Security disability benefits? A person is unable to perform the duties of his or her job. A person is unable to perform some of his or her duties. A person is unable to work in any gainful occupation and has a disability that is expected to last at least one year or result in death. A person is unable to perform the job for which he or she has been trained or educated.
A person is unable to work in any gainful occupation and has a disability that is expected to last at least one year or result in death.
Which statement is correct about the tax treatment of group disability income benefits? An employee does not pay income tax on the benefits while disabled. An employee pays income tax on the percentage of benefits equal to the percentage of premium the employee paid. An employee pays income tax on all benefits. An employee pays income tax on the percentage of benefits equal to the percentage of premium the employer paid.
An employee pays income tax on the percentage of benefits equal to the percentage of premium the employer paid.
All of the following statements regarding the extended term nonforfeiture option are correct EXCEPT: If the extended term option is elected, the face amount of the term policy is the same as the face amount of the lapsed policy. An extended term option allows the policyowner to have insurance coverage for some period with no further premium payments required. The extended term option is not available if the original policy was issued on a substandard (rated) basis. Coverage under the extended term insurance option continues for the insured's entire life.
Coverage under the extended term insurance option continues for the insured's entire life.
All the following statements regarding term life riders covering additional insureds are correct EXCEPT: Term insurance is used to provide the additional insured coverage. The additional insured rider covers individuals other than the base policy's insured. Coverage usually ends when the policyowner reaches age 65 or 70. It is not necessary for the policyowner to have an insurable interest on the insured who is covered under the additional insured rider.
It is not necessary for the policyowner to have an insurable interest on the insured who is covered under the additional insured rider.
Which of the following best describes insurable interest? It refers to the role life insurance can play in protecting policyowners from investment fraud. It refers to the maximum amount of insurance that may be purchased on the insured person or property. It describes the basic relationship between the insurance company and the policyowner. It refers to the financial relationship between the policyowner and the insured person or property.
It refers to the financial relationship between the policyowner and the insured person or property.
Which statement about return of premium riders is correct? They refund the entire premium to the insured only if no claims are filed against the policy. They prevent the insured from receiving a premium refund if any claims are filed. Return of premium riders are not available in all states. They are available at no additional cost.
Return of premium riders are not available in all states.
Social Security benefits are funded through payroll taxes split between the employee and employer. Which of the following best explains the amount of tax paid by self-employed individuals? Self-employed individuals pay a rate that is more than the employee rate but less than the employer rate. Self-employed individuals pay the same rate as employers. Self-employed individuals pay a tax rate equal to the combined employer and employee rate. Self-employed individuals pay the same rate as employees.
Self-employed individuals pay a tax rate equal to the combined employer and employee rate.
Which statement about credit disability insurance is correct? The policy repays the principal amount, but not any interest. The benefit period is the same as the loan period. It pays a flat benefit amount over the policy period. It covers the risk of being disabled and unable to loan money.
The benefit period is the same as the loan period.
Which statement is correct about the operation of an employer's self-insured group health insurance plan? A state insurance fund pays covered claims. The employer pays covered claims. An insurance company pays covered claims. Employees contribute to a fund from which covered claims are paid.
The employer pays covered claims.
Which statement about state and federal involvement in group health insurnace is NOT correct? The government limits insurers freedom to impose restrictions and limitations on coverage. The federal government regulates group plans to protect workers and dependents The federal government exclusively regulates all health insurance
The federal government exclusively regulates all health insurance
ABC Company ends its group health plan with one insurer and buys another plan from another insurer. What happens to the deductibles and coinsurance payments that ABC's employees made under the previous plan? They are transferred to ABC as the plan sponsor. They are forfeited to the previous insurer. The new insurer applies a portion of them to the new plan. They are refunded to the employees.
The new insurer applies a portion of them to the new plan.
Which of the following statements generally guides insurance companies in determining "loading"? The resulting net premiums should help the company maintain or improve its competitive position. Total loading from all policies should meet industry averages. Expenses should be divided primarily among the company's most profitable plans and lowest mortality experience. Total loading from all policies should cover total operating costs, provide a safety margin, and contribute to profits or surplus.
The resulting net premiums should help the company maintain or improve its competitive position.
