Practice questions for insurance
Which agreement specifies how a business will transfer hands when one of the owners dies or becomes disabled?
Disability Buy-Sell The Disability Buy-Sell agreement specifies how a business will pass between business owners if one of the owners dies or becomes disabled.
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.
Items stipulated in the contract that the insurer will not provide coverage for are found in the
Exclusions clause Exclusions are restrictions of coverage as stated in the policy.
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.
What are the three basic coverages for medical expense insurance?
Hospital, surgical and medical Basic medical policies and major medical policies are commonly grouped into medical expense insurance. The three basic coverages are hospital, surgical and medical, and may be purchased separately or as a package.
Which of the following statements pertaining to Medicare Part A is correct?
Individuals who have ALS automatically qualify for Medicare Part A, regardless of age. Persons under the age of 65, but entitled to Social Security disability benefits for 24 months, may qualify for Medicare, in addition to citizens or legal residents of the US age 65 and over who qualify for Social Security or railroad retirement benefits. Individuals with ESRD or ALS are automatically eligible for coverage under Medicare Part A.
What would be an advantage to naming a contingent (or secondary) beneficiary in a life insurance policy?
It determines who receives policy benefits if the primary beneficiary is deceased. Naming a secondary beneficiary (also referred to as contingent beneficiary) ensures that there is a beneficiary to receive policy proceeds if the primary beneficiary dies before the insured. If there is no secondary beneficiary, the policy benefits will go to the insured's estate.
Which of the following is NOT true of a major-medical health insurance policy?
It is designed to pay on a first dollar of expense basis. A major medical policy usually has deductibles and a copayment requirement. Basic medical, but not major medical, expense policies pay on a first dollar basis.
Which of the following best describes annually renewable term insurance?
It is level term insurance. Annually renewable term is a form of level term insurance that offers the most insurance at the lowest cost.
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. The premium does not change on the inclusion of additional children; it is based on an average number of children.
Which of the following statements is TRUE about a policy assignment?
It transfers rights of ownership from the owner to another person. The policyowner may assign a part of the policy (collateral assignment) or the entire policy (absolute assignment).
Which statement is NOT true regarding a Straight Life policy?
Its premium steadily decreases over time, in response to its growing cash value. Straight Life policies charge a level annual premium throughout the insured's lifetime and provide a level, guaranteed death benefit.
What type of health insurance policy provides an employer with funds to train a replacement if a valued employee becomes disabled?
Key person disability Key person disability is purchased by the employer on the life of a key employee to cover the expense of hiring and training a replacement for the key person.
Untrue statements on the application unintentionally made by insureds that, if discovered, would alter the underwriting decision of the insurance company, are called
Material Misrepresentation A material misrepresentation is a statement that, if discovered, would alter the underwriting decision of the insurance company.
Which of the following provisions is mandatory for health insurance policies?
Physical examination and autopsy Physical examination and autopsy is a mandatory provision required by law. The other answer choices are optional provisions.
How must a replacing producer respond to an applicant wishing to replace existing life insurance?
The producer must provide the applicant with a Notice Regarding Replacement In a replacement transaction, a producer must present to the applicant a Notice Regarding Replacement, signed by both the applicant and the producer.
Manny has been injured in an accident. Although she is still receiving benefits from her policy, she does not have to pay premiums. Her policy includes
Waiver of premium rider the waiver of premium rider causes the insurer to waive future premiums when an accident or disease causes a disability lasting at least six months
Which of the following best describes an insurance company that has been formed under the laws of this state?
domestic A company is domestic when doing business within the state in which it is incorporated.
A typical Accidental Death & Dismemberment policy covers all of the following losses EXCEPT
income Accidental Death & Dismemberment policies cover loss of body parts or life only.
Regulations for annuity recommendations would apply when a consumer is at least what age?
65 years old A senior consumer is a person age 65 or older.
Most policies will pay the accidental death benefits as long as the death is caused by the accident and occurs within
90 days Most policies will pay the accidental death benefit as long as the death is caused by the accident and occurs within 90 days.
Which of the following entities can legally bind coverage?
A Insurer Only insurers, not agents, can bind coverage.
A hospital indemnity policy will pay
A benefit for each day the insured is in the hospital Hospital confinement indemnity policies pay specific amounts that depend on the amount of time the insured is confined to the hospital
The premium charged for exercising the Guaranteed Insurability Rider is based upon the insured's
Attained age (The premium charged for the increase will be based upon the attained age of the insured.)
