Final Exam (Health and Life insurance)
At what point must insurable interest be present for a life insurance policy to be valid?
When the application is made -Insurable interest has to exist when the application is made for the contract to be valid.
When does coverage becomes effective in a health policy?
The initial premium is paid, and the policy is delivered -Coverage becomes effective in a health policy when the initial premium is paid, and the policy is delivered.
If a physical exam or autopsy is required, who pays for it?
The insurer -The insurer pays for a physical exam or autopsy. They have the right to request them.
Skylar has a major medical policy that has a $1,000 deductible, a maximum out of pocket of $2,000 after the deductible, and an 80/20 coinsurance. If this medical bill was $7,000, what will he have to pay?
$2,200 $2,200 is what he will pay. $2,200 is what he will pay. Note in all questions who is paying, the insured or insurer. The calculation is: $7,000 - $1,000 = $6,000 x .20 = $1,200 + $1,000 = $2,200. Note that the out of pocket is after the deductible.
Bob has a $30,000 life policy with a double indemnity AD&D rider. If he dies of cancer after 6 months, what would his beneficiaries receive?
$30,000 -$30,000. An accidental death and dismemberment (AD&D) policy will only pay the benefit if the cause of death is accidental.
An insured has how many days from the date of loss to provide proof of loss?
90 DAYS - An insured has 90 days from the time of loss to provide the insurer proof of loss THREE MONTHS. THEY HAVE THREE MONTHS TO PROVIDE PROOF OF LOSS
Tim was injured in an accident, how many days does he have to provide proof of loss
90 DAYS -An insured has 90 days from the time of loss to provide the insurer proof of loss. 90 DAYS. THREE MONTHS
Sally was injured in a car wreck. How many days does she have to rpvide proof of loss to her insurer?
90 days Three months 90 days -An insured has 90 days from the time of loss to provide the insurer proof of loss
When a company provides employees with a noncontributory group health insurance plan, what percentage of employees must be covered?
100% - Noncontributory group health plans must have 100% of the employees covered. 100% of the employees must be covered under noncontributory group health plans
A converted individual policy can be issues with a face amount up to what percentage of that provided by the group policy?
100% -A converted individual policy can be issues with a face amount up to that provided by the group policy
James' Carpet cleaning is considered a noncontributory health plan. Noncontributory plans require:
100% of eligible employees enroll. -Employer sponsored group health plans may be either contributory or noncontributory. Contributory plans, where the employee pays premiums, require enrollment of at least 75% of all eligible employees. Noncontributory plans, where the employer fully funds the plan, require 100% of all eligible employees enroll. These requirements are designed to reduce the insurer's risk and administrative costs.
Records related to an insurance transaction must be kept for at least:
3 YEAR -Individuals and entities must retain records relating to insurance transaction for at least 3 years
How much time does a business entity have to inform the Commissioner of Insurance of their assumed name?
30 DAYS -Business entities must inform the Commissioner of any assumed name within 30 days of its planned use 30 DAYS
Insurers must notify the Commissioner of any appointments, pay the appointment fee, and provide any information requested within:
30 days
Most medical expense plans have coinsurance. All of the following are false about coinsurance EXCEPT:
Is coinsurance is useful in controlling overutilization of benefits -Coinsurance helps control the temptation of overutilization of benefits
Which of the following statements is true about the return of premium rider?
It is an increasing term rider that matches the total premium input -The return of premium rider is an increasing term rider that matches total premium input. Usually policies drop the rider when the insured reaches age 60
Bob bought a policy that covers cancer only. It is considered a:
Limited plan -Cancer policies are considered limited plans. LIMITED PLANS
Marshall wants to reinstate his life policy and to do so he need not do which of the following?
MAKE A COLLATERAL ASSIGNMENT TO THE INSURANCE COMPANY -He must do all except make a collateral assignment. MAKE A COLLATERAL ASSIGNMENT TO THE INSURANCE COMAPNY
Which of the following types of policy cannot be third-party ownership?
MODIFIED LIFE -Modified life cannot be an example of third party ownership MODIFIED LIFE
Noncontributory lans:
MUST HAVE 100% participation -With a noncontributory plan, the employer pays the entire cost of premiums, and must have 100% participation
The commissioner has all of the following power in Virginia, EXCEPT:
Prosecuting insurance crimes -The Commission regulates the solvency of insurers and premium rates in Virginia. The Commission also issues the insurance rules and regulations, but does NOT prosecture insurance crimes PROSECUTING INSURANCE CRIMES
Medicare Supplement policies are primarily designed to:
Provide additional benefits beyond those provided by Medicare -Medical Supplement insurance policies are designed to provide benefits not covered by Medicare Provide additional benefits beyond those provided by Medicare
Nick's life policy lapsed, which Nonforfeiture option would allow the insurer to use the cash value to buy a whole life policy?
REDUCED PAID UP -The reduced paid-up option would allow the insurer to use the cash value to buy another paid up whole life policy. REDUCED PAID UP.
