Life and Health Insurance Exam

in reference to the standard medicare supplement benefits plans, what does the term standard mean?

All providers will have the same coverage options and conditions for each plan.

While a claim is pending, an insurance company may require

An indpendent examination as often as reasonably required

An insurance contract requires that both the insured and the insurer meet certain conditions in order for the contract to be enforceable. What contract characteristic does this describe?

Conditional. A conditional contract requires both the insurer and policyowner to meet certain conditions before the contract can be executed, unlike other types of policies, which put the burden of condition on either the insurer or the policyowner.

Applications to an insurer must include all of the following information, EXCEPT

Credit history report. Licensed agents may not submit applications to an insurer or furnish a copy of an application to a prospective insured unless the name of the insurer is legibly typed or printed on the first page of the application form at the time coverage is bound or the premium is quoted. The application must also disclose the name and license identification number of the agent as shown on the agent's license.

Which of the following is NOT a responsibility of the Office of Insurance Regulation?

Enacting new insurance laws. New laws are enacted by the state legislature.

Which of the following would be an example of an unfair claims settlement practice?

Failing to acknowledge a claim within 30 days. Insurers must either affirm or deny a claim within a reasonable amount of time, but no later than 30 days

The requirement that agents not commingle insurance monies with their own funds is known as

Fiduciary responsibility. Money collected with respect to an insurance transaction must be held in a position of trust by the agent or broker.

Which of the following is true regarding the spendthrift clause in life insurance policies?

It can protect the policy proceeds from creditors of the beneficiary. The spendthrift clause in a life insurance policy prevents the beneficiary's reckless spending of benefits, and protects the policy proceeds from creditors of the beneficiary or policyowner.

The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called

Joint and survivor. A joint and survivor option pays while either beneficiary is still living.

Variable Life insurance is based on what kind of premium?

Level fixed. Variable Life insurance is a level fixed premium investment based product.

Can a group that is formed for the sole purpose of obtaining group insurance qualify for group coverage?

No, the group must be formed for a purpose other than obtaining group insurance. In order to qualify for group coverage, the group must be formed for a purpose other than obtaining group insurance. In other words, it must be a natural group. There are generally two types of groups eligible for group insurance: employers sponsored, and association sponsored.

what type of care is respite care

Relief for a major care giver - include a service such as someone coming to the while while the care giver takes a nap or goes out for awhile.

If an employer decides to change its life insurance policy to a similar one with a different insurer, which of the following describes the extent that replacement regulations will be exercised?

Replacement regulations will not apply in this situation. If a new life insurance policy is provided under a group life insurance policy covering employees or members of an association, replacement regulations do not apply.

what is the best way to change an application

Start over with a fresh application. - if that is not practical, draw a line through the incorrect answer and insert the correct one. the applicant must initial the correct answer

if policy owners repeatedly replace policies from the same agent, this is most likely evidence that

The agent knew that replacement was intended in connection with the sale and intentionally violated the replacement regulation

Which of the following dates must be contained in a policy summary?

The date the summary was prepared. A policy summary must contain the date that the summary was prepared.

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.

what is the purpose of coinsurance provisions

To help the insurance company to prevent overutilization of the policy

Agents who persuade insureds to cancel a policy in favor of another one when it might not be in the insured's best interest are guilty of

Twisting. Twisting is a misrepresentation that persuades an insured or a policyowner, to his or her detriment, to cancel, lapse, or switch policies.

to find what is covered on a health insurance policy, the insured would want to look at the area of the policy entitled eligible expenses

URC stands for usual, reasonable and sutomary

What is the name of the insured who enters into a viatical settlement?

Viator. Viator means the owner of a life insurance policy who enters into or seeks to enter into a viatical settlement contract.

How soon following the occurrence of a covered loss must an insured submit written proof of such loss to the insurance company?

within 90 days or as soon as reasonable pollible, but not to exceed 1 year

which of the following is an eligibility requirement for all social security disability income benefits?

- have attained fully insured status - retirement, survivors and medicare, old age, disability, and death benefits - contributing to SS for 40 quarters (10 years) attains fully insured status

In a survivorship life policy, when does the insurer pay the death benefit?

Upon the last death. Survivorship life pays on the last death rather than upon the first death.

which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium?

automatic premium loan

vision and dental insurance may have a deductible and or coinsurance amounts as well as annual maximum benefit amounts

critical illness plans pay the benefits directly to the insured

Who must pay for the cost of a medical examination required in the process of underwriting?

insurer

a rider attached to a life insurance policy that provides coverage on the insured's family members is called the

other-insured rider

whenever agents submit applications to insurers they must also submit statements signed by the applicant and agent disclosing the involvement of lack of involvement of

replacement

which is true about a spouse term rider?

the rider is usually level term insurance

medicare part C sometimes has a premium and in some cases it does not

those who enroll in part C of medicare (Medicare advantage) do not need to purchase a medicare supplement

J purchased a $100,000 Joint Life policy on himself and his wife. Eight years later, he died in an automobile accident. How much will his wife receive from the policy?

$100,000. In joint life policies, the death benefit is paid upon the first death only.

If an agent does not notify the insurer of an address change, what is the maximum penalty that can be imposed for a one-time offense?

$250. If the department is not notified within the required time period, a maximum fine of $250 will be imposed for the first offense; for subsequent offenses, either a minimum fine of $500 will be imposed or the agent's license will be suspended or revoked.

An employee will be taxed on the cost of group life insurance paid by the employer if the amount of coverage exceeds

$50,000. The cost of coverage paid by the employer in excess of $50,000 is taxed to the employee.

all of the following are correct about he required provisions of a health insurance policy

- A grace period of 31 days if found in annual pay policy - The entire contract clause means the signed application, policy, endorsements, and attachments constitute the entire contract - Proof-of-loss forms must be sent to the insured within 15 days of notice of claim

regarding workers compensation:

- Benefits are regulated by the state government - Benefits are not regulated by the federal government. - Benefits vary from state to state. - The state government regulates Workers Compensation benefits, which vary slightly from state to state.

All of the following statements concerning dividends are true:

- Lower insurance company costs generate higher dividends. - They stem from favorable underwriting experience. - Favorable investment results generate higher dividends. - Dividend amounts are NOT guaranteed in the policy.

what is the main purpose of the seven pay test

- To determine if a life insurance policy is a Modified Endowment Contract or "over-funded" - in other words the cumulative premiums paid during the first seven years of a policy must not exceed the total amount of net level premiums that would be required to pay the policy up using guaranteed mortality costs and interest

dividend options

- accumulated at interest - reduction of premium - paid-up additions

Following hospitalization because of an accident, bill was confined in a skilled nursing facility. medicare will pay full benefits in this facility for how many days?

