Nevada Life and Health

annuity

A contract that provides income for a specified period of time or for life; NOT life insurance

A specified dollar amount that the insured must pay first before the insurance company will pay the policy benefits. (The purpose of a deductible is to have the insured absorb the smaller claims, while the coverage provided under the policy will absorb the larger claims. The higher the deductible, the lower the premium.)

A deductible is a)A percentage of the medical bill the insured must pay before services will be rendered. b)An insurer's obligation to the service provider. c)A nominal fee for the use of an insurer's services. d)A specified dollar amount that the insured must pay first before the insurance company will pay the policy benefits.

qualified plan

A retirement plan that meets the IRS guidelines for receiving favorable tax treatment.

Unearned premiums are retained by the insurance company. (Any unearned premium must be returned to the policyholder. If the insurer cancels, the unearned premium will be returned on a pro rata basis.)

According to the rights of renewability rider for cancellable policies, all of the following are correct about the cancellation of an individual insurance policy EXCEPT a)Unearned premiums are retained by the insurance company. b)The insurer must provide the insured a written notice of the cancellation. c)Claims incurred before cancellation must be honored. d)An insurance company may cancel the policy at any time.

Number of family dependents. (Long-term Care policies can vary in the number of days of confinement covered, the number of home health visits covered, the amount paid for nursing home care, and other contract provisions.)

All of the following are the most common variations in a Long-term Care policy EXCEPT a)Number of home health visits covered. b)Number of family dependents. c)The amount paid for nursing home care. d)Number of days of confinement covered.

All of the above

An advertisement must accurately represent which of the following? a)The insurer's assets b)The insurer's corporate structure c)The insurer's financial standing d)All of the above

Reduction of Premium (The Reduction of Premium option allows the policyholder to apply policy dividends toward the next year's premium. The dividend is subtracted from the premium amount, yielding the new premium due for the next year.)

An insured pays $1,200 annually for her life insurance premium. The insured applies this year's $300 worth of accumulated dividends to the next year's premium, thus reducing it to $900. What option does this describe? a)Flexible Premium b)Reduction of Premium c)Accumulation at Interest d)Cash option

Pay the death benefit (The incontestability clause prevents an insurer from denying a claim due to statements in an application after the policy has been in force for 2 years, even on the basis of a material misstatement of facts or concealment of a material fact.)

An insured purchased a life policy in 2010 and died in 2017. The insurance company discovers at that time that the insured had concealed information during the application process. What can they do? a)Refuse to pay the death benefit because of the fraud b)Pay a decreased death benefit c)Sue for the right to not pay the death benefit d)Pay the death benefit

The insured is in an accident and incurs a large claim. (The company may not cancel coverage due to covered claims. All the rest are allowable reasons for an insurer to terminate the contract.)

An insured purchased a noncancellable health insurance policy 1 year ago. Which of the following circumstances would NOT be a reason for the insurance company to cancel the policy? a)The insured reaches the maximum age limit specified in the policy. b)Within two years of the application, the insurer discovers a misrepresentation. c)The insured is in an accident and incurs a large claim. d)The insured does not pay the premium.

Cash option (The cash option allows an insurer to send the policyholder an annual, nontaxable dividend check.)

An insured receives an annual life insurance dividend check. What term best describes this arrangement? a)Reduction of Premium b)Annual Dividend Provision c)Accumulation at Interest d)Cash option

The insured was in compliance with the policy requirements regarding claims (If claims forms are not furnished to the insured, the claimant is deemed to have complied with the requirements of the policy if he or she submits written proof of the occurrence, nature of the loss, and extent of loss to the insurer.)

An insured submitted a notice of claim to the insurer, but never received claims forms. He later submits proof of loss, and explains the nature and extent of loss in a hand-written letter to the insurer. Which of the following would be true? a)The claim most likely will not be paid since the official claims form was not submitted. b)The insurer will be fined for not providing the claims forms. c)The insured must submit proof of loss to the Department of Insurance. d)The insured was in compliance with the policy requirements regarding claims.

nonoccupational coverage

Claims that result from accidents or sicknesses that occur off the job

First 3 (Medicare supplemental policies cover costs of deductibles and coinsurance for Parts A and B. Since Medicare will not pay for the first 3 pints of blood, a Medicare Supplement plan will cover that. This is considered to be a core benefit.)

