Kapalan LTC Review

How many months' premiums may be collected with an application for long-term care insurance if interim coverage is NOT provided

1 month

All other factors being equal, which of the following policy provisions would result in the highest premium for a long-term care insurance policy? All other factors being equal, which of the following policy provisions would result in the highest premium for a long-term care insurance policy? A) A 10-day elimination period and 10-year benefit period B) A 30-day elimination period and 3-year benefit period C) A 90-day elimination period and 3-year benefit period D) A 90-day elimination period and 5-year benefit period

A) A 10-day elimination period and 10-year benefit period As a general rule, the shorter the elimination period is, the higher the premium. A longer benefit period will also result in a higher premium.

Which of the following nursing home facilities provide the highest level of medical care and tend to be the most expensive? A) Skilled nursing facilities B) Adult day care facilities C) Intermediate care facilities D) Informal care facilities

A) Skilled nursing facilities Skilled nursing facilities provide the highest level of medical care, so they tend to be the most expensive.

A condition that is long lasting and requires continuing care other than the type of care provided in emergency medical situations is A) an acute condition. B) a preexisting condition. C) a chronic condition. D) an adverse condition.

C) a chronic condition. A chronic condition is one that is long lasting and requires continuing care other than the type used in emergency medical situations

A replacement long-term care insurance policy is presumed to be unnecessary if it is the third policy sold to the same policyholder in any _______ period. A) 24-month B) 60-month C) 36-month D) 12-month

D) 12-month Any third or greater policy sold to the same policyholder in a 12-month period is presumed to be an unnecessary replacement.

Medicare will cover long-term care expenses A) to supplement Medi-Cal benefits B) for custodial care only C) for most levels of long-term care D) for certain nursing home costs in certified skilled nursing facilities only

D) for certain nursing home costs in certified skilled nursing facilities only Medicare covers long-term care expenses only for certain nursing home costs in certified skilled nursing facilities.

If an insurer denies a claim for benefits under a long-term care insurance policy, the insurer must send the policyholder written notice of the reasons within _____ days of the date of denial. A) 40 B) 60 C) 30 D) 10

A) 40 An insurer must send written notification of the reasons for the denial of a claim for LTC benefits to the policyholder within 40 days of the date of denial.

A long-term care insurance policyholder must be eligible to purchase a shortened benefit period nonforfeiture benefit after paying premiums for at least A) 12 years. B) 10 years. C) 20 years. D) 15 years.

B) 10 years. Eligibility to purchase a nonforfeiture benefit must begin no later than after 10 years of premium payments

An insurance company collects $20 million in premiums on its long-term care insurance business and pays out LTC benefits of $18 million. The company's loss ratio on this business is A) 100% B) 90% C) 0% D) 20%

B) 90% A company's loss ratio is determined by dividing losses by total premiums received.

Which of the following is an activity of daily living (ADL) under nonqualified long-term care policies but NOT under qualified long-term care policies? A) Eating B) Continence C) Ambulating D) Dressing

C) Ambulating Ambulating is not considered to be an ADL under federally qualified long-term care policies.

When interim coverage is provided, up to _____ months' premium may be collected with an application for LTC insurance. A) 12 B) 3 C) 6 D) 2

D) 2 Collecting more than 1 month's premium with an application for LTC insurance is prohibited unless interim coverage is provided. If interim coverage is provided, 2 months' premium may be collected.

The type of care that is provided under a medical treatment plan and only by, or under the supervision of, a registered nurse is A) informal care B) intermediate care C) custodial care D) skilled nursing care

D) skilled nursing care Skilled nursing care is provided under a medical treatment plan and only by, or under the supervision of, a registered nurse.

Which of the following statements is NOT true about the specimen policy insurers are required to provide? A) A copy of the specimen policy must be given to a prospective applicant at the time of solicitation. B) The specimen policy must be provided to a requesting party within 15 calendar days of receipt of a request. C) The specimen policy must be available on the insurer's website. D) The notice about the availability of the specimen policy must be displayed on the insurer's website.

A) A copy of the specimen policy must be given to a prospective applicant at the time of solicitation. The insurer is required to provide a clear written notice about the availability of the specimen policy, not a copy of the specimen policy itself, at the time of solicitation. The insurer is required to provide a copy of the specimen policy itself only upon request.

When a sale of long-term care insurance involves replacement, an insurer using an agent to make the sale must furnish the applicant with a notice of replacement A) before issuance or delivery of the policy B) within 60 days after issuance or delivery of the policy C) within 30 days after issuance or delivery of the policy D) at the same time as issuance or delivery of the policy

A) before issuance or delivery of the policy An insurer using an agent must furnish the notice of replacement prior to issuance or delivery of the policy.