All the following statements about standard policy exclusions are correct EXCEPT: If a policy excludes a risk from coverage, the insurer will not pay the policy's benefit if death results from that risk. The war exclusion usually excludes paying the death benefit only if the death directly resulted from war. Standard exclusions found in most policies last for the life of the policy, even after the contestability period ends. The war and commission of a felony exclusions are required by law.
The war and commission of a felony exclusions are required by law.
Which statement about deferred compensation plans is correct? They allow executives to delay receiving current compensation until a future time. All employees over the age of 21 with at least one year of service must be eligible to participate in the plan. Although life insurance is not allowed to fund deferred compensation plans, annuities and mutual funds are allowed. They are considered qualified plans.
They allow executives to delay receiving current compensation until a future time.
Tim had paid only four premiums totaling $1000 on his health insurance policy when he was diagnosed with cancer. The insurance company paid more than $100,000 to cover the medical bills for his treatment during the next year. This situation demonstrates which of the following characteristics of insurance contracts? They are contracts of adhesion. They are personal. They are aleatory. They are unilateral.
They are aleatory.
When do funds in a deferred annuity become the owner's property? They are nonforfeitable and always belong to the contract owner. They belong to the owner only after they have accumulated for the period stated in the contract. They belong to the owner only at annuitization. They belong to the owner only after the end of the surrender charge period.
They are nonforfeitable and always belong to the contract owner.
Which statement correctly describes the tax treatment of unreimbursed medical expenses? They are subtracted from gross income. They are subtracted from premium expenses to determine the medical expense deduction. They may be deducted from taxable income if they exceed a certain percentage of AGI. They are added to taxable income.
They may be deducted from taxable income if they exceed a certain percentage of AGI.
All of the following statements about key person life insurance are correct, EXCEPT: The business applies for, owns, and is the beneficiary of the policy covering the life of a key employee. Key person, or key employee, life insurance is an example of third-party ownership. Upon the insured employee's death, the employee's surviving family receives the policy's death benefit. Life insurance used as key person life is normally owned by the business rather than the insured.
Upon the insured employee's death, the employee's surviving family receives the policy's death benefit.
In accordance with Section 1035 of the Tax Code, which of the following exchanges is permitted on a tax-free basis? a deferred market-value adjusted annuity for an immediate variable annuity a variable annuity for a variable life insurance policy a market-value adjusted annuity for a whole life insurance policy an equity-indexed annuity for an equity-indexed life insurance policy
a deferred market-value adjusted annuity for an immediate variable annuity
Which provision lets the insured control the payment of a death benefit in a health insurance policy? reinstatement provision notice of claim provision legal actions provision change of beneficiary provision
change of beneficiary provision
When underwriting an experience-rated plan, the insurer will NOT examine which factor? claims experience of similar groups group composition group size group stability
claims experience of similar groups
Robert is purchasing a life insurance policy in which he is the insured. If he wants to keep the policy proceeds out of his estate for tax purposes, all of the following arrangements would help him meet that goal EXCEPT: designate an irrevocable life insurance trust to be the owner and Robert's estate to be the policy beneficiary designate an adult son to be the owner and allow him to designate a beneficiary other than Robert's estate purchase the policy as the owner, but then transfer policy ownership to a third party at least three years before his death designate an irrevocable life insurance trust to be the owner and beneficiary of the policy
designate an irrevocable life insurance trust to be the owner and Robert's estate to be the policy beneficiary
Variable life insurance policies offer all of the following EXCEPT: a variety of investment subaccount choices a guaranteed death benefit flexible premium payments a cash value
flexible premium payments
All the following are types of riders that are available with most types of life insurance policies EXCEPT: accidental death benefit rider cost-of-living rider guaranteed dividend rider guaranteed insurability rider
guaranteed dividend rider
When determining eligibility for Medicaid, states do NOT consider: asset limitations disability or age household size income limitations
household size
Which plan reimburses the insured for the cost of covered medical care received? managed care plan PPO indemnity plan HMO
indemnity plan