Claims forms must be given to a claimant within:
15 days -Claims forms must be provided to the claimant a maximum of 15 days after receiving a notice of claim
If an applicant is found guilty of material misrepresentation on an application, how long does the insurer have to contest the policy?
2 YEARS FROM THE EFFECTIVE DATE OF THE POLICY -The policy is contestable for a period of two years from the effective date. 2 YEARS FROM THE EFFECTIVE DATE OF THE POLICY
Jeff was injured in a car wreck. How many days does he have to provide a notice of clam to his insurer?
20 days -A notice of claim must be given to the insurer within 20 days 20 days
What type of policy would offer a 40-year old the fastest accumulation of cash value?
20-PAY LIFE -In this case, a 20 pay life policy offers the quickest accumulation of cash value 20 PAY LIFE
How many hours of continuing education for more than 1 line of authority must insurance agents complete every 2 years?
24 hours -Agents must complete at least 16 hours of continuing education for one line of authority, and at least 24 hours for more than one line of authority with at least eight hours for each line of authority 24
Insurers are required to maintain a file of all advertisements for how many years after their last use?
5 years -Each insurer must maintain a file of every advertisement noting the manner of distribution and the form number of any policy referred to in the advertisement. This file must be maintained for 5 years after the discontinuance of their use or publication. 5 Years
To be eligible for group insurance, an association must have existed for at least how many years?
5 years -To be eligible for group insurance, an association must have at least 100 persons at the time the association was created, have existed for at least 5 years, and have a constitution and bylaws that provide for regular meetings and the collection of dues. 5 years
Small employer plans are designed to provide affordable health and accident coverage for employers who have less than:
50 employees -An eligible employee is an employee who works for a small group employer on a full-time basis has a normal work week of at at least 30 hours, has complied with applicable waiting periods, and is not a part-time, temporary, or substitute employee
An insured filed a claim with her insurance company and submitted all the proof of loss requested. The insurer is non-responsive. How many days must the insured wait before beginning legal action to recover her money?
60 days -If a claim has not been paid after all proof of loss has been submitted, the insured must wait 60 days before instituting legal action
Cindy has always paid her health insurance premium quarterly. She recently changed the payment period to weekly. What will the grace period be on the new cycle.
7 days -The grace period for weekly premium periods is 7 days.
HIPAA requires that maternity benefits include how many hours of inpatient care following a caesarean section?
96 hours The state requires every health benefit plan that provides maternity benefits to provide for coverage of a minimum of 96 hours of inpatient care at a hospital, or birthing center licensed as a hospital, following a caesarean section, for the mother and newborn infant after childbirth. 96 HOURS
A variable whole life policy would be the most appropriate for:
A 34 YEAR OLD EXECUTIVE WITH A LAWYER WIFE AND A CHILD -A variable whole life policy would be the most appropriate for a 34 year old executive with a lawyer wife and a child
Which of the following groups is ineligible for group insurance?
A BOOK CLUB FORMED TO PROCURE INSURANCE
Josh wants to provide income for his family for a designated period if he should die, and lump sum benefit as well. He should purcahse:
A FAMILY INCOME RIDER -The family income rider would best suit his needs
In managed care, the primary care doctor is:
A GATEKEEPER - A primary care physician acts as a gatekeeper in an HMO, coordinating all the HMO member's healthcare A GATE KEEPER
What should someone buy who is concerned about being able to function independently without help when they become older?
A LONG-TERM CARE RIDER ATTACHED TO A LIFE INSURANCE POLICY. -A long-term care rider will help with expenses for those who are not able to live independently
A one-sided agreement whereby a promise to do (or refrain from doing) something in return for a performance (not a promise) is what type of contact
A UNILATERAL CONTRACT -An insurance contract is a good example of a unilateral contract, especially a life insurance contract. A UNILATERAL CONTRACT
Mark, a producer, took an application for a life policy from Barbara, but neglected to collect the initial premium. When he delivers the policy to Barbara he must collect the initial premium. When he delivers the policy to Barbara he must collect the initial premium and also
A signed statement of good health -In addition to the premium, he must collect a signed statement of good health. A SIGNED STATEMENT OF GOOD HEALTH
Which of the following policies requires a beneficiary designation?
AD&D -The AD&D is the only health policy listed that requires a beneficiary be names. AD&D
Which contract pay an additional sum if the insured dies due to an accident?
AD&D (ACCIDENTAL DEATH AND DISMEMBERMENT) -The AD&D (Accidental Death and Dismemberment) pays an additional sum, called the principal sum, if the insured dies due to an accident ACCIDENTAL DEATH AND DISMEMBERMENT AD&D
Typical health polices do not provide benefits for which of the following?
ALL OF THE ABOVE
What are the advantages of purchasing a straight life policy?
ALL OF THE ABOVE
Who is appointed to conduct insurance business on behalf of an insurere?
