Review 2

An employee is insured by a group major medical plan that is provided through employer who contributes 75% of premium, and employee 25%. If the insured received a benefit from this policy in the amount of $1000m how much of this benefit would be taxed as income?

$0 Group and dental expense benefits are received income tax free by the employee

if an individual willfully violates provisions of the fair credit reporting act, what is the max civil penalty?

$2500

Modified Endowment Contract (MEC)

-a life insurance policy failing the 7-pay test is classified as an MEC -primary purpose of regulations was to reduce incentives for the use of life insurance as a short-term investment vehicle. -a distribution from an MEC subject to 10% penalty if withdrawn prior to 59(1/2)

Considered to be an activity of daily living in most LTC policies?

-eating & dressing

partial disability pays?

50% of total disability benefit

In CT, a benefit period in individual disability income policies must be ay least?

6 months

An applicant misstates his age on his application for a health insurance policy. He states that he is 39, but his actual age is 49. When he files a claim, what will most likely happen?

Benefits paid will be those that would have been purchased at the correct age -cannot discriminate -must be permanent -cannot be excluded

In addition to participation requirements, how does an insurer guard against adverse selection when underwriting group health?

By requiring that the insurance be incidental to the group

X receives $50000 from a $100000 accidental death and dismemberment policy with the loss of his left arm in an accident. He received?

Capital amount -50%principal and paid for loss of a single body part

HMO pay a small fee to see their PCP. this is?

Copay

Which of the following losses would likely be covered under the accidental death rider?

Death caused by a head on collision

Who establishes the minimum standards for a health insurance policy issued in CT?

Department of insurance

the 'Stop Loss' on a major medical policy is intended to?

Establish a maximum amount of out-of -pocket expense that an insured will have to pay for medical expense in a calendar year

When life proceeds are used to pay inheritance taxes and federal estate taxes. this is?

Estate conservation

How often must insurers determine the maximum interest rate for policy loans for each policy?

Every 12 months -no more frequently than once every 3 months

Info about financial status of an insurer was withheld... this is?

False financial statement

A husband and a wife both incur expenses that are attributed to a single major medical insurance deductible, what type of deductible is it?

Family deductible

A married couple wants to include the entire family in their whole life policy under one rider?

Family term policy

J receives fixed amount benefit for his late wife's insurance policy. if he dies all of the benefits are paid, the remaining amount will go to the contingent beneficiary. What settlement option is this?

Fixed amount

To purchase insurance the policyowner must face the possibility of losing money os something of value in a loss. What is this?

Insurable interest

Name of the agreement in the first page of the policy that includes a list of losses that will be covered by her insurer?

Insuring clause

agent falsely guarantees higher dividends than he knows would be possible. what is this?

Misrepresentation

Insurance company that is owned by policy holder

Mutual insurer -issue participating policies

if an insurance company issues a policy even though some questions on the application were unanswered, when can the insurer get the answers to those questions?

Never, the insurer has waived its right to those answers by issuing the policy

The reduction of premium option uses the dividend to reduce

Next year's premium

cash value guarantees in a whole life policy are called

Nonforfeiture values

Agreement in insurance contracts

One party accepts the exact term of the other's party's offer

Insurance contracts are unilateral in nature

Only one party makes a promise

in health policies, which portion of the contract explains cancellation rights?

Renewability provision

X set up an individual retirement account that her employer is now contributing to. Her employer's contribution are not included in her gross income, what kind of retirement plan is this?

SEP (simplified employee pension)

If a life insurance policy is purchased by some who has no insurable interest in the insured, it is considered?

STOLI

What risk classification is representative of the majority of people in a certain age group with similar lifestyles?

Standard

Accelerated Benefits

Terminal illness Specified catastrophic illness Permanent institutionalization doesn't cover disability

Life insurance creates an immediate estate

The face value of the policy is payable to the beneficiary upon the death of the insured

Example of insurer participating in the unfair trade practice of discrimination

charging the insurer higher premiums based on their race

Decreasing term insurance is often used to

cover a mortgage

A major medical expense policy would include treatment for?

drug addiction treatment

When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option?

extended term

With annuities?

fixed annuities do not provide protection against inflation

The guaranteed purchase option is also referred to as the?

future increase option

When may HIV-related test results be provided to the MIB?

only if the individual is not identified

What effect will the LTC rider have on the DB of a life insurance policy if LTC benefits were paid to the insured?

reduce the death benefit

An attorney decided to become a bungee jumper. He files a claim to his health policy?