How many pints of blood will be paid for by Medicare Supplement core benefits? a)None; Medicare pays for it all b)Everything after first 3 c)1 pint d)First 3

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.)

If a person is compensated for a testimonial in an advertisement, which of the following statements should be included in the advertisement? a)Paid endorsement b)Insurer is not responsible for the contents of the testimonial c)The author is the employee of the insurer d)Commissioned advertisement

Elimination Period

In disability income insurance, the time between the onset of an injury or sickness and when benefits begin

Adhesion (A contract of adhesion is prepared by only the insurer; the insured's only option is to accept or reject the policy as it is written.)

Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. What contract characteristic does this describe? a)Unilateral b)Conditional c)Personal d)Adhesion

medical expense insurance

Insurance that reimburses the policyowner for hospital and medical costs

First-Dollar Insurance Coverage

Insurance where the insured is not required to pay a deductible

COBRA (because she can convert, and if she has a long term illness it it will be hard for her to get approved for individual insurance)

Kevin and Nancy are married; Kevin is the primary breadwinner and has a health insurance policy that covers both him and his wife. Nancy has an illness that requires significant medical attention. Kevin and Nancy decide to legally separate, which means that Nancy will no longer be eligible for health insurance coverage under Kevin. Which of the following options would be best for Nancy at this point? a)COBRA b)Apply for social security benefits c)Apply for coverage under the same group policy that covers Kevin d)Convert to an individual insurance policy with 31 days so she won't have to provide evidence of insurability

closed panel

Physicians provide services exclusively to members of a health organization

prepaid

Plans where providers are compensated regularly regardless of the services provided

qualifying events include the voluntary termination of employment; an employee's change from full time to part time; or the death of the employee, divorce

Qualifying Events for COBRA

Insurance companies from adverse selection by high risk persons (The MIB makes information available to underwriters to assist them in the underwriting process. It is a nonprofit trade organization which receives adverse medical information from insurance companies and maintains confidential medical impairment information on individuals)

The Medical Information Bureau (MIB) was created to protect a)Insurance departments from lawsuits by policyowners. b)Insureds from unreasonable underwriting requirements by the insurance companies. c)Medical examiners that perform insurance physical examinations. d)Insurance companies from adverse selection by high risk persons.

Accident-only (Accident-only policies cover medical benefits related to an accident. Medical conditions related to sickness are not covered.)

The insured's health policy only pays for medical costs related to accidents. Which of the following types of policies does the insured have? a)Accidental Death b)Comprehensive c)Accident-only d)Restrictive

Tax deductible by the employer. (The premiums that an employer pays for life insurance on an employee, whereby the policy is for the employee's benefit, are tax deductible to the employer as a business expense.)

The premiums paid by the employer in a business life insurance policy are a)Tax deductible by the employee. b)Always taxable to the employee. c)Never taxable to the employee. d)Tax deductible by the employer.

Entire Contract Clause (Entire contract is a mandatory provision that is required by law.)

The provision in a health insurance policy that ensures that the insurer cannot refer to any document that is not contained in the contract is the a)Incontestability clause. b)Legal action against us clause. c)Entire contract clause. d)Time limit on certain defenses clause.

Insuring clause. (The insuring clause is a provision on the first page of the policy that states the coverage and when it applies.)

The section of a health policy that states the causes of eligible loss under which an insured is assumed to be disabled is the a)Incontestability clause. b)Consideration clause. c)Probationary period. d)Insuring clause.

Unlimited (The Physical Exam and Autopsy provision allows the insurer to examine the insured as much as is reasonably necessary while the claim is being processed, provided that the insurer pays the expenses.)

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? a)2 examinations per week of the claim processing period b)Unlimited c)None at all d)1 examination per week of the claim processing period

Loan values and retirement income (Whole life policies also build cash values (living benefits), which the policyowner can borrow against, or is entitled to, in the event the policy is surrendered.)

What are the "living benefits" of whole life insurance? a)Premiums paid by the insured b)Loan values and retirement income c)Face amounts and increases in cash values d)Dividends and interest paid on cash values

Ownership

What is the major difference between a stock company and a mutual company?

As long as the policy is in force (An insurer can contest a fraudulent misstatement as long as the policy is in force. No other statement or misstatement made in the application at the time of issue will be used to deny a claim after the policy has been in force for 2 years.)