AN AGENT -An insurer must appoint a producer to sell, solicit, or negotiate policies for compensation on behalf of the insurer. AN AGENT
Under workers compensation, which of the following injury qualifies?
AN EMPLOYEE BREAKS AN ARM WHILE LIFTING A BOX AT WORK -Workers compensation only covers injuries that happen on the job.
How often do appointments have to be renwed?
ANNUALLY -Appointments renew annually, and insurers must pay the renewal appointment fee by August 31st ANNUALLY
What kind of contract uses periodic payments as a way to systematically liquidate assets?
ANNUITY -An annuity is a way to provide liquidation of an estate ANNUITY
What would be best for someone who received a large lump sum from their company retirement and wants to be sure their basic living needs are always covered?
An immediate annuity purchased with a lump sum -Someone should buy a single premium deferred annuity that will produce enough income to cover their basic expenses -An immediate annuity purchased with a lump sum
Which of the following individuals is required to be licensed?
An individual that provides administrative services in the enrolling and issuing of plans and receives comissions.
Which of the following statemetns is true?
An insurance consultant must work on a fee basis -An insurance consultant is an individual or company who advises or counsels on insurance needs and coverage under any insurance policy or contract for a fee. insurance consultants do not include licensed agents or brokers, licensed attorneys, actuaries, certified public accountants, or employees who mange risk for their employer. -An insurance consultant must work on a fee basis
When does an agent have to stop selling insurance after being terminated?
At least 10 days after notice of termination
The provision that will prevent a whole life policy from lapsing is:
Automatic premium loan -The automatic premium loan provision authorizes the insurance company to make a policy loan automatically when a premium that is due is not paid. AUTOMATIC PREMIUM LOAN
Jeff owns a small business. If he becomes disabled, which type of policy would pay his operating expenses?
BUSINESS OVER HEAD EXPENSE -A business overhead expense policy pays a company's operating expenses, such as rent or payroll, if an owner becomes disabled. BUSINESS OVER HEAD EXPENSE
A Business Continuation Agreement in used to assure business ownership is transferred upon the death of an owner or partner. Another name for this is
BUY AND SELL AGREEMENT -The Buy and Sell agreement would allow someone to buy 100% the business if the owner or partner dies. BUY AND SELL AGREEMENT WOULD ALLOW SOMEONE TO BUY 100% OF THE BUSINESS IF THE OWNER OR PARTNER DIES
With what receipt is coverage assured, even if the person is later proved to be uninsurable, until the insurer formally rejects the application?
Binding -With a binding receipt, coverage is assured, even if the person is later proved to be uninsurable, until the insurer formally rejects the application.
Which of the following unfair trade practices doe NOT involve misrepresentation?
Boycott -Boycott is a form of intimidation in which an individual or group refuses to do business with a company or individual. Churning, twisting, and defamation all involve some type of misrepresentation BOYCOTT
Maggie and Melinda are partners in the Bizzy Bakery. What type of insurance did they purchase to allow one partner to buy all of the business if the other partner dies?
Buy and Sell Agreement -The Buy and Sell agreement would allow one or the other to buy 100% the business if the other dies BUY AND SELL AGREEMENT
A limited dread disease policy most likely would cover:
CANCER
Which of the following is not a change that a policyowner can make to an adjustable life policy?
CHANGE THE NAMED INSURED -Changing the named insured is not a change the policyowner can make to an adjustable life policy. CHANGE THE NAMED INSURED
The provision that determines who becomes the beneficiary if the insured and primary beneficiary both die in the same acccient:
COMMON DISASTER -The common disaster clause protects the contingent beneficiaries' rights by stipulating a certain number of days the primary beneficiary must outlive the insured after a common accident causing near-simultaneous death. COMMON DISASTER
When a person buys insurance, the insurer is obligated to pay uncertain benefits in the future which are called:
CONDITIONAL -Insurance contracts are conditional because all parties to the contract must meet certain conditions when a loss occurs in order for the contact to e legally enforceable CONDITIONAL
Annuity suitability rules apply to which of the following?
CONVERSION OF A GROUP ANNUITY TO AN INDIVIDUAL ANNUITY -The annuity suitability rules do not apply to the following: recommendations involving direct response solicitations when there is no recommendation based on information collected from the consumer; certain qualified and nonqualified retirement plans; or settlements or assumptions of liabilities associated with personal injury litigation or any dispute or claim resolution process. CONVERSION OF A GROUP ANNUITY TO AN INDIVIDUAL ANNUITY
Preston needs a life policy. He is just starting out as a doctor. In two years he will be making more money, and would like the option for a more permanent policy. What type of policy should he buy?
CONVERTIBLE TERM -A convertible term policy can be exchanged for a whole life policy after the set period without the insured having to show proof of insurability. Convertible term
During the replacement of a policy with another one from the same company, the producer needs to make sure it is not considered?...