Which level of long-term care provides ongoing but not continuous care to address a person's condition and is delivered by registered nurses, licensed practical nurses, and nurses' aides under a doctor's supervision? remedial care custodial care skilled nursing care intermediate care
intermediate care
A tax-qualified long-term care insurance policy lets policyowners deduct premiums as a medical expense while also receiving: a premium credit upon policy renewal unlimited tax-free benefits limited tax-free benefits a partial premium refund if no claims are filed
limited tax-free benefits
Medicare Part A does NOT cover which expense? long-term care costs home health care costs hospice costs inpatient hospital costs
long-term care costs
In which health care delivery plan does the insured share the cost of services and treatment with the insurer? managed care plan traditional insurance policy medical expense plan indemnity plan
managed care plan
Benefit payments from group long-term disability income coverage would NOT be reduced by income received from workers compensation government benefits other insurance plans salary increases
salary increases
A currently insured worker is eligible for which of the following Social Security benefits? survivor death benefits and disability benefits survivor death benefits only survivor death benefits, disability benefits, and retirement benefits retirement benefits only
survivor death benefits only
With a survivorship life insurance policy, the insurer pays the death benefit: when the surviving spouse dies when either of the insureds dies first only when the older of the two insureds dies only when the younger of the two insureds dies
when the surviving spouse dies
Bob's insurance goal is to provide additional death benefit protection for his family in case he dies while his children are young. What type of life insurance is best suited to this need? group life insurance whole life insurance term life insurance business life insurance
term life insurance
Which of the following best defines the main purpose of the California Department of Insurance? to set forth and pass insurance laws and regulations to serve as a lobbyist for the interests of California insurance companies and the insurance business at the federal level to serve as an advocate for California insurance companies and insurance licensees to protect the interests of California insurance consumers
to protect the interests of California insurance consumers
Why would a large manufacturer choose to self-insure rather than buy an insurance policy from an insurance company? to shelter company cash from federal taxation to avoid having to comply with state insurance laws dealing with employee benefits so they can pick and choose which losses they cover to save insurance premiums by paying relatively minor losses out of company funds
to save insurance premiums by paying relatively minor losses out of company funds
Which of the following correctly identifies qualified educational expenses that can be covered under a Section 529 prepaid tuition plan? tuition and mandatory fees only tuition only tuition, mandatory fees, room and board, and books tuition, mandatory fees, and room and board only
tuition and mandatory fees only
XYZ Insurance company receives notice of a cliam filed by one of its policy owners. When must XYZ company accept or deny the claim? within 10 days within 40 days only after it has determined that the claim is not fraud
within 40 days
Tom is employed by Acme Industries and covered by its group long-term disability income policy. Acme pays 80 percent of the premium. Tom pays 20 percent of the premium. He becomes disabled and receives a monthly benefit payment. How much of this benefit will NOT be taxed as income? 80% 100% 60% 20%
20%
An insured's policy with Company A pays $2,000 in benefits. His policy with Company B pays $3,000 in benefits for the same loss. He suffers a $5,000 loss and files a claim with both insurers. Company A's proportion of the loss is: 50 percent ($1,000 divided by $2,000) 40 percent ($2,000 divided by $5,000) 60 percent ($3,000 divided by $5,000) 20 percent ($1,000 divided by $5,000)
40 percent ($2,000 divided by $5,000) $2000/$5000=40%
To avoid immediate taxation of IRA funds paid to the IRA owner in a rollover IRA transaction, the owner must deposit the funds into the new IRA within how many days of receiving them? 30 days 60 days 120 days 10 days
60 days
If Rick withdraws funds from his universal life insurance policy, what will be the immediate effect on the policy's death benefit? It will not change as a result of the withdrawal. It will be reduced by the amount of the withdrawal, plus projected interest. It will be reduced by the amount of the withdrawal. It will not change, as long as Rick repays the amount withdrawn.
It will be reduced by the amount of the withdrawal.
Donna, age 40, buys a $200,000 straight whole life policy. On the same date, Kara, age 40, buys a $200,000 20-pay life policy. Which of the following statements is correct? Kara's policy will mature (endow) at a younger age than Donna's policy. Kara's policy will build cash value quicker than Donna's policy while she is paying premiums, but once premiums stop, cash value growth will slow down. Kara can make further premium payments once her policy is paid up while Donna cannot. The cash value of Kara's policy will build faster than Donna's policy after Kara's policy is paid up.