Paul has a life insurance policy with a $100,000 face value and a long-term care rider that uses the generalized (independent) approach. If Paul becomes eligible for $25,000 in LTC benefits under the rider, the face amount of the life insurance policy will be A) $25,000 B) $75,000 C) $100,000 D) $125,000

C) $100,000 Under a generalized (independent) LTC rider, LTC benefits paid to the insured do not affect the face amount of the policy.

The free-look period for long-term care insurance policies issued in California is A) 20 days B) 90 days C) 30 days D) 60 days

C) 30 days Someone who buys an LTC policy in California may return the policy for any reason within 30 days after delivery for a full refund of premium. This is known as the free-look period.

Newly licensed agents in California who sell LTC insurance must complete at least ____ hours of LTC education in each of the first 4 annual periods following their original license issue date. A) 12 B) 24 C) 8 D) 16

C) 8 New agents must complete 8 hours of LTC training in each of the four years following the issuance of their licenses.

Qualified long-term insurance policies are entitled to special tax advantages under A) neither federal law nor California law B) California law but not federal law C) both federal law and California law D) federal law but not California law

C) both federal law and California law Generally, federal law and California law include the same provisions regarding the taxation of qualified long-term care insurance premiums and benefits.

An insured has a newly issued LTC policy with an effective date of April 1, 2003. A preexisting condition disclosed on the application must be covered no later than A) January 1, 2004 B) October 1, 2003 C) April 1, 2003 D) April 1, 2004

B) October 1, 2003 Every LTC insurance policy must cover preexisting conditions disclosed on the application no later than six months after the effective date of coverage.

The basic core benefits included in all Medicare supplement policies cover which of the following types of long-term care services? A) All long-term care services B) No long-term care services C) Custodial care services only D) Intermediate care services only

B) No long-term care services The basic core benefits included in all Medicare supplement policies do not cover any kind of long-term care.

Under federal law, a chronically ill individual is someone who has been certified as being unable to perform at least _____ activities of daily living for at least ____ days. A) 2; 30 B) 3; 60 C) 3; 120 D) 2; 90

D) 2; 90 Federal law provides that a chronically ill individual is someone who is unable to perform at least 2 activities of daily living for at least 90 days.

Which of the following programs uses an interdisciplinary team to provide and coordinate all needed preventive, primary, acute, and long-term care services for an individual through a comprehensive medical/social service delivery system? A) IHSS B) PACE C) HIPAA D) MSSP

B) PACE PACE stands for Program of All-Inclusive Care for the Elderly. PACE provides for primary and acute care as well as long-term care services.

The maximum contestability period for long-term care insurance policies issued in California is A) 3 years B) 2 years C) 1 year D) 5 years

B) 2 years The maximum allowable contestability period for long-term care insurance in California is two years.

An insurer must notify an applicant for LTC insurance within _____ from the date of application whether the applicant will be issued a policy. A) 30 days B) 60 days C) 10 days D) 120 days

B) 60 days An insurer has 60 days from the date of the application to notify an applicant for LTC insurance whether the applicant will be issued a policy.

The maximum daily benefit of Dwayne's long-term care insurance policy is $200. Dwayne's daily cost of care is $175, but Dwayne's policy still pays him the full $200 daily amount. Dwayne's policy is written on what basis? A) Reimbursement B) Cash C) Indemnity D) Per diem

B) Cash Reimbursement and indemnity are the two general categories of long-term care policy payment methods. Per diem and cash are the two types of indemnity policies. Under a per diem policy, the daily maximum benefit is the most the policy will pay, but if the cost of care is less than the daily maximum, it will pay the lesser amount. An indemnity policy written on a cash basis will pay the full daily maximum benefit even if the actual cost of care is less.

The purpose of the Long-Term Care Insurance Personal Worksheet is primarily to determine A) an agent's annual commissions for the sale of LTC insurance B) whether an applicant's purchase of LTC insurance meets the insurer's suitability standards C) whether an insurance company is financially sound D) whether an applicant for LTC insurance meets the insurer's underwriting standards

B) whether an applicant's purchase of LTC insurance meets the insurer's suitability standards The Long-Term Care Insurance Personal Worksheet is used to determine whether the purchase of LTC insurance is appropriate for the applicant's needs.

Which of the following provisions may be included in long-term care insurance policies issued in California? A) A provision that benefits will be provided for skilled nursing care only B) A provision allowing the insurer to cancel the policy if the policyholder's health deteriorates C) A preexisting conditions provision D) A provision that the payment of benefits will be based on a standard described as usual and customary

C) A preexisting conditions provision Preexisting conditions provisions are permitted in long-term care insurance policies within certain limits, but all of the other provisions are prohibited.