- at least three days - 20 will be fully covered - days 21-100 require a daily copayment

qualifications for soliciting selling or negotiating a long term care partnership policy include all of the following

- being appointed - completing an initial 8 hour training - completing ongoing 4 hour training ever 24 months

in a replacement situation, all of the following must be considered

- benefits - limitations - exclusions

group life insurance

- cost of coverage is based on the average age of the group and the ratio of men to women - can be converted to an individual whole life policy. - premiums are usually lower than those of an individual policy - group sponsor receives a master contract - participants receive certificates of insurance

regarding partial disability

- covers full time working insureds who are unable to perform some, but not all, of their regular job duties or can no longer work full time, which ultimately results in a loss of income. payment from partial disability is typically 50% of the total disability benefit

long term care insurance does provide coverage for

- diagnostic or preventative care - personal care services - therapeutic or rehabilitative care -must be given in a setting other than an acute care unit of a hospital

social security disability definition includes all of the following

- disability as inability to engage in any gainful employment due to a medically determinable physical or mental impairment that is expected to result in death or last for a continuous period of 12 months

in a disability policy, the probationary period refers to the time

- during which illness related disabilities are excluded from coverage - limits coverage on new policies for certain illness related conditions

when an employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy, this is called an

- executive bonus - owned by the employee - any type of insurance policy may be used - the employer pays a bonus to a selected employee to fund the policy - it is considered a nonqualified employee benefit - amount paid by owner is taxable income

the following riders would cause the death benefit to increase:

- guaranteed insurability - cost of living - accidental death

social security supplement (sis) or social security riders would provide for the payment of income benefits in each of the situations:

- if the insured has been denied coverge under SS - when used to replace or supplement benefits payable under other social insurance programs - when the insured is eligible for social security benefits but before the benefits begin

differences between individual and group health insurance:

- individual policies are renewable at the option of the insured, while group usually terminates when the individual leaves the group - the individual selects coverage options, while in a group all employees are covered by the same coverage (chosen by employer) - individual coverage can be written on an occupational or non occupational basis; group plans cover only nonoccupational

all of the following statements concerning medicaid are correct:

- individual states design and administer the medicaid program under broad guidelines establish by the federal government - individuals claiming benefits must prove they do not have the ability or means to pay for their own medical care - persons at least 65 years of age, who are blind or disabled and financially unable to pay, may qualify for medicaid nursing home benefits.. - medicaid is a government funded (both state and federal) program designed to provide health care to poor people of all ages

General requirements for a qualified plan

- must be permaenet, written and legally binding - must meet the general reqirements established by IRS - must be communicated to all employees - must be for the exclusive benefits of the employees and their beneficiiaries

qualifications for social security disability benefits:

- must have a particular insured status - satisfy a waiting period - meet a strict definition of total disabiity

all of the following are the most common variations in a long term care policy

- number of days of confinement covered - number of home health visits covered - amount paid for nursing home care - other contract provisions

if a person is compensated for a testimonial in an advertisement, which of the following statements should be included in the advertisement

- paid endorsement - The ad must disclose whether the person making the testimonial has a financial interest in the insurer. if the person is compensated, the testimonial must include "paid endorsement" or similar language

concerning the taxation of premiums in a key-person life insurance policy

- premiums are not tax deductible as a business expense - if the key employee dies, the benefits paid to the business are usually received tax free

the patient protection and affordable care act includes all of the following provisions:

- right to appeal - no lifetime dollar limits - coverage for preventive benefits - no tax deductions for health insurance premiums - it does offer a tax credit which is different from a tax deduction

which of the following is typically excluded from life policies

- self-inflicted death - death that occurs while a person is committing a felony - death due to war or military service

An IRA purchased by a small employer to cover employees is known as a

- simplified employee pension (SEP) - employer sponsored IRA - contributions are not included in the employee's taxable income for the year, to the extent that they do not exceed max allowed. - distributions from a SEP are taxable as ordinary income when received at retirement

concerning medicaid:

- state program - funded by state and federal taxes - intended to provide medical assistance for certain categories of people who are needy

which of the following is not covered under basic hospital expense coverage

- surgeons' fees x-ray charges, hospital room and board, and lab charges are covered.

all of the following would be different between qualified and nonqualified retirement plans

- taxation of withdrawals - taxation of contributions - IRS approval requirements - taxation on accumulation is deferred in both types of plans

Children's riders attached to whole life policies are usually issued as what type of insurance?

- term - expires when the minor reaches a certain age

under an accumulation at interest option

- the annual dividend is retained by the company - the interest is creditated at a rate specified by the policy - the policy holder has the right to withdraw the accumulations at any time - the interest is taxable

all of the following are true regarding Key EMployee Disability Income insurance:

- the employer owns the policy - benefits are paid to the employer to retain a new person - premiums are not tax deductible for the employer - benefits received income tax free by the business

noncontributory group plan

- the employer pays 100% of the premiums - the employer receives a master policy, and employees receive a certificate of insurance - they help to reduce adverse selection against the insurer - they require 100% employee participation

guaranteed insurability rider

- the insured may purchase additional coverage at the attained age - the insured may purchase additional insurance up to the amount specified in the base policy - only at specified dates/events - expires at the insured's age 40

in a life settlement contract, whom does the life settlement broker represent?

- the owner - for compensation, solicits, negotiates, or offer to negotiate a life settlement contract. - represent only the policy owner

which of the following best defines the "owner" as it pertains to life settlement contracts?

- the policy owner of the life insurance policy - DOES NOT include: insurance provider, qualified institutional buyer, financing entity, special purpose entity, or a related provider trust

on a health insurance application, a signature is required from all of the following individuals

- the proposed insured - the policy owner - the agent

in a disability income policy all of the following are considered presumptive disabilities

- total loss of sight - loss of speech - loss of hearing - loss of any two limbs

which is true about beneficiary designations?

- trusts can be valid beneficiaries - the beneficiary may be a natural person - the policy does not have to have a beneficiary named in order to be valid

If one takes Social Security retirement benefits at age 62, what needs to be done at age 65 to qualify for Medicare?

-nothing -medicare part a and b will automatically be effective the month you turn 65

a husband and wife are insured under group health insurance plans at their own places of employment, and as dependents under their spouse's coverage. if one of them incurs hospital expenses, how will those expenses likely be paid?

-the benefits will be coordinated when individuals are covered under two or more health plans

If an insured receives accelerated death benefits, what is the least amount of the original death benefit that the beneficiary would receive after the insured's death?