Kara's policy will build cash value quicker than Donna's policy while she is paying premiums, but once premiums stop, cash value growth will slow down.
Policyowners can withdraw the interest earnings on their dividends or allow the interest to continue to accumulate. In either case, how is the interest treated for income tax purposes? The interest earned on the dividend is taxable if withdrawn, but if paid out as part of the death benefit it is income tax free. The dividend itself is generally tax free but the interest earned on the dividend is reported as taxable income in the year credited. The interest earned is not taxable. The interest earned is not tax free, but it is tax deferred.
The interest earned on the dividend is taxable if withdrawn, but if paid out as part of the death benefit it is income tax free.
Due to the increasing cost of health insurance, employers with group health insurance plans usually: require all employees to reimburse the employer for their share of the premium require participating employees to contribute to the premium through payroll deductions ask participating employees to contribute to the premium through direct payroll deposits to the insurer require all employees to take a reduction in salary equal to their share of the premium
require participating employees to contribute to the premium through payroll deductions
All the following statements regarding life insurance cost-of-living (COL) riders are correct EXCEPT: Universal life policies, with their highly flexible terms, are not good candidates for the addition of a cost-of-living rider. As the consumer price index (CPI) increases, so does the policyowner's coverage, providing the insured can prove insurability. The cost-of-living rider on a whole life policy is typically an increasing term insurance rider.
As the consumer price index (CPI) increases, so does the policyowner's coverage, providing the insured can prove insurability.
Which one of the following statements about term life insurance is most correct? Term life insurance is an inexpensive way to provide permanent lifetime coverage. Term life insurance cannot be converted to permanent coverage. At any given age when issued, a level term policy will be less expensive than a permanent policy of the same face amount. Term life insurance builds a cash value.
At any given age when issued, a level term policy will be less expensive than a permanent policy of the same face amount.
When looking at how much income his family would need if he were to die prematurely, Tom discovered that the Social Security survivors' benefit would not give them enough ongoing income. If securing his family's financial future is his top priority, which of the following statements describes Tom's best response? Tom should try to lower his monthly expenses and increase the amount of Social Security withheld from his paychecks to ensure his family will have enough income if he dies. Tom can buy additional life insurance to cover the amount needed to provide an adequate stream of income upon his death. Tom should apply to the Social Security Administration now to ensure that his family will receive higher benefits if he dies. Tom can arrange to have his 401(k) account distribute its account value to his surviving dependents in monthly payments.
Tom should try to lower his monthly expenses and increase the amount of Social Security withheld from his paychecks to ensure his family will have enough income if he dies.
Jones is the policyowner and insured of a life insurance policy that contains a standard suicide provision. He commits suicide 18 months after the policy was issued, Jones's beneficiary will get which of the following from the insurer? the full death benefit nothing a return of premiums paid, plus interest a return of the premiums paid only
a return of premiums paid, plus interest
Which of the following entities would be eligible to set up a Keogh plan? a state government agency a three-person law partnership a corporation with 15 employees a nonprofit charitable organization
a three-person law partnership
Under the integrated long-term care option, the beneficiary receives the remainder of the face amount as the death benefit at the insured's death. In this way, the long-term care integrated option is similar to which of the following? term life insurance an accelerated benefits rider a family term rider a disability income benefit rider
an accelerated benefits rider
Regarding policy dividend options, the so-called "fifth dividend option" involves the purchase of: term life insurance in $1,000 increments additional insurance (determined by the dividend amount) of the same type as the base policy permanent life insurance in $1,000 increments one-year term life insurance equal to the base policy's cash value or the amount that the dividend can purchase
one-year term life insurance equal to the base policy's cash value or the amount that the dividend can purchase
Which is the amount that is paid for death under an accidental death and dismemberment (AD&D) insurance policy? primary amount capital sum indemnity amount principal sum
principal sum
Which health insurance policy provision requires that insurers must receive written proof of loss within a certain number of days of the loss? grace period time limit on certain defenses proof of loss time of payment of claims
proof of loss
Which statement regarding defined benefit employer retirement plans is correct? There are no limits to the monthly benefit amount participants can receive from the plan. When the plan participant reaches retirement, the employer typically pays benefits by withdrawing funds directly from the plan each month. Individual accounts are typically NOT set up for individual employees in a defined benefit plan. The employee typically contributes a portion of the plan funding, through pre-tax contributions.