What is the maximum period of time during which an insurer may contest fraudulent misstatements made in a health insurance application? a)90 days after the effective policy date b)6 months after the effective policy date c)1 year after the effective policy date d)As long as the policy is in force

36 months

What is the period of coverage for events such as death or divorce under COBRA?

Application (An individual can submit an application to an insurer, which requests that the insurer review the information and issue an insurance contract.)

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? a)Insurance Request Form b)Request for Insurance c)Application d)Policy Request

Increasing Term

What type of insurance would be used for a Return of Premium rider? a)Decreasing Term b)Annually Renewable Term c)Increasing Term d)Level Term

To renew the policy until the insured has reached age 65. (The guaranteed renewable provision is similar to the noncancellable provision, with the exception that the insurer can increase the policy premium on the policy anniversary date. As with the noncancellable policy, coverage is generally not renewable beyond the insured's age 65.)

When an insurer issues an individual health insurance policy that is guaranteed renewable, the insurer agrees a)To renew the policy indefinitely. b)To renew the policy until the insured has reached age 65. c)To charge a lower premium every year the policy is renewed. d)Not to change the premium rate for any reason.

Reduced paid-up (The reduced paid-up nonforfeiture option would provide protection until the insured reaches 100, but the face amount is reduced to what the cash would buy.)

Which nonforfeiture option provides coverage for the longest period of time? a)Accumulated at interest b)Reduced paid-up c)Extended term d)Paid-up option

Coverage for dependents (Most medical expense policies will not cover expenses for dental care, self-inflicted injuries, or injuries incurred as a result of military service (among other exclusions). Most policies include coverage for dependents.)

Which of the following is NOT an exclusion in medical expense insurance policies? a)Military duty b)Self-inflicted injuries c)Routine dental care d)Coverage for dependents

The death benefit is fixed. (In a variable universal life policy, the death benefit is adjustable, and the cash values are not guaranteed. While the death benefit may decrease and increase, it cannot go below a guaranteed minimum face amount.)

Which of the following is NOT true regarding a Variable Universal Life policy? a)The minimum death benefit is guaranteed. b)The cash values are not guaranteed. c)The death benefit is fixed. d)The policyowner can participate in some of the investment decisions.

It does not have limits on contributions. (A Flexible Spending Account (FSA) is a form of cafeteria plan benefit funded by salary reduction. The employees are allowed to deposit a certain amount of their paycheck into an account before paying income taxes. FSA benefits are subject to annual maximum and "use-or-lose" rule.)

Which of the following is NOT true regarding a flexible spending account? a)It provides an opportunity to receive benefits on a pretax basis. b)It is a cafeteria plan. c)It does not have limits on contributions. d)It operates on "use-or-lose" basis.

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

Which of the following is true about the premium on the children's rider in a life insurance policy? a)It decreases when the oldest child reaches the age of 21. b)It increases when a newborn baby is added to the policy c)It decreases when an adopted child is added to the policy. d)It remains the same no matter how many children are added to the policy.

Its goal is to channel patients to providers that discount services. (Insureds are treated by providers who have agreed to discount their charges.)

Which of the following is true of a PPO? a)Claim forms are completed by members on each claim. b)No copayment fees are involved. c)Its goal is to channel patients to providers that discount services. d)The most common type of PPO is the staff model.

It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age. (Children's rider is term insurance covering all of the children in the family, including newly born children, and is convertible to permanent insurance upon a child reaching the maximum age without evidence of insurability.)

Which of the following is true of a children's rider added to an insured's permanent life insurance policy? a)Each child covered must show evidence of insurability. b)It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age. c)It is permanent insurance. d)The policy covers only the natural children of the insured.

Medicaid

Which of the following programs expands individual public assistance programs for people with insufficient income and resources? a)Unemployment compensation b)Medicaid c)Medicare d)Social Security

Payment of Claims (The Payment of Claims provision states that the claims must be paid to the policyowner, unless the death proceeds need to be paid to a beneficiary.)

Which of the following provisions would prevent an insurance company from paying a reimbursement claim to someone other than the policyowner? a)Proof of Loss b)Payment of Claims c)Change of beneficiary d)Entire Contract Clause

Impairment rider (The impairment rider excludes a specified condition from coverage, therefore, reducing benefits. An insurance company will not charge extra for a rider that reduces benefits.)