0%. If an insured accepts an accelerated death benefit, the death benefit received by the beneficiary will be reduced by the amount paid by the accelerated death benefit, as well as the amount of earnings lost by the insurance company in interest income. Because it is legal for an insurer to pay 100% of the death benefit before an insured dies, it is possible that the beneficiary of a policy would not receive any benefits after the insured's death.

advantage of qualified plans to employers is

1) Contributions currently TAX DEDUCTIBLE2) Plan APPROVED by the IRS3) Plan CANNOT DISCRIMINATE4) Earnings grow TAX DEFFERED5) ALL WITHDRAWALS are TAXED

3 step promotion

1. describe how you will introduce yourself 2. describe the introduction 3. stress your nominators importance

6 step prospecting

1. get the affirmative 2. feed name and or give category 3. qualify 4. ask who else 5. pinpoint 6. double step ahead

balancing act in case of a rejection

1. restate the prospects objection or concern 2. validate their objection by assuming they are correct 3. remind prospect of value of double checking 4. conclude by revealing the potential of creating a significant impact

individuals who itemize deductions can claim deductions for medical expenses not covered by health insurance that exceed what percent of their adjusted gross income

10% - Most people who itemize their deductions can claim deductions for unreimbursed medical expenses, those that are not covered by health insurance, that exceed 10% of their adjusted gross income

An employee quits her job where she has a balance of $10,000 in her qualified plan. The balance was paid out directly to the employee in order for her to move the funds to a new account. If she decides to rollover her plan to a Traditional IRA, how much will she receive from the plan administrator and how long does she have to complete the tax-free rollover?

10,000, no tax consequence

The insured under a $100,000 life insurance policy with a triple indemnity rider for accidental death was killed in a car accident. It was determined that the accident was his fault. The triple indemnity rider in the policy specifies that the death must not be contributed to by the insured in any manner. In this case, what will the policy beneficiary receive?

100,000

An agent delivers a life insurance policy to the proposed insured. The insured makes a decision not to accept the policy. The insured may return the policy for a full refund of premium within how many days?

14. The free-look provision in Florida allows the insured to return a life policy or annuity after 14 days if dissatisfied for any reason.

the validity of coverage under a life insurance policy may not be contested, except for nonpayment of premium, after the policy has been in force for at least how many years?

2 years

an insured purchased a 15 year level term life insurance policy with a face amount of 100,000. the policy contained an accidental death rider, offering a double indemnity benefit. the insured was severely injured in an auto accident. and after 10 weeks of hospitalization died from the injuries. what about would his beneficiary recieve?

200,000. - only get double or triple if it is an accident as defined in the policy and occurs within 90 days of such an accident

the patient protection and affordable care act mandates that insurers provide coverage for adult children of the insured up to the age of

26 - regardless of marital status, residency, financaial dependence on their parents, or eligibility to enroll in their employer's plan

when a policy is replaced, replacing insurers must maintain a replacement register regarding that policy for

3 years - when a policy is to be replaced, replacing insurers must maintain copies of the replacement notice, all required written communications, the applicant's signed statement regarding replacement and a replacement register in their home office for at least 3 years or until the conclusion of the next regular examination by the Insurance Department, whichever is later

the time limit on certain defenses clause is another name for the incontestability clause

31 days is the longest grace period

an insured owns a $500,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. what would be the face amount of the new term policy?

50,000

To attain currently insured status under Social Security, a worker must have earned at least how many credits during the last 13 quarters?

6 credits

what is the waiting period on a waiver of premium rider in life insurance policies?

6 months

how long is an open enrollment period for medicare supplement policies?

6 months; 6-month period that guarantees the applicants the right to buy Medigap once they first sign up for Medicare Part B.

which of the following would best describe total disability?

A person's ability to work is significantly reduced or eliminated for the rest of his/her life While different policies might define "total disability" differently, any definition would imply that under a total disability a person's ability to work is significantly reduced or eliminated for the rest of his/her life.

Which of the following would be required to be licensed as an insurance producer?

A salaried employee who advertises and solicits insurance. A person does not require an insurance producer license if he or she only advertises without intent to solicit insurance. However, once there is solicitation, a license is required.

under the mandatory uniform provision notice of claim, the first notice of injury or sickness covered under an accident and health policy must contain

A statement that is sufficiently clear to identify the insured and the nature of the claim - within 20 days after the occurrence or commencement

premiums paid by an employer on a group health policy such as medical expense are tax deductible, since this is a fringe benefit to the employees

AD&D benefits paid to a beneficiary are not taxable. they are treated in the same way as life insurance proceeds

What level of authority is given to the Office of Insurance Regulation with respect to examination of insurer's activities to determine compliance Unfair Trade Practice laws?

Absolute. Florida statutes provide the Office of Insurance Regulation with an absolute right to examine the affairs of every person (insurers and licensees) involved in the business of insurance to see if they are engaged in any unfair trade practices.

The death protection component of Universal Life Insurance is always

Annually Renewable Term. A universal policy has two components: an insurance component and a cash account. The insurance component (or the death protection) of a universal life policy is always annual renewable term insurance.

Partners in a business enter into a buy-sell agreement to purchase life insurance, which states that should one of them die prematurely, the other would be financially able to buy the interest of the deceased partner. What type of insurance policy may be used to fund this agreement?

Any form of life insurance. Any form of Life insurance may be used to fund a buy-sell agreement.

An insurance contract must contain all of the following to be considered legally binding EXCEPT

Beneficiary's consent. The four essential elements of all legal contracts are offer and acceptance; consideration; competent parties; and legal purpose.

How are state Insurance Guaranty Associations funded?

By their members - authorized insurers. Guaranty Associations are funded by their members: all authorized insurers are required to contribute to a fund to provide for the payment of claims for insolvent insurers.

experience rating is used on group health and is based on past claims experience

COBRA (a federal regulation applying to group medical expense policies) allows an employee to continue group coverage for 18 months in case he or she quits or is released from employment

If an employee is accepted into a group insurance plan, which status will the employee have?

Certificate holder. In group insurance, plan participants (insureds) do not receive a policy. Instead, they receive certificates of insurance, indicating that they are covered by the policy.

If an agent advises a policyholder to replace an insurance policy but only does so for the purpose of making commissions, the agent has committed an act of

Churning. "Churning" is defined as replacing insurance policies for the sole purpose of making commissions.

When twin brothers applied for life insurance from Company A, the company found that while neither of them smoked and both had a very similar lifestyle, one of the twins was in a much stronger financial position than the other. Because of this, the company charged him a higher rate for his insurance. This practice is considered

Discrimination. Permitting individuals of the same class to be charged a different rate for the same insurance is an unfair trade practice of discrimination.

Two individuals are in the same risk and age class; yet, they are charged different rates for their insurance policies due to an insignificant factor. What is this called?