Which of the following statements regarding Business Overhead Expense policies is NOT true?
Benefits are usually limited to six months. Business Overhead Expense (BOE) insurance is sold to small business owners for the purpose of reimbursing the policyholder for business overhead expenses during a period of total disability. Premiums are tax-deductible for a business, but any benefits received are taxable as income. Overhead expenses, including equipment and employee salaries, are covered by the plan. Salaries and profits of the employer are not protected.
An insured receives an annual life insurance dividend check. What term best describes this arrangement?
Cash option: allows an insurer to send a policyholder an annual, nontaxable dividend check.
In order for a debtor group to qualify for group life insurance, what should be the minimum number of participants joining the plan every year?
100 Life insurance policies can be issued to debtor groups if the group of eligible debtors is receiving new entrants at the rate of at least 100 persons a year.
A Straight Life policy has what type of premium?
A level annual premium for the life of the insured Straight Life policies charge a level annual premium for the lifetime of the insured and provide a level, guaranteed death benefit.
The minimum interest rate on an equity indexed annuity is often based on
An index like Standard & Poor's 500 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. Interest rates on equity indexed annuities are often tied to a familiar index, such as the Standard and Poor's 500.
In which of the following locations would skilled care most likely be provided?
In an institutional setting Skilled nursing care is performed under the direction of a physician, usually in an institutional setting.
Which of the following is NOT true regarding a Certificate of Authority?
It is issued to group insurance participants. Before insurers may transact business in a specific state, they must apply for a license or certificate or Authority from the state department of insurance and meet any financial requirements set down by the state.
Under an individual disability policy, the MINIMUM schedule of time in which claim payments must be made to an insured is
Monthly If a claim involves disability income benefits, the policy must pay those benefits not less frequently than monthly. In all other cases, the company may specify the time period of 45 or 60 days for payment of claims
Premium payments for personally-owned disability income policies are
Not tax deductible Premiums for personally-owned individual disability income policies are not deductible.
All of the following would be considered an insurance transaction EXCEPT
Obtaining an insurance license. An insurance transaction means the carrying on of business in insurance, which could include the solicitation of a policy, advising, negotiation, or inducement related to coverage or claims. Obtaining an insurance license is a prerequisite to transacting insurance.
Traditional IRA contributions are tax deductible based on which of the following?
Owners income. Traditional IRA contributions are tax deductible, but may be limited if the owner's income exceeds a certain level.
When an insurer combines two periods of disability into one, the insured must have suffered a
Recurrent Disability Recurrent disability is the period of time (usually within 3-6 months) during which the recurrence of an injury or illness will be considered as a continuation of a prior period of disability.
Which of the following insurance products will be subject to the regulation on life insurance solicitation?
Term life policy. The regulation on life insurance solicitation does not apply to the sale of annuities, credit life and group life insurance, variable life insurance policies, and life insurance policies issued in connection with pension and welfare plans that are subject to ERISA.
An employee quits his job on May 15 and doesn't convert his Group Life policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen?
The insurer will pay the full death benefit from the group policy to the beneficiary. The employee usually has a period of 31 days after terminating from the group in order to exercise the conversion option. During this time, the employee is still covered under the original group policy.
All of the following are true about variable products EXCEPT
The premiums are invested in the insurer's general account. Insurers selling variable products invest their customer's monies in a separate account, which is very similar to a mutual fund. Since there is no guaranteed rate of return, customers must bear the investment risk.
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
Unearned premiums are retained by the insurance company. This rider allows the insurer to cancel the policy at any time, or at the end of the policy period. Any unearned premium must be returned to the policyholder. If the insurer cancels, the unearned premium will be returned on a pro rata basis.
The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called
Waiver of premium. Waiver of premium rider waives the premium if the insured owner has been totally disabled for a predetermined period. The payor benefit provides for an owner other than the insured and the waiver of cost of insurance is found in Universal Life.
An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will coverage begin?
When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health If the initial premium is not paid with the application, the agent will be required to collect the premium at the time of policy delivery. In this case, the applicant will most likely need to fill out a Statement of Good Health.
What is the typical deductible for basic surgical expense insurance?
$0 As with the other types of basic medical expense coverage, there is no deductible, but coverage is limited.