Which of the following riders would NOT increase the premium for a policyowner? a)Waiver of premium rider b)Multiple indemnity rider c)Impairment rider d)Payor benefit rider

Termination of employment due to downsizing (Employee qualifying events include the termination of employment for reasons other than for misconduct; dependents' qualifying events include the death of the employee, divorce or legal separation.)

Which of the following would be a qualifying event as it relates to COBRA? a)Eligibility for coverage under another group plan b)Eligibility for Medicare c)Termination of employment due to downsizing d)Termination of employment for stealing

Indemnity (A Hospital Indemnity policy pays a fixed amount each day the insured is hospitalized, unrelated to medical expenses.)

Which type of a hospital policy pays a fixed amount each day that the insured is in a hospital? a)Surgical b)Blanket c)Medigap d)Indemnity

Limited pay whole life (Premium payments will cease at her age 65, but coverage will continue to her death or age 100.)

Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client? a)Life annuity with period certain b)Increasing term c)Limited pay whole life d)Interest-sensitive whole life

Agent/Producer

a legal representative of an insurance company

broker

a licensed person who represents the insured

agent

a licensed person who solicits insurance on behalf of an insurance company (represents the insurer)

annuitant

a natural person whose life expectancy is taken into consideration and who receives annuity payments

benefit period

a period of time for the monthly disability benefit payments

Applicant/Proposed insured

a person applying for insurance

estate

a persons' net worth

cash value

a policy's savings element or living benefit

Attending Physician's Statement

a statement about the applicant's medical conditions, diseases, and treatments obtained from the applicant's doctor

Subscriber (participant, member)

an individual signed up for a prepaid plan

open enrollment

annual general enrollment period, Jan 1 through March 31

activities of daily living (ADLs)

bathing, continence, dressing, eating, toileting, and transferring

occupational coverage

benefits for illness, injury, or disability resulting from accidents or sicknesses that occur on or off the job

permanent insurance

builds cash value and remains in effect for the entire life of the insured

pre-existing condition

condition for which the insured received diagnosis. or treatment prior to the policy issue

Hazard

conditions that increase the probability of a loss

coinsurance

cost sharing by the policyowner and the insurer (a percentage)

life insurance

coverage on human lives

surrender

early termination of a policy by the policyowner

sickness

illness or disease that manifests itself while the policy is in force

Annuitization period (liquidation, pay-out period)

income is paid to the annuitant

Adverse Selection

insuring of risks more prone to loss than average risk

Medical Information Bureau (MIB)

nonprofit organization that receives adverse medical information from insurers and helps in their underwriting

open panel

physicians provide services to a health organization and its subscribers, but retain the right to treat nonmembers

fee-for-service

plans where providers receive a payment for billed charges for each service

accumulation period (pay-in period)

premiums are paid into an annuity

indemnity

restoring the insured to the condition that existed before loss

earned income

salary, wages, or commissions; but NOT income from investments, unemployment benefits, workers comp, and similar sources of income

insurance transaction

solicitation, negotiations, or effectuation of a contract

rollover

tax free distribution of cash from one qualified plan to another

term insurance

temporary protection

face amount

the amount of benefit stated in the life insurance policy

deductible

the amount of covered expenses paid by the policyowner before the policy pays

death benefit

the amount paid upon the insured's death

peril

the cause of loss

insurer

the company that issues an insurance policy

policy proceeds

the death benefit

contributory plan

the employee pays part of or the entire premium

noncontributory plan

the employer pays the entire premium

own occupation

the insured is unable to perform any duties of his/her own occupation

any occupation

the insured is unable to perform any duties of the occupation for which he/she is suited by education, training, or experience

law of large numbers

the larger the number of people with the same exposure to loss, the more predictable the actual loss will be

insured

the person covered by the insurance policy

policyowner

the person who has the rights and privileges in the policy

beneficiary

the person who receives the benefits from an insurance policy

provisions

the rights and obligations within a contract

riders

these modify policy provisions

insurance

transfer of risk of loss from an individual to an insurer

risk

uncertainty or chance of loss

accidental bodily injury

unforeseen and unintended injury from an accident

options

ways to invest or distribute a sum of money available in a policy

tax deferred

withheld or postponed until a specified time in the future