Discrimination. Permitting individuals of the same class to be charged a different rate for the same insurance is the unfair trade practice of discrimination.

All of the following are personal uses of life insurance EXCEPT

Estate liquidation. Personal uses of life insurance include survivor protection, estate creation and conservation, cash accumulation, and liquidity.

When the policyowner specifies a dollar amount in which installments are to be paid, he/she has chosen which settlement option?

Fixed amount. When the fixed amount settlement option is chosen, the policyowner sets the amount of each installment. The insurer will determine how long the installments are to be paid.

Both Universal Life and Variable Universal Life have a

Flexible premium. Variable universal life, like universal life itself, has a flexible premium that can be increased or decreased as the policyowner chooses, so long as there is enough value in the policy to fund the death benefit.

The inclusion of the Life and Health Guaranty Association in an advertisement by an insurer is

Forbidden. No insurance company can advertise the existence of the Guaranty Association; nor can an agent bring up the Guaranty Association in a sales presentation.

Which of the following activities would be sufficient violation to warrant rejection, revocation, or suspension of an insurance agent's license?

Forgery. Upon conviction of a felony, an agent's license will be revoked by the Commissioner.

life insurance death proceeds are

Generally not taxed as income

An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy?

Guaranteed insurability option. The guaranteed insurability option allows the insured to purchase specific amounts of additional insurance at specific times without proving insurability.

an insured becomes disabled at age 22 and can no longer work. she meets the definition of total disability under social security. what other requirement bust the insured have met to receive social security disability benefits

Have accumulated 6 work credits in the past 3 years - a max of 4 work credits can be earned each year - the amount of credits required varies by age -persons disabled before the age of 24 can qualify for social security benefits with only 6 work credits earned in the three years prior to the start of the disability

medicaid provides benefits for all the following

Inpatient hospital services Outpatient hospital services EPSDT: Early and Periodic Screening, Diagnostic and Treatment Services Nursing facility Services Home health services Physician services Rural health clinic services Federally qualified health center services Laboratory and X-ray services Family planning services Nurse midwife services Certified pediatric and nurse practitioner services Freestanding birth center services (when licensed or otherwise recognized by the state) Transportation to medical care Tobacco cessation counseling for pregnant women

Which of the following is an example of a limited-pay life policy?

Life Paid-up at Age 65. Limited Pay Whole Life premiums are all paid by the time the insured reaches age 65. The policy endows when the insured turns 100. It is the premium paying period that is limited, not the maturity.

Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary?

Life income with period certain. The life income with period certain option guarantees payments for the life of the recipient and also specifies a guaranteed period of continued payments. If the recipient should die during this period, the payments would continue to a designated beneficiary for the remainder of the period.

individual and group accident and sickness policies that cover what kinds of losses must also provide for newborns, from the moment of birth, with all health insurance benefits applicable to children

Losses that happen to family members - applicable to children until 31 days from birth

All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy?

Lower. Survivorship Life is much the same as joint life in that it insures two or more lives for a premium that is based on a joint age. The major difference is that survivorship life pays on the last death rather than upon the first death. Since the death benefit is not paid until the last death, the joint life expectancy in a sense is extended, resulting in a lower premium than that which is typically charged for joint life.

What is the other term for the cash payment settlement option?

Lump sum. Upon the death of the insured, the contract is designed to pay the proceeds in cash, called a lump sum.

An insurer incorporated in which of the following locations would be considered a foreign insurer in Washington, D.C.?

Maryland. A foreign insurer is an insurance company that is incorporated in another state or territorial possession. Mexico and Canada are foreign countries, so their insurers will be considered alien. An insurer that is incorporated and that operates in Washington, D.C. would be considered domestic.

a child was adopted on May 1 of this year. when will her health benefits go into effect

May 1 of this year Coverage for adopted children must be effective At the date of the final decree of adoption

an insured is covered under a medicare policy that provides a list of network healthcare providers that the insured must use to receive coverage. in exchange for this limitation, the insured is offered a lower premium. which type of medicare policy does the insured own?

Medicare SELECT - require insureds to use specific health care providers and hospitals, except in emergency situations. - in return, the insured pays lower premium amounts

What is the name of a clause that is included in a policy that limits or eliminates the death benefit if the insured dies as a result of war or while serving in the military?

Military service or war. There are two different types of exclusions that may be used by life insurers that limit the death benefit if the insured dies as a result of war or while serving in the military. The status clause excludes all causes of death while the insured is on active duty in the military. The results clause only excludes the death benefit if the insured is killed as a result of an act of war.

Which of the following is NOT true regarding policy loans?

Money borrowed from the cash value is taxable. Money borrowed from the cash value is not taxable. Policy loans can be repaid at any time, including surrender and death. An insurer can charge interest on outstanding policy loans.

official name for the social security program

Old age survivors disability insurance OASDI

What is the major difference between a Stock Company and a Mutual Company?

Ownership. Mutual companies are owned by policyholders, while stock companies are owner by stockholders.

the stop loss feature on a major medical policy applies after the insured first pays the deductible

POS (point of service) plans, HMOs (health maintenance organization) and PPOs (Preferred Provider Organization) are all types of managed care

prior to purchasing a medigap policy a person must be enrolled in which of the following?

Parts A and B of Medicare

A participating insurance policy may do which of the following?

Pay dividends to the policyowner. A participating insurance policy will pay dividends to the owner based upon actual mortality cost, interest earned and costs.

Which of the following will be included in a policy summary?

Premium amounts and surrender values. A policy summary must be delivered along with the policy and will provide the producer's name and address, the insurance company's home office address, the generic name of the policy issued, and premium, cash value, surrender value and death benefit figures for specific policy years.

All of the following are characteristics of group life insurance EXCEPT

Premiums are determined by the age, sex and occupation of each individual certificate holder. Premiums are determined by the age, sex and occupation of the entire group.

When an insurer terminates an agent's appointment, the insurer must do all of the following EXCEPT

Provide a 30-day advance notice to the Commissioner. An appointing entity may terminate an agent's appointment at any time, subject to an appointee's contract rights and with a 60-days advance notice. Once the appointment is terminated, the appointing entity must file a written notice with the department of insurance within 30 days.

An agent offers his client free tickets to a sporting event in exchange for the purchase of an insurance policy. The agent is guilty of

Rebating. When producers give or promise anything of value that is not specified in the policy, they are guilty of rebating.

Equity indexed annuities

Seek higher returns. Equity Indexed Annuities are not securities, but they invest on a relatively aggressive basis to aim for higher returns. Like a fixed annuity the Equity Indexed Annuity has a guaranteed minimum interest rate. The current interest rate that is actually credited is often tied to a familiar index like the Standard and Poor's 500.