The insurance policy will pay the claim according to the benefits available if the correct premium had been paid

In common disaster clause, if the insurer and primary beneficiary are killed in the same accident, what is assumed?

The primary beneficiary died before the insured

What is the purpose of a benefit schedule?

To state what and how much is covered in the plan

What type of insurance is investment based, has level fixed premium and a non guaranteed cash value?

Variable whole life

A stock insurer is defined as an insurer

owned by its stockholders

if an employer has 51 employees working in an avg day of the preceding year, he is considered?

small employer <100

If the insurance premiums were not tax deductible, what other taxation will this affect?

taxation of benefits -often determined whether the premiums had been taxed

Who is not required to have an insurable interest in the insured?

the beneficiary

Health insurance plans purchased from insurance marketplace features:

-coverage for emergency services -coverage for pre-existing conditions -guaranteed renewability

Total disability

-defined differently under some disability income policies. -some policies use strict definitions such as the any occupation definition, similar to social security.

Index Whole Life Insurance

-face amount increases annually to keep pace with inflation -cash value depends on the performance of the index -there is a guaranteed minimum interest rate

Unfair Claims Settlement Practices

-failing to address claim issues in a reasonable time period -circulating false claims regarding another insurer -advertising benefits not representative of actual benefits

Fair Credit Reporting Act (FCRA)

-insurers are not required to give customers a copy of the report -it applies to credit reports ordered in connection with insurance, banking and employment -customer must be notified if adverse actions is taken as a result of a report

Health insurance policy provisions

-insurers may add provisions that are not in conflict with uniform standards -all individual policies have Universal Mandatory Provisions -insurers may only offer optional provisions that are allowed by the state where the policy is delivered

Qualified plans general requirements

-must be approved the IRS -must have a vesting requirement -cannot discriminate in favor of the prohibited group -must be permanent

Renewable Term Insurance

-renews regardless of the insured's health -the premium increases each year -DB remains level

Mandatory under the provisions law as applied to accident and health policies?

-time limit on certain defenses -physical examination and autopsy -entire contract

In order for a business partner to be elegible for a Keogh plan they must work full time and own?

10% of the business

For how long may an insurance impose restrictions of coverage because of pre-existing conditions?

12 months

How many days after final disposition must an insurance producer report administrative action or criminal prosecution to the director?

30 days

Under the mandatory provision Legal Actions, an insured is prevented from bringing a suit against the insurer to recover on a health policy prior to?

60 days after written proof of loss has been submitted

Under the mandatory provisions 'Legal Actions', an insured is prevented from bringing a suit against the insurer to recover on a health policy prior to?

60 days after written proof of loss has been submitted

Premiums for controlled business cannot exceed

9 times the premiums on policies issued to the general public

Insurer submitted policy forms to the Department. When will they have a response?

90 days

Policy Replacement

A policy is reissued with a reduction in cash value

What can be provided at the community center?

Adult day care

Which rider pays a beneficiary a DB that is x2 or triple the face amount if the death is caused by an accident?

An accidental death rider

Solicitation of applications for insurance is considered to be?

An insurance transaction

Which of the following is required in order for a plan to be qualified?

The plan must be written and communicated to the employees

If an insured dies and they misstated their age, the insurance will?

adjust the DB to what the premium would have purchased the actual age/gender

Under what circumstances will the contingent beneficiary receive the death benefit?

if the primary beneficiary dies before the insured

What describes a Major Medical Expense policy?

it provides catastrophic medical coverage beyond basic benefits on a usual, customary and reasonable basis.

Dividends received on participating life insurances are

not taxable because they are a return of unused premiums

Notice of claim must be submitted

within 20 days -for disability, if incapacitated then its waived

If a producer's check given to an insurer is returned for insufficient funds, and remains outstanding for 15 days, the insurer must?

notify the comissioner

What happens to the face amount if the insured reaches 100?

the face amount is paid to the insured

The provision that sets forth the basic agreement between the insurer and the insured and states the insurer's promise to pay the death benefit upon the insured's death is called?

the insuring clause

The corridor deductible is?

the deductible between a basic and major medical policy