Churning -Churning is an improper type of replacement along with twisting. Twisting is replacing another company's policy, whereas churning is replacing a policy within the same company. CHURNING
The purpose of the Medical Information Bureau (MID) is to:
Collect and share medical information with member insurance companies
What may an insurer not require to reinstate a health policy?
Correct answer: A reinstatement application fee -Insurers cannot require the applicant to pay a reinstatement application fee. A REINSTATEMENT APPLICATION FEE
The amount that an individual receives as monthly income under Social Security is not affected by:
Correct answer: Martial status -The insured's marital status does not influence the amount. MARITAL STATUS
What must be provided to the applicant by the agent when replacement occurs?
Correct answer: Notice regarding replacement -A notice regarding replacement must be provided to the applicant by the agent when replacement occurs. NOTICE REGARDING REPLACEMENT
Rich drives a forklift and sometimes moves boxes by hand. He sustained an injury to his back and can no longer lift the boxes, but can still drive the forklift. This disability is classified as:
Correct answer: Partial disability -Rick's disability would be classified as a partial disability because although he cannot perform all of his previous duties, he can perform some of them PARTIAL DISABILITY
Amelia has a nonqualified annuity that is paid out of her paycheck. It will be paid:
Correct answer: Post tax -A nonqualified plan is not eligible for tax benefits. Therefore a nonqualified annuity would be paid with after tax income. The test makers try to trick you with different names of annuities or policies, but the question is asking about pretax or after tax on a nonqualified plan. POST TAX
Greg, a teacher, has a disability income policy with the change of occupation provision. Greg quits his job and becomes an oilfield worker. What would happen to Greg's policy if he becomes disabled after the job change?
Correct answer: The insurance company would pay the amount of disability income benefits that the premium purchased would have covered for Greg's more hazardous occupation. -If Greg becomes disabled after having changed occupations to one classified as more hazardous, the insurer will pay only portions of the indemnities provided in the policy as the premium paid would have purchased at the rates and within the limits fixed by the insurer for the more hazardous occupation. Correct answer- The insurance company would pay the amount of disability income benefits that the premium purchased would have covered for Greg's more hazardous occupation.
Which clause in an insurance policy identifies the scope and limits of coverage as well as the contracting parties?
Correct answer: The insuring clause -The scope, limits and contracting parties are identified in the insuring clause. THE INSURING CLAUSE
Advertisements are designed to:
Create public interest in life insurance or annuities
On December 6th, an application for life insurance is submitted with the initial premium. On December 23rd the insurer issues the policy. Due to it being Christmas, the agent does not deliver the policy under December 28th. A conditional receipt was issued without a required medical exam. When is coverage effective?
DECEMBER 6TH -Coverage is effective on December 6th. Since the premium was paid with the application, a statement of good health does NOT need to be signed.
What kind of term policy would a man with limited resources most likely purchase to make sure that his wife and children are secure in their home if he dies while the children are young and in school?
DECREASING TERM -They will most likely purchase a decreasing term policy because it can be accommodated with his limited resources, and would provide the protection he needs while his children are young A DECREASING TERM
This type annuity benefit payments start at a later date, greater than 12 months from of purcahse:
DEFERRED -A Deferred annuity's benefit payments tart at a later date, greater than 12 months from of purchase. An immediate annuity's benefit payments start within a year of purchase. DEFERRED DERERRED DERERRED
Which of the following would NOT be considered unfair discrimination?
DISCRIMINATION BASED ON HOBBIES
Tim buys a life policy on December 6th, and the agent delivers it on December 10th. When will the free look period begin?
December 10th -The free look starts upon the delivery of a life policy DECEMBER 10TH
The type policy agents buy to protect themselves if they give incorrect advice or didn't advise a client about an important issue is a:
E&O -Agent buy an E&O (Errors & Omissions) policy to protect against giving incorrect advice (errors), and not advising a client about an important issue (omissions). Errors & Omissions are most likely to occur during a policy replacement. E &O ERRORS ARE OMISSIONS
A producer cannot change or waive any provisions in an insurance contract. This is stipulated in the:
ENTIRE CONTRACT PROVISON -The Entire Contract provision states that a producer does not have the authority to change any provisions The entire contract provison
Replacement regulations protect the interest of life insurance and annuity purchasers by:
Establishing minimum standards of conduct -The activities of insurance agents in replacing existing life insurance and annuities is regulated to protect the interests of life insurance and annuity purchasers by establishing minimum standards of conduct. Establishing minimum standards of conduct
How often must the Commissioner of Insurance examine individuals that transact insurance in Virginia?
Every 5 years -The Commissioner has the power to examine any individuals or entities that transact insurance in Virginia as often as he deems necessary and insurers at least every 5 years. Every 5 years
If an insurer is to protect themselves from suicide, prexisting conditions and injuries that are self-inflicted, they primarily do it by:
Exclusions -Insurers deal with these items using exclusions
All of the following policies or contracts are exempt from replacement rules, EXCEPT:
Existing life insurance that is a nonconvertible term life insurance policy that will expire in 5 years or more and is renewable -Replacement rules would not apply if the existing life insurance that is a nonconvertible term life insurance policy that will expire in 5 years or LESS and CANNOT be renewed; but because the policy will expire in 5 years or more and is renewable, it is subject to replacement rules
The ___ requires an applicant be notified in writing that the insurer could request an investigative consumer report may be made on them.