The clause that protects the proceeds of a life insurance policy from creditors after the death of the insured is known as the

Spendthrift clause. The spendthrift clause protects the policy proceeds from creditors of the policyowner or beneficiary.

Which of the following is a risk classification used by underwriters for life insurance?

Standard. The three ratings classifications that denote the risk level of insureds are standard, substandard, and preferred. This classification system helps insurers to decide if an insured should pay a higher premium.

A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as

Survivor protection. Life insurance can provide the funds necessary for the survivors of the insured to be able to maintain their lifestyle in the event of the insured's death. This is known as survivor protection.

Which of the following is an example of a producer being involved in an unfair trade practice of rebating?

Telling a client that his first premium will be waived if he purchased the insurance policy today. Rebating is defined as offering any inducement in the sale of insurance products that is not specified in the policy, including money, reductions in commissions, promises, and personal services. Both the offer and acceptance of a rebate are illegal.

What are the 2 offices of the Financial Services Commission?

The Office of Financial Regulation and the Office of Insurance Regulation. The following 2 offices are established within the Commission: the Office of Financial Regulation and the Office of Insurance Regulation, which specifically regulates the business of insurance in the state.

If a policy has an automatic premium loan provision, what happens if the insured dies before the loan is paid back?

The balance of the loan will be taken out of the death benefit. If the loan and interest are not repaid and the insured dies, then it will be subtracted from the death benefit.

If a life insurance policy has an irrevocable beneficiary designation,

The beneficiary can only be changed with written permission of the beneficiary. If a policy has an irrevocable beneficiary designation the beneficiary can only be changed with written permission of the beneficiary.

Which is NOT true about beneficiary designations?

The beneficiary must have insurable interest in the insured. A beneficiary is the person or interest to whom the policy proceeds will be paid upon the death of the insured. Beneficiaries do not have to have an insurable interest in the policyholder.

An employer offers group life insurance to its employees for the amount of $10,000. Which of the following is true?

The cost of coverage is a deductible expense by the employer. The cost of coverage paid by the employer in excess of $50,000 is taxed to the employee.

In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports?

The customer's associates, friends, and neighbors provide the report's data. Both consumer reports and investigative consumer reports provide additional information from an outside source about a customer's character and reputation, and both types of reports are used under the Fair Credit Reporting Act. The main difference is that the information for investigative consumer reports is obtained through an investigation and interviews with associates, friends and neighbors of the consumer.

Who is the owner and who is the beneficiary on a Key Person Life Insurance Policy?

The employer is the owner and beneficiary. With the key-person coverage, the business (the employer) is the applicant, owner, premium payer, and beneficiary.

Who bears all of the investment risk in a fixed annuity?

The insurance company. Fixed annuities guarantee a minimum amount of interest to be credited to the purchase payment. Income payments do not vary from one payment to the next. The insurance company can afford to make guarantees because the money of a fixed annuity is placed in the general account of the insurance company, which is part of its investment portfolio. The company makes conservative enough investments to insure a guaranteed rate to the annuity owners.

Who does the secondary addressee provision protect?

The insured over the age of 64. The secondary notice/addressee provision protects elderly insured. Coverage for persons age 64 and older that has been in force for at least 1 year cannot lapse for nonpayment of premium after expiration of the grace period without the insurer notifying the policyowner and a specified secondary addressee (if designated in writing by the policyowner) of the impending lapse in coverage.

A 40-year old man buys a whole life policy and names his wife as his only beneficiary. His wife dies 10 years later. He never remarries and dies at age 61, leaving 2 grown-up children. Assuming he never changed the beneficiary, the policy proceeds will go to

The insured's estate. Because there is no viable beneficiary at the time of death, proceeds are paid to the insured's estate.

A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums?

The insured's premiums will be waived until she is 21. If the payor (usually a parent or guardian) becomes disabled for at least 6 months or dies, the insurer will waive the premiums until the minor reaches a certain age, such as 21.

which of the following is true regarding elimination periods and the cost of coverage

The longer the elimination period, the lower the cost of coverage

which of the following definitions would make it easier to qualify for total disability benefits.

The more liberal "own occupation"

In a life settlement contract, whom does the life settlement broker represent?

The owner. Life Settlement Broker is a person who, for compensation, solicits, negotiates, or offers to negotiate a life settlement contract. Life settlement brokers represent only the policyowners.

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. The parties to a contract must be capable of entering into a contract in the eyes of the law. Generally, this requires that both parties be of legal age, mentally competent to understand the contract, and not under the influence of drugs or alcohol.

A person insured under a group life insurance policy can make an assignment of all or any part of the incidents of ownership conferred on the insured by the policy or by law, to any of the following EXCEPT

The policyholder. Any person insured under a group life insurance policy can make to any person, other than the policyholder, an assignment of all or any part of the incidents of ownership conferred on the insured by the policy or by law, including the right to exercise the conversion privilege and the right to name a beneficiary.

Which of the following statements is correct regarding a whole life policy?

The policyowner is entitled to policy loans. Whole life policies offer level premium based on the issue age, guaranteed, level death benefit, cash value that is scheduled to equal the face amount at the insured's age 100, and living benefits, which include policy loans.

Under a SIMPLE plan, which of the following is TRUE regarding taxation on both contributions and earnings?

They are tax deferred on both contributions and earnings until funds are withdrawn.

All of the following are requirements for life insurance illustrations EXCEPT

They must be part of the contract. An illustration may not be altered by an agent and must clearly state that it is not part of the contract. It is legal to list nonguaranteed values in the contract, but they must be specifically labeled as projected, not guaranteed values.

a policy owner has a health insurance policy with his wife listed as the primary beneficiary. he would like to change the primary beneficiary to his sister. which of the following is true?

Unless the policy designated the current beneficiary as irrevocable, the policyowner can make the change at any time.

All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT

Upon conversion, the death benefit of the permanent policy will be reduced by 50%. Convertible term insurance is convertible without proof of insurability up to the full term death benefit. However, upon conversion, the premium for the permanent policy will be based on the insured's attained age.

Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?

