Final Exam MD Life and Health
Larry has a Major Medical Expense policy for his family with a $1,000 per family/per year deductible and an 80/20 coinsurance provision. If Larry's family files four claims of $400, $800, $100, and $700 in one year, how much will the insurance company pay?
$800 $400+$800+$100+$700= $2,000. Their ded is $1,000. and the coinsurance is 80% 80% of $1,000= $800
Dependent children can typically be covered under an individual or group health insurance pol up to age
26
A licensee is required to take cont edu completing 24hrs of cont edu, which includes ______ hrs of ethics coursework
3
Newborn children are automatically covered under an existing family medical plan at the moment of birth for a period of at least ___ days
31
What is the actuarial value of a bronze health plan
60%
Which of the following combinations best describe a universal life insurance policy?
A flexible premium fund and a monthly renewable term policy
Which of these is an accurate statement regarding the fixed period settlement option on a life ins policy?
A portion of the payments paid to the beneficiary comes from interest calculated on the proceeds of the policy
In long-term care insurance, what is an ADL?
Activities of Daily Living
Which of the following is NOT covered by a comprehensive Long-term care policy ?
Acute care
According to the ACA, dependent children may remain on their parent's plan until what age?
Age 26
Tim is retired and has recently separated from his wife . he receives benefits from a qualified retirement plan through his former employer. The plan's trustee has decided to split they benefits between Timand his estranged wife. This decision is likely in violation of which IRS rule.
Alienation of benefits
An applicant submits a life insurance application where an investigative consumer report is used in the underwriting process. Which f these statements is true?
Applicant has a right to receive a copy of the report
in what situation could an ins pol's coverage be modified ?
Applicant is a substandard risk
Insurance is NOT characterized as which of the following?
As the number of ins'ds increase the number decrease
A policy owner suffers a covered accident and health insurance loss on June 30 and submits the roof of loss to the insurer July 10. If the p/o cxlld the coverage July 2, how will the insurance company handle the claim ?
Claim must be paid after proof of loss is received
Which of the following statement is true regarding accident and health insurance claims that reimburse on an indemnity basis?
Claims can be sent directly to the insured
What does a Mandatory Second Surgical Opinion provision provide to an employer-paid health insurance plan?
Containment of the employer's premium cost
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
The main purpose of an annuity is to
Create a stream of income
Linda is covered with long-term insurance and has early-stage Alzheimer's. She is able to reside in her home while receiving primary car, as opposed to moving into a nursing home. All of the following long-term benefits encourage home health EXCEPT
Custodial Care
All of these are used to prevent adverse selection in a group dental plan EXCEPT
Decrease employee participation
What happens to the purchasing power of benefit payments form a fixed life annuity when the cost of living goes up?
Decreases
For purposes of disability income insurance, earned income would be include all of the following EXCEPT
Dividens
When dealing with long-term care coverage, which of the following are classified as ADLs?
Eating, bathing, dressing, and mobility
When using the needs approach for life insurance planning, a lump sum may be created to provide all of the following EXCEPT
Employee benefits
Non-occupational disability coverage is designed for
Employees who suffer non-work related disabilities, since work-related disabilities are covered by Worker's Compensation
Which of the following health insurance provisions requires that the application becomes part of the policy?
Entire Contract Clause
Who is eligible for insurance under a group policy issued to a labor union?
Every member of that union
When an applicant applies for a large amount of life insurance coverage, which of the following would likely NOT be an underwriting requirement?
Eye exam
A pol/own fell behind on the premium payments of a whole life policy and is now in the grace period. How much will the beneficiary receive if the ins/d dies during the grace period and the policy also contains outstanding policy loan ?
Face amount minus the loan balance and past-due premium
When a ceding insurer transfers a portion of its risk to an assuming insurer on a case by case basis, this process is referred to as
Facultative reinsurance if foe a single risk or a defined package of risks
Which of these may NOT be deducted from premium payments or the cash value of a variable life insurance policy
Federal premium taxes
Tori has 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
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? A. Remain the same B. Decrease but never increase C. Increase but never decrease D. Fluctuate with changes in the cash account
Fluctuate with changes in the Cash account
What is considered a valid reason for small corps to insure the lives of its major stockholders?
Fund a buy-sell agreement
When the disclosure of an insured's nonpublic information is involved, what is the insurer obligated to do?
Give notice, explain, and allow opting out
Most medicare supplement info used by an insurer must be approved by the state . which of the following types of info does NOT require state approval ?
Gov't publications
Which is an insurance contract that identifies individuals by relationship to a specific organization?
Group Insurance
The administrator for a corp pension plan brought an accumulation annuity contract for its 2k employees . all 2k participating employees rec'd certificates of participation . what kind of contact is this .
Group deferred annuity
Which of the following health plans pay benefits on a pre-paid service basis?
HMO
Which license is REQUIRED in order to solicit Long Term Care insurance in the State of Maryland?
Health insurance producer license
Some standard Medicate supplement policies include which benefit?