FAIR CREDIT REPORTING ACT -The Fair Credit Reporting Act (FCRA) requires that consumer be made aware, in writing, when the insurer plans to request an investigative consumer report. FAIR CREDIT REPORTING ACT
How much time does a replacing insurer have to inform the previous insurer of the replacement transaction?
FIVE DAYS 5 business days -A replacing insurer will notify any other existing insurer that may be affected by the proposed replacement within 5 business days of receipt of a completed application indicating replacement.
If Dylan wants a set minimum rate of return, what type annuity should he buy?
FIXED -He should buy a fixed annuity. They have a set minimum rate of return FIXED
Premium payment mode is:
FREQUENCY OF PREMIUM PAYMENTS -Premium payment mode is the frequency in which premium payments are made. FREQUENCY OF PREMIUM PAYMENTS
Which of the following would be considered rebating?
GIVING PART OF AN AGENT'S COMMISSION BACK TO A NEW CLIENT -Statements are deemed to be misrepresentations if, when taken in the context of the whole presentation, they may tend to mislead or deceive a person. By detailing only the benefits, the producer was not giving a fair representation of the policy Giving part of an agent's commission back to a new client
What type of policy does not allow the insurer to change the coverage, but allows the insurer to change the premiums by class?
GUARANTEED RENEWABLE -A guaranteed renewable policy does not allow the insurer to increase the premiums. GUARANTEED RENEWABLE
A long-term care insurance policy must contain which of the following provisions?
GUARENTEED RENEWABILITY -As a result of the 1996 Health Insurance Portability and Accountability Act (HIPAA), all long-term care policies sold today must be guaranteed renewable. The insurer cannot cancel the policy and must renew coverage each year, as long as the insured pays the premiums. GUARENTEED RENEWABILITY
Lanna notices that she forgot to ask a few questions on the application after leaving the client home. She is in a hurry to submit the application, what should she do?
Go back and ask the questions, then have the client initial the changes
The agent notices that he or she forgot to ask a few questions on the application after leaving the clients home. Before submitting it he or she should:
Go back and ask the questions, then have the client initial the changes
Which of the following is not a benefit of the Social Security program?
Group health insurance benefit -Group health is not a social security benefit
Which rider allows an insured to purchase additional disability income coverage, at a future date, regardless of insurability?
Guaranteed insurability rider -The guaranteed insurability rider allows the insured to purchase additional disability income coverage at future dates regardless of insurability Guaranteed insurability rider
What groups have the ability to purchase, lease, construct, operate, and maintain hospitals for members?
HMOs Health maintenance organizations (HMOs) have the ability to purchase, lease, construct, operate, and maintain hospitals, medical facilities, and their equipment. HMOs
HDHP's (High Deductible Health Plans) are most often used with:
HSA's (HEALTH SAVINGS ACCOUNT) - HDHP's (high deductible health plans) are frequently used with an HSA (Health Savings Account). HSA HEALTH SAVINGS ACCOUNT
When does the license terminate for agents who move from Virginia?
IMMEDIATELY
A replacing agent has all the following duties, EXCEPT
INFORM EXISTING INSURER OF THE REPLACEMENT -The replacing agent must be able to provide copies of the notification of replacement for at leave 5 years and provide the contract owner notice of the right to examine the policy or contract for at least 10 days from the delivery of the policy or contract with the right to receive unconditional full refund of all paid premiums or considerations. The replacing INSURER must inform the existing insurer of the replacement. Inform existing insurer of the replacement.
In which clause would the insurance company's promise to pay be included
INSURING CLAUSE -The insuring clause contains the insurer's basic promise to pay a sum of money in the event of a covered loss to the beneficiary INSURING CLAUSE
Generally, how are health insurance policies taxed?
If premiums are tax-deductible, benefits are taxed as income. -As a general rule, if the premiums are tax-deductible, the benefits are taxed as income
How must an agent or insurance institution inform an applicant of an adverse underwriting decision?
In writing -In the event of an adverse underwriting decision, including those that involve policies and the insurance institution or agent responsible for the decision shall give a written notice. In writing
How is the Virginia Insurance Guaranty Association to be used in advertisements?
It must never be mentioned -The existence of the Virginia Insurance Guaranty Association may not be used for the purpose of sale or solicitation of or inducement to purchase insurance. It must never be mentioned
What is the primary purpose of Medicaid?