In order to maintain an insurance license, an agent licensed for less than 6 years will need to satisfy Florida's continuing education requirement of
24 hours every 2-year period Agents licensed for less than 6 years must complete 24 credit hours of continuing education every 2 years. Agents licensed for more than 6 years must complete 20 credit hours. As part of their CE hours, all agents must complete a 4-hour Law and Ethics updates course.
A paid-up nonforfeiture benefit will become effective as specified in the policy, unless the person entitled elects another available option within how many days after the due date of the premium in default?
60 A paid-up nonforfeiture benefit will become effective as specified in the policy, unless the person entitled elects another available option within 60 days after the due date of the premium in default
If an insurance company offers Medicare supplement policies, it must offer which of the following plans?
A ( An insurance company must make available to each applicant a policy form offering the basic core benefits (Plan A) if it will offer any Medicare Supplement policies. An insurance company does not have to issue all or any of the plans B through N)
An insured misstated her age on an application for an individual health insurance policy. The insurance company found the mistake after the contestable period had expired. The insurance company will take which of the following actions regarding any claim that has been issued?
Adjust the claim benefit to reflect the insured's true age The Misstatement of Age provision says that if a client has misstated her age, whether intentional or unintentional, they will adjust the benefit being paid. It doesn't matter when the mistake was found.
Level term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will be
Adjusted to the insured's age at the time of renewal. If a level term product is renewed at the end of the term period the premium will be based upon the attained age of the insured.
Which of the following best describes the concept that the insured pays a small amount of premium for a large amount of risk on the part of the insurance company?
Aleatory An insurance contract is an aleatory contract in that it requires a relatively small amount of premium for a large risk.
If more than one family member covered under the same major medical policy is injured in the same accident, the family only has to pay one deductible. This is due to the
Common accident provision Under the common accident provision, only one deductible applies for all family members involved in the same accident.
An applicant for an insurance agent's license must
Complete a prelicensing education course Applicants for an agent's license must complete a 40-hour prelicensing education course.
Which of the following is NOT a term for the period of time during which the annuitant or the beneficiary receives income ?
Depreciation period The "annuitization period" is the time during which accumulated money is converted into an income stream. It is also referred to as the annuity, liquidation or pay-out period
An insured is hospitalized with a back injury. Upon checking his disability income policy, he learns that he will not be eligible for benefits for at least 30 days. This indicates that his policy is written with a 30-day
Elimination period. The elimination period is the time immediately following the start of a disability when benefits are not payable. This is used to reduce the cost of providing coverage and eliminates the filing of many claims.
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
No insurance policy form can be issued, delivered, or used in this state unless it has been
Filed with and approved by the Office of Insurance Regulation. Prior to the use of any policy or contract form, application form, rider, or endorsement, insurers must submit the forms and all changes to the Office and have the forms approved.
How many pints of blood will be paid for by Medicare Supplement core benefits?
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.
When would a misrepresentation on the insurance application be considered fraud?
If it is intentional and material A misrepresentation would be considered fraud if it is intentional and material. Fraud would be grounds for voiding the contract.
Which of the following is NOT specifically prohibited by state law as an unfair trade practice?
Reducing the premiums paid by employers for group insurance based on loss experience
Which of the following is NOT specifically prohibited by state law as an unfair trade practice?
Reducing the premiums paid by employers for group insurance based on loss experience Insurers are permitted to lower the premiums of employers' group insurance because of loss experience. This is called experience rating. All the other practices would be considered unfair trade practices.
A customer with an existing life insurance contract is considering exchanging it for a newer contract. What Florida insurance regulation should the customer's insurance agent consult?
The Florida Replacement Rule The Florida Replacement Rule established the procedures followed when a prospective life insurance buyer replaces an existing insurance contract with new insurance.
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.
A policy with a 31-day grace period implies
The policy will not lapse for 31 days if the premium is not paid when due A mandatory provision of life insurance policies requires that a grace period be provided. The grace period is the period of time after the premium due date in which premiums may still be paid before the policy lapses for nonpayment of the premium.
What is the purpose of a fixed-period settlement option?
To provide a guaranteed income for a certain amount of time When the fixed-period installments option is selected, the insurer agrees to pay the proceeds in equal installments over a specified period of time.
Before starting operations as an HMO, the organization must meet which of the following requirements?
all of the above The requirements to start an HMO in Florida include all of the above, as well as other requirements as stated in the statutes.