Hospice care
With life insurance, the needs approach is used primarily in determining
How much life insurance a client should apply for
A characteristic of preferred provider organizations (PPO) IS
If service is obtained outside the PPO, benefits are reduced and costs increase
Which life insurance clause prohibits an insurance com from questioning the validity of the contract after a stated period of time has passed
Incontestable clause
The initial Premium for a life insurance policy is typically paid in what way ?
It is typically obtained by the producer and forwarded to the insurer
James owns a business and purchased a policy that covers the business expense of finding a permanent or temporary employee to replace a disabled one. This type of disability coverage is called
Key employee coverage
Inpatient psychiatric care is covered under Part A Medicare for 190 days per
Lifetime
According to the Federal Fraud and False statement act, which of these is considered to be an INTENTIONAL violation ?
Making false entries in a company's books
Under the MD Health Insurance Plan, comprehensive health benefits are provided to
Medically uninsurable residents
Emergency health care cov for medicare enrollees traveling abroad is
Medicare supplement additional benefit
An insurance producer who convinces a prospective insured to purchase a policy by EXAGGERATING the benefits of the policy may be found guilty of
Misrepresentation
Periodic health claim payments MUST be made at least
Monthly
Beginning of January 1 2014, the restricted annual limit for plans under the ACA will be
NO LIMIT
Wyatt is shopping for life insurance and is mainly concerned with the policy's death benefit. Which index should he be looking at when making comparisons?
Net Payment cost index
Specialty care is provided by which of the following HMO providers?
Neurologist
The disability income policy most likely to have been issued on a substandard basis is
Non-cancelable with a health condition exclusion rider
Tim is covered by an accident and health insurance policy that may not be changed in any way by the insurer up to a stated age, as long as the premiums are paid. What type of policy is this?
Noncancelable
Which element of a contact constitutes a definite and unqualified proposal by on party to another ?
Offer
insurable interest involves what assumption?
One person benefits from another person's continued life
If group Health benefit levels are too high, what could be the end result?
Overutilization of the plan
Which of the following is NOT a function of accident and Health insurance?
Pays a death benefit as a result of natural causes
A health insurance applicant is notified that a physical examination is required. Which of the following statements is correct?
Physical examinations are performed at the expense of the insurer
A disability income insurance policy was recently issued with a rating . What does this mean?
Pol/own will be charged additional premium
If an insured dies during the grace period without having paid the premium, how much will the insurer pay?
Policy's face amount minus any premiums due
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 factors does NOT affect life Insurance premium rates?
Producer Certification
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 ins on a child's life?
Provide benefits for the child if the parents die
What is considered interstate travel under the Federal Fraud and False Statements Act
Puerto Rico
An insurance producer agrees to pay the first monthly premium fo an insurance applicant. This is called a
Rebate
How are qualified Roth IRA distributions normally treated for tax purposes?
Received income tax-free
What effect can a long-term care benefit rider have on a life insurance policy ?
Reduced death benefit
Which of these is NOT an Unfair Claims Settlement Practice?
Refusing to pay persons bringing false or fraudulent claims
Which type of policy pays benefits to a policyholder covered under a Hospital Expense policy?
Reimbursement
Ron recently purchased an immediate, straight life fixed annuity. His benefit payments will
Remain a constant dollar amount for the duration the annuity period
Which of the following is NOT a BASIC U/W action for accident and health Insurance ?
Removing uniform policy provisions
Mary is an employee who is covered with a disability income policy through her employer. She pays for the portion of the premium attributable to the cost of residual disability benefits, while her employer pays for the remainder. What are the tax implications of this policy?
Residual benefits will be received income tax-free
who regulates the quality of care provided by a health maintenance organization (HMO)?
Secretary of the Dept of Health and Mental Hygiene
If an individual would like to enroll in Medicare or seek public info about medicare which federal agency handles this
Social Security admin
Licensed producers in MD are authorized to
Solicit, receive, and fwd app's to the insurer
Which one of these is NOT considered to be an element of an insurable risk?
Speculative Risk
How does the cost for a survivorship life policy compare to the cost of combining two separate life insurance policies? Survivorship life policy is lower Survivorship life policy is higher Depends on the investment performance of the underlying accounts Both have the same actuarial costs
Survivorship life policy is lower
Jonas is covered with disability insurance through his employer. The employer pays 75% of the premium, while Jonas pays the other 25%. What is Jonas' tax liability for any benefits paid from the disability plan?
Taxes must be paid on 75% of the benefits rec'd
Why might it be beneficial for an employee to purchase private disability income insurance for workplace injuries when s/heis already covered by worker's comp?
The benefits arising from a worker's compensation claim could be inadequate to replace the loss of income
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 martial deduction which generally exempts the transfer from estate taxes
Which statement concerning a deferred annuity contract is correct?
The owner can be the beneficiary, annuitant, or neither
What is the primary reason for the Commissioner's examination of a producer's insurance records?
To determine compliance with stat insurance laws and regulations
A hold-harmless clause is an example of risk
Transfer
Which reinsurance contract between two insurers involves an automatic sharing of the risks assumed?
Treaty reinsurance
What is the face amount of $50,000 graded death benefit life insurance policy when the policy is issued?
Under 50k but increases annually until fully insured.
How do birthing centers reduce medical costs?