It provides medical expense coverage for low income people. -Medicaid provides medical coverage to financially disadvantaged people. MEDICAID IS FOR FINANCIALLY DISADANTAGED PEOPLE. LOW INCOME PEOPLE
A policy on two or more lives that pays the death benefit after the first person dies is called:
JOINT LIFE -Joint life pays the death benefits after the first person dies. A survivorship life policy pays after the second person or last survivor dies. JOINT LIFE
Rick sold a Major Medical policy and collected the initial premium on May 5th. He received the approved policy back from the insurer on May 9th and tried to deliver it on May 15th, but the client was not at home. He did deliver the policy on May 30th. If the client does not wish to keep the policy, she must return it by what date to receive a refund?
June 9th -The client must return it within 10 days after it was delivered to her, by June 9th. JUNE 9TH
Although Karl attends school, he has a physical impairment and is not capable of self-care or self-sustaining employment. Under his mother's group health plan, which of the following is true?
KARL'S COVERAGE WILL CONTINUE AS LONG AS HE IS PHYSICALLY AND FINANCIALLY DEPENDENT ON HIS MOM -Karl's coverage under his mom's policy will continue as long as he is financially and physically dependent on her. Kar's coverage will continue as long as he is physically and financially dependent on his mom
Tim loves to ski, but his boss worries that business will suffer if he has a major accident. What type of policy should his boss think about purchasing?
KEY EMPLOYEE -He should look at buying a key employee policy. A key employee policy covers lost income due to a key employee's disability. KEY EMPOYEE
Which of the following plans was most likely purchased for the leading sales representative?
KEY PERSON INSURANCE -The Bell Company purchased Key person insurance. Shelly is a key employee, as she is responsible for the majority of the company's profitability. KEY PERSON INSURANCE
Melissa climbs mountains on the weekends. Her boss is afraid that the company will lose a major client if she is in an accident. What type of policy would be most appropriate?
Key employee -The boss should look at buying a key employee policy. A key employee policy covers lost income due to a key employee's disability
Vision plans are considered:
LIMITED PLANS -Vision policies are considered limited plans LIMITED PLANS
If a person has both Medicare and a work plan, which payer is secondary?
Medicare -Employer sponsored health plans are always primary, and Medicare is secondary
If a producer relates only the benefits of a policy and does not include a description of conditions or limitations they have committed:
Misrepresentation -Any written or oral statement that does not accurately describe a policy's benefits, conditions, or coverage is considered a misrepresentation. Relating only the benefits and not including a description of conditions or limitations is a misrepresentation of the policy. A misrepresentation is simply a lie.
A Lump Sum payment for life insurance is:
NOT TAXABLE -Lump Sum settlements are NOT taxable for either individual or group policies. However if the settlement is paid in installments over time the portion that earned interest is taxable. NOT TAXABLE IF PAID IN LUMP SUM
The probation Period of a group health policy can be defined as:
New hire waiting period prior to eligibility for group health policy -A probation period is the waiting period for new employee before he/she is eligible for group coverage. New hire waiting period prior to eligibility for group health policy
What other consideration is an agent allowed to receive without the consent of the applicant?
Nothing
On October 13th, an application is submitted with the initial premium, and on October 21st the insurer issues the policy standard. Due to a family emergency, the agent does not deliver the policy until October 27th. A conditional receipt was issued without a required medial exam. When is coverage effective?
OCTOBER 13TH -Coverage is effective on October 13th. Since the premium was paid with the application, a statement of good health does not need to be signed. OCTOBER 13th
What right of renewability does not guarantee insurability, allowing the insurer to cancel on certain dates?
OPTIONALLY RENEWABLE -An optionally renewable policy allows the insurance company to cancel the policy for any reason, on dates set in the contract. The insurer can also increase the premiums. OPTIONALLY RENEWABLE
What type of policy allows the insurer to cancel the policy on any specified date and to increase the premiums for any class?
OPTIONALLY RENEWABLE -An optionally renewable policy allows the insurance company to cancel the policy for any reason, on dates set in the contract. The insurer can also increase the premiums. OPTIONALLY RENEWABLE.
Baxter tells the insurer to keep the dividend and apply it to the face value of his life policy. He is using which dividend option?
PAID UP ADDITION -The paid-up addition dividend option allows the insurer to keep the dividend and apply it to the face value of the policy. Don't get confused the the reduced paid up option, which is a non-forfeiture option. Remember dividends are not taxed. PAID UP ADDITION
What long-term care partnership policy document outlines the requirement and benefits of the policy?
PARTNERSHIP PROGRAM NOTICE -An insurer or its agent, soliciting or offering to sell a partnership policy must provide to each prospective applicant a Partnership Program Notice (Form 200-A) that outlines the requirements and benefits of the policy. PARTNERSHIP PROGRAM NOTICE.
While investigating a claim, the insurer discovers the claimant had not included her full medical history on the application. The claims results from a condition that existed 4 years ago. The insurer will:
PAY THE CLAIM -The company may not refuse the pay the claim because of the time limit that is placed on pre-existing conditions and misstatements. In most states, after the policy has been in force for 3 years, the insurer may not refuse to pay claims using the misrepresentation or preexisting conditions defense. PAY THE CLAIM
What is the insurer's obligation if an insured commits suicide 4 years after the policy inception date?