The First Street Church plans to sponsor a summer camp for the youth of their congregation. They would like to purchase insurance that would pay benefits should one of the youth get injured while participating in the camp activities. The type of policy they would likely need is a/an
blanket A policy that covers all of the participants without naming them individually is a blanket policy.
During replacement of life insurance, a replacing insurer must do which of the following?
obtain a list of all insurance policies that will be replaced The replacing insurance company must require from the producer a list of the applicant's life insurance policies to be replaced and a copy of the replacement notice provided to the applicant, and send each existing insurance company a written communication advising of the proposed replacement.
A group blanket health policy is best suited for which of the following?
summer camp Group blanket health insurance policies are meant to cover members of a group or association without evidence of insurability. Coverage is usually limited to loss from specific causes.
Workers compensation insurance covers a worker's medical expenses resulting from work related sickness or injuries and covers loss of income from
work-related disabilities All states have workers compensation laws, which were enacted to provide mandatory benefits for employee's work related injuries, illnesses, or death.
All of the following are basic types of health insurance plans EXCEPT
workers compensation Workers Compensation coverage is actually considered a liability coverage because it pays those medical expenses of employees that an employer is legally liable to provide.
A insured has a primary group health plan and an excess plan, each covering losses up to $10,000. The insured suffered a loss of $15,000. Disregarding any copayments or deductibles, how much will the excess plan pay?
$5,000 Once the primary plan has paid its full promised benefit, the insured submits the claim to the secondary, or excess, provider for any additional benefits payable.
An insured purchased a variable life insurance policy with a face amount of $50,000. Over the life of the policy, stock performance declined and the cash value fell to $10,000. If the insured dies, how much will be paid out?
$50,000 The cash value of a variable life insurance policy is not guaranteed. However, even if investments devalue significantly, they cannot be lower than the initial guaranteed benefit amount.
S is a sole business proprietor who owns a medical expense plan. What percentage of the cost of the plan may he deduct?
100% Sole proprietors and partners may deduct 100% of the cost of a medical expense plan provided to them and their families because they are considered self-employed individuals, not employees.
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 continuation of coverage provision allows terminated employees to continue coverage under a group health insurance plan for up to
18 months Upon termination of employment, eligible employees may elect the continuation of coverage for an additional 18 months or until they are eligible for other group coverage. A terminated employee must provide notice to the insurer within 63 days of termination.
In this state, long-term care benefits may be triggered by inability to perform how many activities of daily living?
3 LTC policies may not restrict eligibility for the payment of benefits to inability to perform more than 3 of the activities of daily living.
When a group policy terminates, every individual insured under the policy will be entitled to have an individual policy if the insured has been insured by the group policy for at least how many years prior to policy termination?
5 years. When a group policy terminates, every individual insured under the policy at the date of such termination who has been so insured for at least 5 years prior to such termination date will be entitled to have issued to him by the insurer an individual policy of life insurance.
In the state of Florida, it is illegal for a licensee's commissions from controlled business to exceed what percentage of the total in a given year?
50% A license will not be permitted to exist if the department finds that during any 12-month period, aggregate commissions or other compensation accruing in favor of the licensee's insurable interest have exceeded 50% of the aggregate amount of commissions and compensation accruing in the licensee's favor during the same period as to all insurance coverages procured through him/her.
If a claim is made on a policy during the grace period, an insurer is allowed to deduct the overdue premium and to charge interest. What is the maximum allowed interest rate?
8% The time that may elapse between a premium's due date and its eventual payment is called the grace period. If a claim is made on a policy during one of these grace periods, an insurer may deduct the amount of the premium due and up to 8% of interest per year from the settlement.
Under the uniform required provisions, proof of loss under a health insurance policy normally should be filed within
90 days of a loss Under the Uniform Required Provisions, proof of loss under a health insurance policy normally should be filed within 90 days of a loss.
How often must domestic insurance companies be examined by the Chief Financial Officer in Florida?
at least every 5 years Examinations must be conducted at least once every 5 years, or as frequently as deemed appropriate by the Office.
Which of the following best describes fixed-period settlement option?
Both the principle and interest will be liquidated over a selected period of time Under the fixed-period option (also called period certain), a specified period of years is selected, and equal installments are paid to the recipient. Both the principal and interest are liquidated together over the selected period of time.