Which of the following exclusions would NOT be permitted in an LTC insurance policy in California? A) Alzheimer's disease that begins after the effective date of coverage B) Alcoholism and drug addiction C) Preexisting conditions or diseases D) Self-inflicted injury

A) Alzheimer's disease that begins after the effective date of coverage The exclusions permitted in LTC policies are specified by law. Alzheimer's disease is not one of the permitted exclusions

Which of the following taxpayers may deduct the premiums for qualified long-term care insurance as a medical expense if they do NOT itemize deductions? A) Self-employed taxpayers only B) Only taxpayers who are not self-employed C) No taxpayers, regardless of whether they are self-employed D) All taxpayers, regardless of whether they are self-employed

A) Self-employed taxpayers only Self-employed taxpayers may deduct qualified LTC premiums even if they don't itemize deductions. Other taxpayers may deduct these premiums only if they itemize deductions.

Which of the following statements about living needs (living benefits) riders to life insurance policies is FALSE? A) There are no limits on the maximum benefits that are payable. B) Benefits may usually be used for nursing home expenses. C) They may make funds available for a terminal illness. D) They are often provided without charge because benefit payments are borrowed from the life insurance proceeds.

A) There are no limits on the maximum benefits that are payable. The benefits available under a living needs rider are usually limited to a certain percentage of the policy's death benefits.

Care that does not involve medical services and that is limited to assistance with the essential needs of daily living such as walking, bathing, dressing, and eating is known as A) custodial care B) intermediate care C) respite care D) skilled nursing care

A) custodial care Custodial care, also known as personal care, is limited to assistance with essential activities of daily living. It is one of the lowest levels of care because it does not involve medical services.

All of the following are considered to be activities of daily living (ADLs) under long-term care insurance policies issued in California EXCEPT A) driving a car B) eating C) bathing D) dressing

A) driving a car Driving a car is not considered to be an activity of daily living (ADL) in long-term care insurance policies issued in California.

Insurance agents who are guilty of committing multiple or knowing violations of the LTC insurance laws in California may be fined a maximum of A) $25,000 for each offense B) $10,000 for each offense C) $5,000 for each offense D) $2,500 for each offense

A) $25,000 for each offense Agents may be fined up to $25,000 for each offense if they commit multiple or knowing violations of the LTC insurance laws.

Which of the following would be the best candidate for long-term care insurance? A) A middle-class person who has assets worth $300,000 and an income that keeps the person well above the poverty level B) A person with assets worth $50 million and an annual income of $5 million C) A person who is not eligible for Medi-Cal but who would become Medi-Cal eligible after a few months in a nursing home D) A person who is eligible for Medi-Cal

A) A middle-class person who has assets worth $300,000 and an income that keeps the person well above the poverty level The best candidates for long-term care insurance are people whose financial well-being would be jeopardized by long-term care expenses. People at the low end of the economic scale have no assets to protect, and people at the high end can pay their own long-term care expenses without endangering their financial health.

Asset protection under Medi-Cal is a feature of A) partnership LTC policies only B) both traditional LTC policies and partnership LTC policies C) traditional LTC policies only D) neither traditional LTC policies nor partnership LTC policies

A) partnership LTC policies only Only partnership LTC policies provide the advantage of asset protection under Medi-Cal.

In California, benefits provided under individual long-term care insurance policies are considered reasonable in relationship to the premiums charged if the expected loss ratio is at least A) 20% B) 60% C) 30% D) 40%

B) 60% Benefits under individual LTC policies are considered reasonable in relationship to the premiums charged if the expected loss ratio is at least 60%. This means that over the long run, insurers should pay out benefits equal to at least 60% of the premiums they are charging.

If a person is licensed in the state of California as an insurance agent or broker, advertises insurance on the internet, and transacts insurance in California, all of the following information about the agent or broker is required to be displayed on the internet EXCEPT A) name B) license number C) telephone number D) state of domicile and principal place of business

C) telephone number The agent's telephone number is not required. The other three items are.

Which of the following statements about employer-paid premiums for long-term care insurance on employees is TRUE? A) The premiums are deductible for the employer and are treated as taxable income to the employees. B) The premiums are deductible for the employer and are not treated as taxable income to the employees. C) The premiums are not deductible for the employer and are treated as taxable income to the employees. D) The premiums are not deductible for the employer and are not treated as taxable income to the employees.

B) The premiums are deductible for the employer and are not treated as taxable income to the employees. The premiums paid by employers for long-term care insurance on employees are tax deductible, as they are for other forms of group health insurance. The premiums are not treated as taxable income to the employees.

An agent replaces a long-term care insurance policy for one of her clients. The new policy materially improves the insured's benefits, but the annual premium increases from $2,000 to $2,500. The replacing insurer may pay the agent the full first-year commission rate on what amount? A) $0 B) $2,500 C) $500 D) $2,000

C) $500 In this case, the insurer may pay the agent the full first-year commission rate only on the difference in premium between the old and new policy. It may pay the agent the standard renewal commission on the balance of the premium.