Warranty. A warranty in insurance is a statement guaranteed to be true. When an applicant is applying for an insurance contract, the statements he or she makes are generally not warranties, but representations. Representations are statements that are true to the best of the applicant's knowledge.

life settlements

With Life Settlements, unlike with viatical settlements, the seller does not need to be terminally ill. They usually involve life insurance policies with a face amount of $250,000 or more, "key-person" coverage, corporated owned policies, or policies representing excess coverage that is no longer needed, and could be sold for an amount greater than the current cash value. they could be used for a key person coverage. they could be sold for an amount grater than the current cash valued. they involve insurance policies with large face amounts

premiums paid by the insured on an individual disability income policy are not tax deductible, but any benefits received would be received tax free

a blanket disability policy may be written to cover passengers on a common carrier, an employee group, a student group, a debtor group, or a sports team. blanket policies do not require individual applications, nor are certificates of insurance issued to those covered

the underwriter determines the final rating classification, not the producer

a buyers guide and policy summary must be left with the applicant prior to accepting the initial premium

medical expense policies are usually written as cancellable which means the company can cancel at any time as long as it gives advance notice

a cancellable policy may be canceled at any time by either party with proper advance notice

the guaranteed purchase option is a rider with allows the insured to purchase additional coverage at certain intervals without a physical exam. this rider is also known as the guaranteed insurability rider (GIR)

a conditionally renewable policy must be renewed if certain specified conditions are met

Most coverage for nursing homes is provided by Medicaid (Medical welfare)

a disabled person must have fully insured status in order to the eligible for social security disability benefits

who is a third party owner

a policy owner who is not the insured

in order to be eligible for part D of medicare (prescription drug insurance) one must be enrolled in medicare Part A or in parts A and B

a retiree may supplement medicare by staying enrolled in his or her former employer's group health plan. buying a medigap policy or enrolling in a managed care plan through an HMO

a person who cannot perform the activities of daily living (ADLs) needs a long term care policy

activities of daily living (ADLs) include eating, bathing, dressing, toileting, continence, and mobility

When transacting business in this state an insurer formed under the laws of another country is known as a/an

alien

an accident only policy would cover

all medical costs caused by accidents, not sickness

insurable interest may be based on economics or family relationships

an absolute guarantee of trust is called a warranty

The earliest that coverage COULD start would be the day of application, assuming the client paid the first premium, had no conditions to fulfill, and had not lied on the application

an incomplete application is usually returned. this being said, should the underwriter approve it as is, coverage begins. if this occurs, the company gives up some of its ability to contest a claim

Who can make a fully deductible contribution to a traditional IRA?

an individual not covered by an employer-sponsored plan who has earned income.

Under which of the following circumstances would an insurer pay accelerated benefits?

an insured is diagnosed with cancer and needs help paying for her medical treatment

if the insured's medical bills exceed what medicare covers the insured needs a medigap policy

an insured may only be covered by one medicare supplement at a time. it is unlawful to sell more than one medigap policy tot eh same person

which premium payment mode will incur the lowest overall payment

annual

what type of life insurance is most commonly used for group plans?

annually renewable term

aka perceived authority agent

apparent - appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created

what is the term used for an applicant's written request to an insurer for the company to issue a contract, based on the information provided

application

if a policy is non-cancellable and guaranteed renewable (the best kind) the company cannot change the coverage or rates and must offer renewal

at the option of the insured a guaranteed renewable policy is renewable by paying the premium up to a certain specified age (usually 65)

to comply with fair credit reporting act, when must a producer notify an applicant that a credit report may be requested?

at the time of application

what document describes an insured's medical history, including diagnoses and treatments?

attending physician's statement - best way for an underwrite to evaluate an insured's medical history. the report includes past diagnoses, treatments, length of recovery time, and prognoses

medical expense policies cover both accident and sickness

basic medical expense policies provide first dollar coverage without a deductible

which of the following would be considered a violation of life insurance advertising regulations

calling a variable insurance policy an investment plan

what type of policy allows the insurance company to cancel a policy at any time?

cancellable. - may be canceled at any time with proper written notice from the insurer and a refund of any unearned premium. - the insurer must continue to honor any claims submitted before the cancellation date

Under which non-forfeiture option does the company pay the surrender value and have no further obligations to the policy owner?

cash surrender

the act of trying to discourage a policy holder from dropping his/her existing policy is called

conservation effort

an insured pays an annual premium to his insurer. In return, the insurer promises to pay benefits in accordance with the terms of the contract. This is called

consideration

insuring clause

contains the company's promise to pay

term used for the specific dollar amount that must be paid by an HMO member for a service

copayment

according to the entire contract provision, what document must be made part of the insurance policy?

copy of the original application

the medical information bureau (MIB) collects claims information

coverage can never begin unless the premium has been paid. even though the premium has been paid, coverage will not start untl the applicant has satisfied all of the conditions of the conditional receipt, if any

dental and vision insurance may be a family plan, individual policy or offered as a group policy

dental and vision insurance may require the insured to go to an in-network dentist to receive maximum benefits

which of the following statements about occupations vs nonoccupational coverage is true

disability insurance can be written as occupational and nonoccupational

which of the following terms is used to name the nontaxed return of unused premiums

dividend

which of the following best describes an insurance company that has been formed under the laws of this state

domestic

The provision which states that both the policy and a copy of the application form the contract between the policy owner and the insurer is called the

entire contract

the insurance policy, together with the policy application and any added riders from what is known as

entire contract

which nonforfeiture option has the highest amount of insurance protection?

extended term

Which rider, when attached to a permanent life insurance policy, provides an amount of insurance on every family member?

family term rider

If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select?

fixed period

Keogh Retirement Plan

for self-employed workers and people who run their own businesses.

which provision allows the policyholder a period of time, while coverage is in force, to examine a health insurance policy and determine whether or not to keep it

free look period - allows 10 days after the policy is delivered in which to decide whether or not he/she wants the policy. - if the policyholder decides to return the policy within this period he/she receives a full refund of all premiums paid

• Groups may not be formed just to buy insurance. They must exist for another reason.

group health insurance usually does not have a probationary period and has little underwriting. group rates are usually lower than individual rates since the cost of administration is much lower

At the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability. This rider is called

guaranteed insurability

an individual is purchasing a permanent life insurance policy with a face value of 25,000 but would like the option to add additional coverage in the future.

guaranteed insurability option

if a life policy allows the policy owner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a

guaranteed insurability rider

heath insurance excludes war, self inflected injury and cosmetic surgery

health insurance underwriters may discriminate based on an applicant's health history.

under the privacy rule for HIPAA, protected info includes all individually identifiable health info

held or transmitted in any form - electronic, paper, or oral - protected health info (PHI)

a recurrent disability is an old injury that comes back within 90 days. the waiting period does not apply in the instance of re-occurrence since it is the same injury

if a policy has residual disability coverage it would pay the difference between what the insured used to make before the disability and what the insured can make currently

on disability income insurance, the waiting period is just another name for the elimination period

if an insurer wants fewer claims they should lengthen the waiting period

a family deductible limits the total amount of the family must pay during the year, no matter how many family members become sick or injured

if an insurer wants to stress preventive care, they should waive the deductible for office visits

if a reinstatement application is required, the insured is reinstated when the company says so or after 45 days, whichever comes first. when the insured is reinstated a 10 day probationary period begins on sickness only

if no reinstatement application is required the insured is reinstated effective upon payment of their late premium to either the company or the producer

an insured purchased a life insurance policy on his life naming his wife as primary beneficiary, and his daughter as contingent beneficiary. Under what circumstances could the daughter collect the death benefit?