Which of the following is true regarding the agent's appointments?
A person may hold several appointments at one time. At any one time, the same individual agent may hold any or all categories of appointments for which he or she is qualified and licensed. However, an agent must have a separate appointment for each insurer.
The free-look provision allows for which of the following?
A right to return the policy for a full premium refund The free-look period is a mandatory provision found in health insurance policies that allows the applicant to examine the policy and if dissatisfied for any reason, return the policy for a full refund.
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. The Insurance Code requires that each policy must include, "Written notice of claim must be given to the insurer within 20 days after the occurrence or commencement of any loss covered by the policy, or as soon thereafter as is reasonably possible".
In insurance, an offer is usually made when
An applicant submits an application to the insurer In insurance, the offer is usually made by the applicant in the form of the application. Acceptance takes place when an insurer's underwriter approves the application and issues a policy.
All of the following are examples of third-party ownership of a life insurance policy EXCEPT
An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan. A collateral assignment is the transfer of some or all of the death benefits of the policy to a creditor as security for a loan, but does not give the creditor the rights of ownership. In the event of the insured's death, the creditor would only be able to recover that portion of the policy's proceeds equal to the creditor's remaining interest in the loan.
Which statement accurately describes the Change of Beneficiary provision?
Any policy that has a death benefit must also have a Change of Beneficiary provision. Any policy that has a death benefit must also have a Change of Beneficiary provision. This allows the policyowner to change beneficiaries without the original beneficiary's consent, unless that person was designated as an irrevocable beneficiary.
Which is the primary source of information used for insurance underwriting?
Application The application contains most of the information used for underwriting purposes. This is why its completeness and accuracy are so crucial.
The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective?
As of the application date. If the full premium was submitted with the application and the policy was issued as requested, the policy coverage effective date would generally coincide with the date of application
What document describes an insured's medical history, including diagnoses and treatments?
Attending Physician's Statement An Attending Physician's Statement (APS) is the best way for an underwriter to evaluate an insured's medical history. The report includes past diagnoses, treatments, length of recovery time, and prognoses.
A policy available to business owners that provides payment for normal business expenses in the event that the owner is disabled is called
Business Overhead Expense. Business Overhead insurance is often purchased by small employers to pay the ongoing business expenses (such as payroll) in the event the owner of the business becomes disabled. Premiums paid are tax deductible as a business expense, but proceeds paid are taxable as income.
A small hardware store owner is involved in a car accident that renders him totally disabled for half a year. Which type of insurance would help him pay for expenses of the company during the time of his disability?
Business overhead expense policy Business Overhead Expense (BOE) insurance is sold to small business owners for the purpose of reimbursing the policyholder for various business overhead expenses during a period of total disability. Expenses such as rent, utilities, and employee salaries are covered.
What does "liquidity" refer to in a life insurance policy?
Cash values can be borrowed at any time. Liquidity in life insurance refers to availability of cash to the insured through cash values.
All of the following are duties and responsibilities of producers at the time of application EXCEPT
Change any incorrect statement on the application by personally initialing next to the corrected statement. Any changes to information on an application must be initialed by the applicant.
Who examines the books and records of insurance companies in Florida?
Chief Financial Officer The CFO and the Office of Insurance Regulation have the right to examine the affairs of every person or entity authorized to transact insurance in this state. Examinations must be conducted at least once every 5 years.
Which of the following is NOT typically excluded from life policies?
Death due to plane crash for a fare-paying passenger Generally, policies do not exclude conditions in which an insured is a fare-paying passenger on a commercial airline.
If a change needs to be made to the application for insurance, the agent may do all of the following EXCEPT
Erase the incorrect answer and record the correct answer. An agent should not use white-out, erase or obliterate any answers given to a question on an application. It could prevent an insurer from contesting the application, should it be necessary.
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.
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 accidents is immediate when reinstatement occurs but coverage for sickness may have a waiting period of about 10 days
Which of the following riders would NOT increase the premium for a policyowner?
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.
Annually renewable term policies provide a level death benefit for a premium that
Increases annually. Annually renewable term policies provide a level death benefit for a premium that increases each year with the age of the insured.
During partial withdrawal from a universal life policy, which portion will be taxed?
Interest. During the withdrawal, the interest earned on the withdrawn cash value may be subject to taxation.
