STUDY GUIDE LIFE AND HEALTH

An insured's long-term care policy is scheduled to pay a fixed amount of coverage of $120 per day. The long-term care facility only charged $100 per day. How much will the insurance company pay?

$120 a day

If a person is disabled at age 27 and meets Social Security's definition of total disability, how many work credits must he/she have earned to receive benefits?

12 Credits

In addition to penalties, fines, and possible imprisonment for violating the provision relating to misrepresentation, the Commissioner may suspend the license of such person for a period up to

3 years

An IRA uses immediate annuities to pay out benefits; the IRA owner is nearly 75 years old when he decides to collect distributions. What kind of penalty would the IRA owner pay?

50% tax on the amount not distributed as required

According to the Medical Loss Ratio (MLR), what is the minimum percentage of health coverage premium that must be applied to actual medical care in an individual health plan?

80%

Which of the following best describes the waiting period?

A period of time the insured has to wait before payments of benefits begin after a disability.

A group blanket health policy is best suited for which of the following?

A summer camp

Which of the following types of LTC is NOT provided in an institutional setting?

Home health care

Units with the same or similar exposure to loss are referred to as

Homogeneous.

All of the following would fall under the definition of Durable Medical Equipment EXCEPT

Hospital blankets. "Durable Medical Equipment is medical equipment such as oxygen equipment, wheel chairs, and other medically necessary equipment that a doctor prescribes for use in the home."

Life income joint and survivor settlement option guarantees

Income for 2 or more recipients until they die.

Which type of a hospital policy pays a fixed amount each day that the insured is in a hospital?

Indemnity

All of the following actions by a person could be described as risk avoidance EXCEPT

Investing in the stock market.

The insurer may suspect that a moral hazard exists if the policyholder

Is not honest about his health on an application for insurance.

What is NOT a benefit of a POS plan?

It allows guaranteed acceptance of all applicants.

Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option?

It does not guarantee that the entire principal amount will be paid out.

What are the consequences of a failure to comply with the Commissioner's office while it is executing a seizure order?

It is a misdemeanor punishable by a fine of $1,000, one-year imprisonment, or both.

When is the General Enrollment period for Medicare Part B?

January 1 through March 31 each year

Which of the following will be covered by a nonoccupational policy?

John gets hurt in a car accident during his lunch break.

A set of legal or regulatory conditions that affect an insurer's ability to collect premiums commensurate with the level of risk incurred would be considered a(n):

Legal hazard.

An insurance company wants to obtain the insurance history of an applicant. Which source releases coded information to insurers regarding information included on previous insurance applications?

Medical Information Bureau

In a situation when a Medicare insured uses the services of a non-participating provider, which of the following is NOT true?

Medicare pays its share of the bill directly to the provider.

In a POS plan, benefits for covered services when self-referring (without having your primary care physician arrange for the service) are generally

More expensive.

Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured?

Option B

During the grace period, the policyowner can

Pay a late premium without penalty.

What do living benefit riders do?

Pay part of the policy death benefit to insureds in order to help fund long-term care or nursing home care

Which of the following is the most common time for errors and omissions to occur on the part of an insurer?

Policy delivery

Which of the following can an insured submit to the insurer that would provide evidence of a claim and illustrate how severe the loss is?

Proof of claim

During the accumulation period in a nonqualified annuity, what are the tax consequences of a withdrawal?

Taxable interest will be withdrawn first and the 10% penalty will be imposed if under age 59 ½.

Written binders provide insurance before the policy is actually issued. The time period between the issuance of the binder and the policy's effective date is called

Temporary term.

An insurer wishes to compare the information given in an insurance application with previous insurance applications by the same applicant but for different companies. What organization can help the insurer accomplish this?

The Medical Information Bureau

An employee becomes insured under a PPO plan provided by his employer. If the insured decides to go to a physician who is not a PO provider, which of the following will happen?

The PPO will pay reduced benefits.

Which of the following is true regarding METs?

The allow several small employers purchase less expensive insurance together.

Which of the following is true about the requirements regarding HIV exams?

The applicant must give prior informed written consent.

An insured has a Social Insurance Supplement rider in her disability income plan. Following a disability, she begins receiving benefit payments from the insurer. She then begins receiving Social Security benefits that are smaller than the SIS benefit payments. At that point, her insurer ends the SIS benefit payments. Which of the following best describes the situation?

The insured should contact the insurer to confirm her actual Social Security benefit amount. The SIS rider should pay the difference between the rider amount and the actual benefit.

All of the following are TRUE statements regarding the accumulation at interest option EXCEPT

The interest is not taxable since it remains inside the insurance policy. "The interest credited under this option is TAXABLE, whether or not the policyowner receives it."

Not all losses are insurable, and certain requirements must be met before a risk is a proper subject for insurance. These requirements include all of the following EXCEPT

The loss may be intentional

Which of the following will vary the length of the grace period in health insurance policies?

The mode of the premium payment "The grace period is 7 days on a policy with a weekly premium mode; 10 days if a monthly premium mode; 31 days on other premium modes."