PAY THE DEATH BENEFIT -If the suicide clause has expired, the insured must pay the death benefit. PAY THE DEATH BENEFIT
Physicians and medical facilities provide services on a contracted price in:
PPOs -PPOs for services on a contracted price known a fee-for-service basis PPO's
A guaranteed insurability rider allows the insured to protect against insurability risk. What is NOT protected?
PREMIUMS -The guaranteed insurability rider does not protect the insured against an increased premium, due to a higher attained age. It does protect the insured against having to show proof of insurability. PREMIUMS A guaranteed insurability rider allows the insured to protect against insurability risk, but PREMIUMS ARE NOT PROTECTED
Jonathan was 45 when he applied for a disability income policy, but stated his age as 35. He is now 57 and has submitted a claim The insurer discovers the error and will:
Pay the claim, but a decreased amount of benefits based on the premiums Jonathan should have paid, had his correct age been stated in the application
If an employee dies during the Group Life Conversion Period without completing the conversion, the insurer will:
Pay the full death benefit -If a death occurs during the conversion period, the full death benefit is paid
What is HIPAA'S most important aspect?
Portability -The main benefit of HIPAA is portability PORTABILIY
Insurers use risk classification to rate policies. Risk classification can impact all of the following EXCEPT:
Premium payment dates -Risk classification does not affect payment dates -Premium payment dates
Which provision encourages a disabled policy owner to try to return to work?
Recurrent disability -The recurrent disability provision encourages a person with a disability to try and go back to work. It specifies a certain number of days that a recurrence of the disability is considered a continuation, not a new disability. Therefore it does not have a new elimination period.
Amanda provided information to the best of her recollection on her insurance application. This is referred to as a :
Representation -All the statements on an insurance application are considered representations. Representation
Which of the following individuals CANNOT convert from a group health policy to an individual health policy?
SOMEONE WHO WAS INVOLUNTARILY TERMINATED FOR CAUSE -Group policies must provide for the right of all persons covered under the group to convert to an individual policy if the person was continuously covered for at least 3 months and termination of coverage occurred for any reason except involuntary termination for cause. SOMEONE WHO WAS INVOLUNTARILY TERMINATED FOR CAUSE
When an insured dies, the settlement option provision:
SPECIFIES HOW THE PROCEEDS ARE HANDLED. -How the proceeds/claims/benefits are paid are specified in the settlement options SPECIFIES HOW THE PROCEEDS ARE HANDLED. When an insured dies, the settlement option provision specifies how the proceeds are handled
An insured's policy has a maximum of $2,000 in out of pocket expenses, then the insurer will cover 100%. This is called:
STOP LOSS -With the stop-loss feature, an insured's out of pocket expenses are limited to a stated amount, such as $1,000 or $2,000. Once this amount is paid, the insurer pays 100% of covered expenses. STOP LOSS STOP LOSS STOP LOSS STOP LOSS STOP LOSS
Brenda has given her insurer permission to go after a third party to collect damage owned. This is known as:
SUBROGATION -Related to indemnity, subrogation is the right of the insurer to assume the rights of the insured and sue the responsible third party for damages inflicted upon the insured SUBROGATION
What type policy would pay the death benefits after the second person dies if it covers two or more lives?
SURVIVORSHIP LIFE -A survivorship life policy pays after the second person or last survivor dies. Joint life pays the death benefits after the first person dies
The commissioner of Insurance can suspend or revoke the license of an agent who committed any of the following acts, EXCEPT:
Selling a replacement policy -The Commissioner may place on probation, suspend, revoke, refuse to issue or renew, or otherwise limit any license for all of the above except selling a replacement policy Selling a replacement policy
For tax purposes, how are premiums from a group life policy treated for an employer?
TAX DEDUCTIBLE -Premiums are tax deductible for employers with group life policies. Tax deductible
Sandra needs more protection than she can afford right now due to her limited financial resources. Her needs can be met by a:
TERM POLICY -A term policy would giver her the most protection for the lease money right now. TERM POLICY
What happens to a death benefit if it is determined that an applicant stated their age was younger than their actual age?
THE DEATH BENEFIT WOULD BE LOWERED -Because the applicant was actually older than the age stated on the policy, the amount of the death benefit would be lowered.
Which of the following is true about the Waiver of Premium provision in a life policy?
THE DISABILITY MUST BE TOTAL AND PERMANANT -The insurer can deny the provision, there is an additional charge, and it can only be added to a term policy. Only total/permanent item is true. THE DISABILITY MUST BE TOTAL AND PERMANENT-TRUE ABOUT THE WAIVER OF PREMIUM PROVISION IN A LIFE POLICY
The provision on Robert's insurance policy that allowed the policy to remain in force, even though he forgot to pay his premium is:
THE GRACE PERIOD PROVISON -The grace period allows the policy to remain in force for a specified number of days beyond the premium due date. THE GRACE PERIOD PROVISON
Which of the following is not true about an increasing term policy?