The Office of Insurance Regulation is responsible for all of the following insurer activities EXCEPT
Issue of securities The Office of Financial Regulation is responsible for all activities of the Financial Services Commission relating to the regulation of banks, credit unions, finance companies, and the securities industry. All the other listed activities are the responsibility of the Office of Insurance Regulation.
Which of the following is true about the mandatory free look in a Life Insurance policy?
It commences when the policy is delivered. (The free look provision is a mandatory provision that allows the insured to examine a policy, and if dissatisfied for any reason, return the policy for a full refund of any premiums paid.)
Which of the following is true about the mandatory free look in a Life Insurance policy?
It commences when the policy is delivered. (The free look provision is a mandatory provision that allows the insured to examine a policy, and if dissatisfied for any reason, return the policy for a full refund of any premiums paid.)
Which of the following is true of a children's rider added to an insured's permanent life insurance policy?
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 terms means a result of calculation based on the average number of months the insured is projected to live due to medical history and mortality factors?
Life expectancy Life Expectancy is an important concept in life settlement contracts. It refers to a calculation based on the average number of months the insured is projected to live due to medical history and mortality factors (an arithmetic mean).
All of the following statements concerning Medicaid are correct EXCEPT
Medicaid is a state funded program that provides health care to persons over age 65, only. Medicaid is a government funded (both state and federal) program designed to provide health care to poor people of all ages.
If a dental plan is integrated, it is combined with what type of plan?
Medical Integrated plans allow for dental plans to be included in a medical plan, providing coverage for both under a single contract. Sometimes the deductibles are merged, but this does not have to be the case.
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.
An applicant for a health insurance policy returns a completed application to her agent, along with a check for the first premium. She receives a conditional receipt two weeks later. Which of the following has the insurer done by this point?
Neither approved of the application nor issued the policy *When the agent receives the application and issues a conditional receipt, the insurer has not yet approved the application and issued the policy.
For which of the following reasons may an insurer terminate a small employer health insurance policy?
Nonpayment of premium Insurers may not terminate or limit a contract entered into or renewed with an agent based on the health status, claims experience, industry, occupation, or geographic location of the small employers or their employees.
Which of the following documents must be provided to the policyowner or applicant during policy replacement?
Notice Regarding Replacement During policy replacement, the replacing producer must present to the applicant a Notice Regarding Replacement that is signed by both the applicant and the producer.
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. Because the accident occurred during the grace period, the insurance company will pay the claim.
Who can request changes in premium payments, face value, loans, and policy plans?
Policyowner Mandatory provisions give these rights to the policyowner.
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.
A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy
Required a premium increase each renewal. Annually Renewable Term policies' premiums are adjusted each year to the insured's attained age; however, the policy may be guaranteed renewable. Death benefits remain level, and as with any term policy, there are no cash values.
Which is the appropriate action by the insurer if a prospective insured submitted an incomplete application?
Return the application to the applicant for completion Any unanswered questions need to be answered before the policy is issued. If the insurer receives incomplete applications, they need to be returned to the applicants for completion.
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 A "stop-loss limit" is a specified dollar amount beyond which the insured no longer participates in the sharing of expenses.
If an insurer issued a policy based on the application that had unanswered questions, which of the following will be TRUE?
The policy will be interpreted as if the insurer waived its right to have an answer on the application Any unanswered questions need to be answered before the policy is issued. If a policy is issued with questions left unanswered, the contract will be interpreted as if the insurer waived its right to have an answer for the question, and will not be able to deny coverage later because of unanswered questions.
An individual purchased a Medicare supplement policy in March and decided to replace it 2 months later. His history of coronary artery disease is considered a pre-existing condition. Which of the following is true?
The pre-existing condition waiting period fulfilled in the old policy will be transferred to the new policy, the new one picking up where the old one left off. When an insured replaces one Medicare supplement policy with another, the pre-existing conditions waiting period does not start over. All types of waiting and elimination periods are carried over, not restarted, since that time was served with the original policy.
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
Unearned premiums are retained by the insurance company. This rider allows the insurer to cancel the policy at any time, or at the end of the policy period. Any unearned premium must be returned to the policyholder. If the insurer cancels, the unearned premium will be returned on a pro rata basis.
In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe?
Unilateral In a unilateral contract, the insured is not legally bound to do anything. The insurer, however, must pay losses covered by the policy.