Using certified nurse midwives
An insurance policy that can also be classified as a securities product is called
Variable life
a policy owner with a terminal illness who sells his life ins policy to third party is called
Viator
Karen is considering replacing her individual accident and health insurance policy with another individual policy. She has had issues in the past with her gall bladder that would be considered a pre-existing condition. How will a pre-existing conditions exclusion affect Karen's new insurance contract?
Will reduce her benefits
Medicare can be described as
a federal health insurance program for individuals over the age of 65 or permanently disabled
The coinsurance for skilled nursing facility services covered by Medicare after the 100% Medicare cov ends is
a flat dollar amount per day
Life insurance replacement can be best defined as
a transaction in which a new life ins pol is purchased and an existing life ins pol is surrendered
Which of the following is NOT a valid contract exchange?
an annuity exchanged for a life insurance policy the 1035 exchange does not allow for an annuity to be exchanged for a life insurance policy. it is not considered an equal exchange and will be taxed
In MD, an insurance producer can not sell, solicit, or negotiate policies for an insurer unless there is an agreement in place between the producer and insurer. This agreement is called
an appointment
According to the Pregnancy Discrimination Act of 1978, employers must treat pregnancy in the same manner as
any other medical disability
Julie is in need of assistance with one or two activities of daily living. She may be eligible for a(n)
assisted living facility
A disabled business owner who has payroll and business expenses paid for has what kind of insurance policy?
business overhead expense
Voluntarily terminating an insurance policy is also known as
cancellation
An example of a replacement is
cancelling a term life policy to buy a whole life policy
Which of the following is NOT a condition that must be met for an accidental death benefit to be paid ?
cause of death must be from a job-related injury
The principal source of information concerning an applicant's identity, age and martial status is found in the
completed application
Group life plans sold in MD typically contain a conversion option. If the ins'd elects this option, the new pol
does NOT require evidence of insurability
Disability income policies provide protection for which of the following?
economic death (occurs when a prolonged disability prevents you from earning a l living and you have no other source of income )
Notice of info practices must be given to a pol/holder at least
every 3 years
Which statement concerning an adjustable life insurance policy is false ?
evidence of insurability is required when there is a change in premium
Which life insurance policy option allows the pol/own to have cov equal to the net death benefit of the lapsed pol?
extended term nonforfeiture option
All individual long term care policy delivered in MD MUST be renewable
for life
Jose recently had his long-term care policy replaced with a new policy. The new long-term care policy may NOT impose a(n)
new pre-existing conditions exclusion
An ________ _________ sells, solicits, or negotiates insurance contracts for compensation .
insurance producer
A life insurance policy that contains an accelerated (living) benefit rider will provide funds if the
insured is expected to be condone to a nursing home for life
The identity of the ______ must be made clear in every health insurance advertisement.
insurer
During the early years of a whole life insurance policy, the cash value normally would be
less than the total premiums paid
After the extended term life nonforfeiture option is chosen, the available insurance will be
level term for a stated period of time
How can a group dental insurer discourage adverse selection?
limit the duration of coverage
Joe is a life insurance policy owner who has failed to pay interest on his policy loan. What will result from the non payment ?
loan amount is increased to reflect the amount of interest due
according to ACA, the proportion of premium revenues spent on clinical services and quality improvements is called
medical loss ratio
When a producer is replacing an existing ordinary life insurance policy, the producer must take all of the following actions EXCEPT
obtain the beneficiary's signature
Which statement best describes a single premium whole life policy?
paid-up policy that offers lifetime protection
a physician who accepts assignment on all medicare claims is called an
participating provider
Mark is covered by a policy that uses the regular occ ( own-occ) definition of total disability . He will be considered disabled if unable to
perform the substantial and material duties of this regular occupation
a disability income insurance policy was recently issued with a rating. what does that mean?
pol/own will be charged add'l premium
What happens to a life insurance policy when the policy loan balance exceeds the cash value?
policy will no longer be in force
At what point must a producer give notification to the commissioner about using an assumed name ?
prior to using the assumed name
Which of the following is NOT a reason the gov't provides ins?
reduce fraudulent claims
Omar is covered by a disability income policy. He is hurt while performing an occupation more hazardous that the occupation listed in his policy. The policy's change of occ provision will have what effect?
reduce the benefit level
What happens to the death benefit of a life insurance pol if the ins'd elects a partial payment from ACL benefit provision
reduced
Statements made by an insured on an accident and health ins application are considered to be
representations
Assets that back the non-guaranteed values of variable life ins products are held in which account?
separate account setup by the insurer
If an employer pays for accidental death and dismemberment ins for its employees, the amount paid by the employer is generally
tax deductible to the business
An insurable risk requires
that the chance of loss be calculable
How long does protection normally extend to under a limited pay whole life policy ?
until age 100
An insurance company's failure to enforce a contract's provision is called a
waiver
Under HIPPAA Requirements, eligibility for the pre-existing conditions exclusion waiver under new coverage is lost if
there is a break in coverage for more than 63 days
The act of using misrepresentation to induce an ins'd person to terminate an existing policy to purchase a new policy is referred to as
twisting