if the primary beneficiary predeceases the insured

a health insurance policy lapses but is reinstated within an acceptable timeframe. how soon from the reinstatement date will coverage for accidents become effective

immediately - coverage for SICKNESS may have a waiting period of about 10 days

which of the following riders would not increase the premium for a policy owner

impairment rider - excludes a specified condition from coverage, therefore, reducing benefits.

skilled care would most likely be provided

in an institutional setting under the direction of a physician

Life income joint and survivor settlement option guarantees

income for 2 or more recipients until they die

what type of insurance would be used for a return of premium rider?

increasing term - when added to a whole life policy it provides that at death prior to a given age, not only is the original face amount payable, but also all premiums previously paid are payable to the beneficiary

the applicants consideration is both the answers on the application and the premium. in return the insurance company promises coverage. consideration does not have to be equal

insurable interest must exist at the time of application, but not necessarily at the time of a claim

which of the following entities can legally bind coverage?

insurer

in the event of loss, after a notice of claim is submitted to the insurer, who is responsible for providing claims forms and to which party?

insurer to the insured

When a beneficiary receives payments consisting of both principal and interest portions, which parts are taxable as income?

interest only

If an insured surrenders his life insurance policy, which statement is true regarding the cash value of the policy?

it is only taxable if the cash value exceeds the amount paid for premiums

When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy?

it is reduced to the amount of what the cash value would buy as a single premium

although the producer must sign the application they are not a party to the contract

it is the responsibility of the producer to explain the policy provisions, riders, and exclusions to the policy owner and or insured

which of the following applies to the 10-day free-look privilege?

it permits the insured to return the policy for a full refund of premiums paid.

which of the following is true about the premium on the children's rider in a life insurance policy

it remains the same no matter how many children are added to the policy.

A policy assignment....

it transfers rights of ownership from the owner to another person

the type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called

joint and survivor

covered under Part B of a Medicare policy

lab services, physician expenses, home health care, and dental expense resulting form an ACCIDENT ONLY

which of the following settlement options in life insurance is known as straight life?

life income - provides the recipient with an income that he or she cannot outlive - pays the benefit while the beneficiary is alive; however the payments stop at the beneficiary's death

on an AD&D (accidental death and dismemberment) policy, loss of eyesight due to an accident is covered. Loss of hearing is not covered, not is loss of use of a limb

limited health insurance policies (like AD&D) only cover limited perils and amounts

a surgical expense policy will pay a claim up to the policy limit. they are the only health insurance policies that may use a relative value schedule

major medical and medicare part b policies have both deductibles and coinsurance requirements

The corridor deductible derives its name from the fact that it is applied between the basic coverage and the

major medical coverage

interim policies are short-term health insurance plans purchased to fulfill temporary needs (6 months or less). They are often used to cover gaps in insurance between jobs

mandatory provisions such as the grace period, protect he insured. optional provisions such as probationary periods, protect the insurance company

medicaid eligibility is based upon financial need. there is no age limit

medicaid is funded by state, local, and federal monies. it is medical welfare, available to low income individuals and families

part B of medicare (medical insurance) is partially funded by user premiums

medicare part B has a premium coinsurance and a deductible which have amounts that are set annually. the amount paid by social security is dependent upon the primary insurance amount (PIA) of the insured

the 20% Medicare Part B coinsurance deductible must be covered by medigap core benefit

medicare parts B and D require the insured to pay a monthly premium but are also heavily subsidized by the federal government

medicare supplement and long term care policies have a 30 day free look

medigap plan A covers 365 additional days of hospital care as a core benefit beyond what medicare part A covers during the policy holder's lifetime

what is the name of a clause that is included in a policy that limits or eliminates the death benefit if the insured dies as a result of war or while serving in the military?

military service or war

an agent commingled 300 of insurance premiums collected with new applications with his personal funds. this agent could be found guilty of a

misdemeanor - Any willful violation will be considered a misdemeanor unless the amount involved exceeds $500, in which case the violation will be considered a felony.

what is the term for how frequently a policy owner is required to pay the policy period

mode

the coverage provided by a disability income policy that does not pay benefits for losses occurring as the result of the insured's employment is called

nonoccupational coverage - most group disability income is nonoccupational coverage, covering insureds only off the job. - the employer carries workers compensation for on the job injuries or sickness

death benefits payable to a beneficiary under a life insurance policy are generally

not subject to income taxation by the federal government - when premiums are paid with after tax dollars

the coordination of benefits provision in a medical expense policy states that if the insured has two group policies one is primary and one is excess

occupational coverage covers both on and off the job injuries for those not covered by workers compensation. non-occupational coverage covers off the job injuries only for those covered by workers compensation o the job

cancellation will have no effect on a pending claim, only on future claims

on a guaranteed renewable policy the insurance company cannot change the coverage however it can change the rates by class, although not individually

optionally renewable policies provide the biggest disadvantage for the insured

on a nncancellable policy, the insurance company cannot change the coverage or the rates, but can decline to offer renewal

the probationary period is different from the time limit on the certain defenses provision (incontestability) which is a max of 2 years

on disability income policies, to reduce the premium an insured may choose a longer waiting period

Long term care policies cover skilled nursing, intermediate care and custodial care

optional LTC coverage includes home health care, adult day care and hospice care

which of the following explains the policy owner's right to change beneficiaries, choose options, and receive proceeds of a policy?

owner's rights

which option is being utilized when the insurer accumulates dividends at interest and then uses the accumulated dividends, plus interest, and the policy cash value to pay the policy up early?

paid up option

an insured has a continuous premium whole life policy. she would like to use the policy dividends to pay off her policy sooner than would have been possible otherwise. what dividend option could she use?

paid-up optioon

certain persons under age 65 who are disabled or who have suffered kidney failure are also eligible for medicare

part A of medicare provides hospital insurance

an insured pays her major medical insurance premium annually on March 1. Last March she forgot to mail her premium to the company. On March 19, she had an accident and broke her leg. The insurance company would...

pay the claim - accident occurred during the grace period

which of the following applies to partial disability benefits

payment is limited to a certain period of time. the partial disability benefit is typically 50% of the total disability benefit and is limited to a certain period of time

Premiums for individual Disability Income or AD&D policies are not tax-deductible.