An agent who wishes to sell certified partnership LTC policies must complete at least ____ hours of special training prior to marketing any partnership-approved policies. A) 4 B) 24 C) 16 D) 6

C) 16 An agent who wishes to sell certified partnership LTC policies must complete at least 16 hours of special training prior to marketing any partnership-approved policies. This includes hours on California long-term care insurance and hours specifically dedicated to the California Partnership for Long-Term Care program.

Agent Smith solicits a sale of long-term care insurance from his client, Jones. When must Smith provide Jones with the outline of coverage? A) When the policy is delivered B) At the expiration of the free-look period C) Before the presentation of an application or enrollment form D) When the first premium is paid

C) Before the presentation of an application or enrollment form In the case of agent solicitation, the outline of coverage must be delivered before the presentation of an application or enrollment form.

Roger has an individual long-term care insurance policy that provides a daily maximum benefit of $120 per day for each day he is confined to a nursing home. What type of policy is this? A) Expense incurred policy B) Coinsurance policy C) Indemnity policy D) Master policy

C) Indemnity policy An indemnity policy provides a maximum daily benefit for each day of confinement in a nursing home or other long-term care facility.

In California, a long-term care insurance policy may be called a comprehensive policy if it provides benefits for A) home care but not for facility care B) facility care but not for home care C) facility care and home care D) home care and community-based services only

C) facility care and home care To be called a comprehensive LTC policy, a policy must provide at least some benefits for facility care and home care.

Long-term care policies must offer an inflation protection feature that provides that benefit levels will increase annually at a rate of at least A) 15% B) 10% C) 3% D) 5%

D) 5% Long-term care policies must offer inflation protection ensuring that benefit levels will increase at a rate of least 5% each year.

Which of the following statements is CORRECT with regard to multilife individual coverage? A) Premiums are based on group rates. B) Every insured is provided with the same coverage. C) One master policy is given to the group sponsor; certificates of insurance are given to each insured. D) Each policy is individually underwritten.

D) Each policy is individually underwritten. Multilife individual insurance plans are individual policies marketed to members of a group. Each policy is individually underwritten, although usually on a simplified basis. The premium is based on that particular individual's underwriting characteristics. The policy can be adjusted somewhat to fit each individual's circumstances.

A) The need for long-term care is a concern only for the elderly. B) Long-term care includes hospital care. C) The chances of requiring long-term care decrease with age. D) Long-term care is provided to people with chronic diseases or disabilities who need care over an extended period.

D) Long-term care is provided to people with chronic diseases or disabilities who need care over an extended period. Long-term care is provided to people with chronic diseases or disabilities and does not include hospital care. The need for long-term care may arise at any age, but the chances of requiring long-term care increase with age.

Which of the following practices is permitted with respect to long-term care insurance in California? A) Field issuance but not post-claims underwriting B) Post-claims underwriting but not field issuance C) Both field issuance and post-claims underwriting D) Neither field issuance nor post-claims underwriting

D) Neither field issuance nor post-claims underwriting Long-term care insurance may not be field issued in California, and post-claims underwriting is also prohibited.

Beth has a long-term care insurance policy. As long as Beth pays the premiums on time, the insurer cannot refuse to renew the policy, change the terms of the policy, or increase the premium for any reason. What kind of policy is this? A) Conditionally renewable B) Guaranteed renewable C) Cancelable D) Noncancelable

D) Noncancelable If a policy is noncancelable, the insurer cannot refuse to renew, change the terms, or increase the premium as long as premiums are paid on time.

Under what circumstances is an individual or organization that sells insurance permitted to make statements that use the existence of the California Life and Health Insurance Association to induce the purchase of insurance? A) The type of insurance being sold must be covered by the association. B) Oral statements are permitted. C) The statement must be accompanied by a written disclaimer. D) Such statements are not permitted under any circumstances.

D) Such statements are not permitted under any circumstances. Individuals or organizations that sell insurance are prohibited from making any statement, written or oral, or disseminating by any means any announcement or advertisement that uses the existence of the association to sell, solicit, or induce the purchase of insurance.

The Commissioner may require an insurer to offer a contingent benefit upon lapse as a condition for approving A) a replacement of a policy B) the sale of a given policy form C) a rescission of a policy D) a rate increase for a policy form

D) a rate increase for a policy form A contingent benefit upon lapse allows policyowners to reduce their coverage or get a paid-up benefit in order to avoid an increase in premium.

LTC insurance policies sold in California before January 1, 1997, were automatically granted tax-qualified status, but that status could be jeopardized if an insured A) becomes unable to perform 3 activities of daily living B) is treated in a skilled nursing facility C) exercises an existing policy option D) requests a material modification of the policy

D) requests a material modification of the policy The qualified status of a policy sold before January 1, 1997, could be jeopardized if an insured requests a material modification of the policy.