Which of the following is NOT required on an illustration used in the sale of a life insurance policy?

The name of the primary and secondary beneficiaries

All of the following are true of an annuity owner EXCEPT

The owner must be the party to receive benefits.

In terms of parties to a contract, which of the following does NOT describe a competent party?

The person must have at least completed secondary education.

A policy with a 31-day grace period implies

The policy will not lapse for 31 days if the premium is not paid when due

How are contributions to a tax-sheltered annuity treated with regards to taxation?

They are not included as income for the employee, but are taxable upon distribution.

Which of the following is true about labor unions, fraternals and co-ops?

They may opt for a self-insured medical and disability plan.

What is the purpose of coinsurance provisions?

To help the insurance company to prevent overutilization of the policy

When an individual purchases insurance, what risk management technique is he or she practicing?

Transfer

A man has HIV and was hospitalized for several weeks. His insurance company has delayed paying his claim for 120 days, saying that he is not covered due to a pre-existing condition exclusion in his policy. The insurance company is guilty of which of the following?

Unfair claims settlement practice

How long will the beneficiary receive payments under the single life settlement option?

Until the beneficiary's death

During the free-look period, the premium for a variable annuity may be invested in all of the following EXCEPT

Value funds.

Restoration of benefits

allows the insured to regain their full life-time benefit level over a period of time after a large or catastrophic loss.

Stability, Price and Longevity

are all factors used to determine losses and cost of insuring risks in a group (or individual) policy.

Nonoccupational policies

exclude coverage of claims that arise from job-related accidents. Workers Compensation would pay for illness of iniury that is work related. Occupational policies would cover accidents on or off the job.

With the Life with Guaranteed Minimum annuity settlement option

if the annuitant dies before the principal amount (the amount paid for the annuity) has been paid out the remainder of the principal amount will be refunded to his/her beneficiary. Pure life provides the highest monthly benefits for an individual annuitant.

Guaranteed Insurability Rider

Allows the policyowner to purchase specific amounts of additional insurance at specific dates or events, without proving continued insurability. Rates for the additions are based upon attained age.

When an insured incurs medical expenses during the last 90 days of a calendar year, the Carry-Over Provision allows them to

Apply such expenses to the new year's deductible.

During a pre-selection interview, an agent is allowed to do all of the following EXCEPT

Ask questions that are not on the application but that are important for underwriting.

All of the following apoly to short-term disability plans EXCEPT

Both group and individual plans are renewable "Short-term disability plans are not renewable"

Which of the following elements in an Indexed Universal Life policy is tied to an index?

Cash values

If a Medicare insured uses a non-participating in Medicare physician, he or she may be asked to sign a private contract. Which of the following conditions will NOT apply when the insured signs a private contract with the provider?

Claims should be submitted to Medicare.

What happens when a policy is surrendered for its cash value?

Coverage ends and the policy cannot be reinstated.

Creditable coverage includes

Coverage under a state health benefits risk pool.

Which of the following will NOT be an appropriate use of a deferred annuity?

Creating an estate

A health insurance policy that pays a lump sum if the insured suffers a heart attack or stroke is known as

Critical illness.

Which agreement specifies how a business will transfer hands when one of the owners dies or becomes disabled?

Disability Buy-Sell

Which of the following best describes the policy nonrenewal?

Discontinuance or an Insurance policy oy the Insured on the policy anniversary date.

What qualifies an individual to contribute to an IRA?

Earned income

What is the difference between the Medicare approved amount for a service or supply and the actual charge?

Excess charge

If an insured is not required to pay a deductible, what kind of coverage does he/she have?

First dollar

All of the following are dividend options EXCEPT

Fixed-period installments.

In disability income insurance, the own occupation definition of disability applies

For the first 2 years of a disability.

What is creditable coverage?

Former health coverage that gives an individual rights when applying for new coverage

A new employee who meets HIPPA eligibility requirements must be issued health coverage on what basis?

Guaranteed

If a policy allows the policy owner to make periodic addictions to the face amount at standard rates, without proving insurability, the policy includes a

Guaranteed insurability rider

What form of the annuity settlement options provides payments to an annuitant for the rest of the annuitant's life and ceases at the annuitant's death?

Pure life

In the event of a loss, business overhead insurance will pay for

Rent

To sell variable life insurance policies, an agent must receive all of the following EXCEPT

SEC registration. SEC registration is for securities, not agents.

What information is provided by the Explanation of Medical Benefits?

Specific services covered and the amounts approved for each service.

When a life insurance policy stipulates that the beneficiary will receive payments in specified installments or for a specified number of years, what provision prevents the beneficiary from changing or borrowing from the planned installments?

Spendthrift provision

All the factors are FALSE when used to provide data and statistics to an insurer in order to project losses and the subsequent cost of insuring risks in a group disability policy EXEPT

Stability, Price, Longevity with a particular carrier.

Restoration of Benefits is most beneficial to the insured when they

Suffer a large loss.

Which of the following would basic medical expense coverage NOT cover?

Surgeon's services

Occupational policies

would cover accidents on or off the job