Individual accounts are typically NOT set up for individual employees in a defined benefit plan.
Which statement best describes the restrictions an insurer must operate under when using information from the MIB? Insurers may rate or decline a life insurance applicant based solely on MIB information, as long as they do so consistently for all applications. Insurers cannot rate, but can decline, a life insurance applicant based solely on MIB information. Insurers must rate or decline a life insurance applicant based solely on MIB information. Insurers cannot rate or decline a life insurance applicant based solely on MIB information.
Insurers cannot rate or decline a life insurance applicant based solely on MIB information.
Which of the following statements is correct regarding coverage for experimental medical treatment in California? Insurers can exclude coverage for nonterminally ill insureds. Insurers must provide coverage to terminally ill insureds. Insurers can deny coverage. Insurers must provide coverage in all cases.
Insurers must provide coverage in all cases.
Which statement about the conversion provision in group life insurance policies is correct? It allows terminating plan participants to convert their coverage to an individual policy of the same face amount if they furnish evidence of insurability. It allows terminating plan participants to convert their coverage to an individual policy of the same face amount without the need to provide evidence of insurability. It allows terminating plan participants to convert their coverage to another group policy at the same benefit level without the need to provide evidence of insurability. It allows terminating plan participants to convert their coverage to an individual policy of the same face amount if they furnish evidence of insurability or to a policy with a lesser face amount without having to prove insurability.
It allows terminating plan participants to convert their coverage to an individual policy of the same face amount if they furnish evidence of insurability.
Which statement about the stop-loss provision in a major medical insurance policy is correct? The lower its maximum limit, the lower the policy premium. It limits the insured's out-of-pocket expenses in a year. Its maximum limit per loss is 10 percent. It protects the insurer from adverse selection.
It limits the insured's out-of-pocket expenses in a year.
Which of the following statements is correct regarding an insurer that accepts an insurance application from a nonappointed agent? It must then issue the policy as applied for. It must transmit the application to an insurer with which the agent is appointed. It must then appoint the agent and file notice of appointment. It is guilty of a misdemeanor.
It must then appoint the agent and file notice of appointment.
An employer with five employees applies for a group health insurance plan. What may the insurer do when underwriting the policy? reject the application to avoid adverse selection require the employees to provide evidence of insurability or undergo a medical examination exclude coverage for any member whose health presents a risk greater than those of other members exclude coverage for certain health conditions due to the size of the group
require the employees to provide evidence of insurability or undergo a medical examination
As contracts of indemnification, health insurance policies are designed to: reimburse third parties who are injured by the insured provide benefits that equal or exceed the loss prevent losses covered in the contract return the insured to the position he or she was in before a loss
return the insured to the position he or she was in before a loss
Annuities offer all the following benefits EXCEPT tax-deferred growth during a deferred annuity's accumulation period a death benefit tax-free distributions upon the annuity owner's death or retirement retirement income the annuitant cannot outlive
tax-free distributions upon the annuity owner's death or retirement
Because basic medical expense policies provide first dollar coverage, the deductible in supplemental major medical policies is: adjusted for the frequency of the insured's claims in one year often waived by the insurer typically high equal to the copayment
typically high
The insurance company function responsible for evaluating the insurable risks and assigning appropriate premium rates, is the: actuarial division sales division claims division underwriting division
underwriting division
Which of the following contract characteristics is unique to insurance contracts but NOT all contracts? consideration competent parties unilateral legal purpose
unilateral
Under the integrated long-term care option, what percentage of the base policy's face amount can be used for long-term care expenses? up to 100 percent, depending on the insurer up to 50 percent, depending on the insurer up to 75 percent, depending on the insurer up to 25 percent, depending on the insurer
up to 75 percent, depending on the insurer
Under a joint life insurance policy, when does the insurer pay the death benefit? upon the death of the insured who dies first upon the death of the insured who dies second when the older insured dies when the younger insured dies
upon the death of the insured who dies first
An insured's health plan provides specific coverage, which means it is NOT likely to cover: vision care only dental care only hospital care only visits to doctors' offices
visits to doctors' offices