premiums paid by an individual on a medical expense policy may be tax deductible if they exceed a certain percentage of that individual's income

which of the following is not provided by an HMO

reimbursement - Traditionally the insurance companies have provided the financing while the doctors and hospitals have provided the care. The HMO concept is unique in that the HMO provides both the financing and the patient care for its members. The HMO provides benefits in the form of services rather than in the form of reimbursement for the services of the physician or hospital.

when an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy as well as a refund of all premiums paid. which rider is attached to the policy?

return of premium

an individual has been contributing to a retirement account after taxes are taken out of his paycheck. his financial advisor told him that we will be allowed to make contributions after age 70.5. the account owner does not have to pay taxes on the growth of his account. what type of retirement account is it?

roth IRA - allows contributions beyond 70.5 - does not force distributions to start at age 70.5

If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a

settlement option

interest only

settlement option

permanent disability does not go away (such as a loss of limb)

short term disability policies have shorter elimination periods than long term disability policies

the waiting period for several security disability benefits is 5 months

social security disability benefits require that a disabled person cannot work any job, and that the disability is expected to last at least 1 year or result in death

all of the following can be insurers

stock and mutual companies blue cross/ blue shield HMOs and PPOs

which of the following terms describes the specified dollar amount beyond which the insured no longer participates in the sharing of expenses?

stop loss limit

the transfer of an insured's right to seek damages from a negligent party to the insurer is found in which of the following clauses

subrogation - insurance policies require the insured to transfer any righ tto recovery to the insurer so that they may seek recovery up to the amount they paid as loss

workers compensation is mandatory on the job coverage for sickness disability or death

subrogation allows the insurance company to sue the negligent party to recover damages they have paid out

which of the following statements about a suicide clause in a life insurance policy is true?

suicide is excluded for a specified period of years and covered thereafter

The premiums paid by the employer in a business life insurance policy are

tax deductible by the employer - policy is for the employee's benefit - business expense

the interest earned on policy dividends is

taxable

which of the following, when attached to a permanent life insurance policy, allows the policy owner to customize the policy to provide an additional amount of temporary insurance on the insured, or allows amounts of temporary insurance to cover the other family members?

term rider

if an applicant does not receive a new insurance policy, who would be held responsible?

the agent

a 60-year-old participant in a 401(k) plan takes a distribution and rolls it over to an IRA within 60 days

the amount of the distribution is reduced by the amount of a 20% withholding tax. must be completed within 60 days - distributions are taxable as ordinary income in the year of the distribution. however if its rolled to an IRA, taxes are deferred until the required minimum IRA distributions begin

health policies cover newborns from the moment of birth

the annual mode of payment is the msot inexpensive

An insurer is attempting to determine the insurability of an applicant and decides to obtain medical information from several different sources. Which entity must be notified of the investigation?

the applicant

In a case where the primary beneficiary predeceases the insured, in the event of the insured's death, the death benefit proceeds will be paid to

the contingent beneficiary

an insurance company may contest a claim after 2 years, if they prove fraud. companies are usually reluctant to charge fraud, since it requires proof of intent to deceive and its usually difficult to prove

the incontestability clause's primary purpose is to protect the insurance company

a policyowner designated a primary and a contingent beneficiary. they both died in the same car accident and it was impossible to determine who died first. who would receive the death benefit

the insured's contingent beneficiary - uniform simultaneous death law: the law will assume that the beneficiary dies first in a common disaster. this provides that the proceeds will be paid to the contingent beneficiary or to the insured's estate if none is designated

a 40 year old man buys a whole life policy and names his wife as his only beneficiary. His wife dies 10 years later. he never remarries and dies at age 61, leaving 2 grown-up children. assuming he never changed the beneficiary the policy proceeds will go to...

the insured's estate

a fathers owns a life insurance policy on his 15 year old daughter. the policy contains the optional payor benefit rider. if the father becomes disabled, what will happen to the life insurance premiums?

the insured's premiums will be waived until she is 21. the premiums will be waived is the father is disabled for more than 6 months

in the insuring clause the insurer promises to pay

the max probationary period on a policy varies by state

which of the following is not covered under plan A in Medigap insurance

the medicare part a deductible what is covered: - provides the core, or basic, benefits established by law: first 3 pints of blood each year approved hospital costs for 365 additional days after Medicare benefits end the 20% part B coinsurance amounts for Medicare approved services

which of the following is true regarding health insurance underwriting for a person with HIV

the person may not be declined for medical coverage solely based on HIV status. a separate written consent form must be obtained prior to an HIV exam results may be disclosed to underwriters but not agents

if the policy owner, the insured, and the beneficiary under a life insurance policy are three different people, who has the ownership rights?

the policy owner

An agent is in the process of replacing the insured's current health insurance policy with a new one. Which of the following would be a proper action?

the policy should stay in force until the new policy is issued

Under an extended term nonforfeiture option, the policy cash value is converted to

the same face amount as in the whole life policy

An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries?

the surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive

persons aged 65 or older cannot be denied medigap coverage for health problems during open entrollment

there is a 6 month open enrollment period for buying medigap policies

regarding optional benefits with long-term care policies

they are available for an additional premium - guarantee of insurability -return of premium

nonforfeiture values

they are required by state law to be included in the policy - reduced paid up - cash surrender - extended term

concerning irrevocable beneficiaries...

they can be changed only with the written consent of that beneficiary

when an insureer issues an individual health insurance policy that is guaranteed renewable, the insureer agrees

to Renew the policy until the insured has reached age 65.

Best reason to purchase life insurance rather than annuities?

to create an estate the death benefit creates an immediate estate should the insured die

under COBRA the family of a deceased or disabled employee may continue group coverage for another 36 months

travel accident insurance will pay if an insured dies in a common carrier (commercial aircraft)

the time payment of claims provision allows the claims department time to investigate (max of 60 days)

under the legal actions provision, if a claim is not paid immediately, the claimant must wait at least 60 days before filing a lawsuit for failure to pay. such suits must be filed within 3 years of the original loss

Claims may be denied if they occur after policy expiration.

under the time payment of claims provision, claims must be paid immediately. Disability income claims must be paid at least on a monthly basis

Under the Physical Exam and Autopsy provision, how many times can an insurer have the insured examined, at its own expense, while a claim is pending?

unlimited The cost of such procedure is the insurer's responsibility.

the waiting period is waived on a disability income policy if the same recurrence happens within 90 days

waiver of premium does not pay money to the insured; it pays the premium to the insurer on behalf of the insured

base plans cover in-hospital only. there is no deductible or coinsurance on a base plan

when calculating how much the company will pay on a claim, always subtract the deductible first, and then apply the coinsurance percentage

which of the following determines whether disability insurance benefits are taxed

whether the premiums were tax deductible