THE INCREASES OCCUR RANDOMLY -The increases occur at certain intervals over the policy period and are specified in the policy THE INCREASES OCCUR RANDOMLY
Coverage becomes effective in a life policy when :
THE INITIAL PREMIUM IS PAID, AND THE POLICY IS DELIVERED -Coverage becomes effective in a life policy when the initial premium is paid, and the policy in DELIVERED INITIAL PREMIUM IS PAID, AND THE POLICY IS DELIVERED THE INITIAL PREMIUM IS PAID, AND THE POLICY IS DELIVERED.
The only person that has the right to change the beneficiary on a life policy is:
THE POLICYOWNER
Which of the following is required in order for an insurance application to be considered complete?
THE SIGNATURE OF THE INSURED (unless not an adult) -The signature of an adult insured is required in order for an application to be complete.
Which of the following is not true about variable universal life policies?
THEY HAVE NO PROVISION FOR POLICY LOANS AND WITHDRAWLS -Variable universal life DOES provide with the policyowner with access to cash values via policy loans and withdrawals. They have no provision for policy loans and withdrawals
An insured can borrow against their policy after it has been in force for how man years?
THREE YEARS -Life insurance policies provide for the insured to borrow against the policy after it has been in forcefor 3 years
Eligibility for the payment of longer term care benefits may not be more restrictive than requiring a deficiency in the ability to perform not more than how many activities of daily living?
THREEEEEEEEE -Eligibility for the payment of long term care benefits may not be more restrictive than requiring either a deficiency in the ability to perform not more than 3 activities of daily living or the presence of cognitive impairment. THREE 3
Which of the following involves misrepresentation?
TWISTING TWISTING
The Health Insurance Portability and Accountability Act (HIPAA) applies to employers with a minimum of how many employees?
TWO -The Health Insurance Portability and Accountability Act (HIPAA) applies to employers with 2 or more employees.
Who is responsible for ensuring that a Medicare supplement policy is appropriate for an applicant?
The producer and the agent
Which of the following is NOT a purpose the Commissioner has established minimum standards for individual health insurance policies?
To get premium rates inline with group premium rates -The Commissioner has established minimum standards for individual health insurance policies in order to provide for reasonable standardization of terms and coverages, facilitate public understanding and comparison, eliminate provisions that are misleading, and provide for full disclosure in the sale of accident and health insurance. To get premium rates inline with group premium rates
Which of the following best describes an assignment?
Transfer of some of the ownership rights -An assignment involves the transfer of some or all of the ownership rights of a policy. Transfer of some of the ownership rights.
What method does an insurer use to determine the coverage and benefits to pay for a surgery based on what is considered fair and common for an area?
USUAL, REASONALBE, AND CUSTOMARY -Under the usual, reasonable, and customary method, an insurer looks at what is considered reasonable and customary for a geographic area
Someone who buys the death benefits for a life insurance policy from someone who has a life-threatening illness is a:
Viatical settlement provider -A viatical settlement provider is someone who buys the death benefits for a life insurance policy from someone who has a catastrophic, life-threatening or chronic illness or condition who enters into a viatical settlement contract VIATICAL SETTLEMENT PROVIDER
If an applicants statements on an application are guaranteed to be true, they are:
WARRANTIES WARRANTIES ARE GUARANTEED TO BE TRUE
Jeremy, a producer, is proposing a life policy to a new client. When must he inform the client of their rights under the FCRA?
WHEN HE COMPLETS THE APPLICATION -The client should be informed of his/her rights under FCRA(Fair Credit Reporting Act) when the application in completed. WHEN THEY COMPLETE THE APPLICATION IS WHEN YOU MUST INFORM THE CLIENT OF THEIR RIGHTS UNDER THE Fair Credit Reporting Act
Insurable interest must exist at which of the following times for an Accidental Death and Dismemberment (AD&D) policy?
When the application is requested -Insurable interest must be shown when an individual applies for a life or health insurance policy -When the application is requested
At what time during the application and approval process for life insurance must insurable interest exist?
When the application on a proposed insured is written -Insurable interest must be present when the application is written When the application on a proposed insured is written
When does an insurer have to report a termination of an appointment to the Commissioner of Insurance?
Within 30 days. 30 days 30 days a month
In order to continue coverage for a newborn in health policies, when must notification to the insurer be made?
Within 31 days -To continue coverage for a newborn, the insurer must be informed of the birth and required fees for the newborn must be paid within 31 days of the birth 31 days
The beneficiary designation that does not allow the policy to be changed without the beneficiary's cosent:
irrevocable - An irrevocable beneficiary means the policy cannot be changed without the beneficiaries consent. A revocable beneficiary means the policy can be changed without the consent. IRREVOCALBE