Final Exam part 1

In Georgia, monthly-premium accident and sickness insurance policies must provide a grace period of at least

10 days

An insurer must provide an insured with claim forms within ____ days after receiving notice of loss

15

Insurers may request a hearing within ___ if their policy is rejected

20 days

A IRA owner can start making withdrawals and NOT be subjected to a tax penalty beginning at what age?

59 1/2

IRA owner can make withdrawals beginning at age:

59 1/2

Qualified Long-Term Care policies may take into consideration an applicant's pre-existing conditions for a maximum of not more than __ month(s) prior to the effective date of coverage.

6

After initially issued, a temporary license is valid for

6 months

In the state of georgia, every policyowner must be offered which of the following?

A free look period allows a policyowner time to examine the policy and request a full refund for any reason

Two partners own equal shares in a business worth a total of $1,000,000. If they both commit to the purchase of a life insurance policy that will fund a Buy-Sell Agreement, which of the following is TRUE?

Each partner owns a $500,000 policy on their partner's life. When one partner dies, the other partner receives the death benefit from the insurance on the deceased partner, which is then used to buy the deceased partner's ownership of the business.

How often must an insurance agent license be renewed in Georgia?

Every 2 years

How are policy owner dividends treated in regards to income tax?

Interest on accumulation is taxed

Which of these arrangements allows one to bypass insurable interest laws?

Investor-originated life insurance sometimes called stranger-originated life insurance is used to circumvent state insurable interest statutes. This is done when an investor (or stranger) persuades an individual to take out life insurance specifically for the purpose of selling the policy to the investor. The investor compensates the insured and makes the premiums, then collects the death benefit when the insured dies.

Which statement regarding third-party ownership of a life insurance policy is true?

It is used extensively in estate-planning as well as business circumstances

Who is a mutual insurance company owned by?

Its policyholders

K insured P sole beneficiary on life insurance policy K dies before P common disaster provision proceeds will be payable to

K's estate if P dies within a specified time

A sole proprietor may use this plan ONLY if the employees of this business are included:

Keogh Pension Plan

A policy owner is allowed to pay premiums more than once a year under which provision?

Mode of premium

Which of the following correctly describes a certificate of authority?

Permits an insurance company to transact business in Georgia

Managed care organizations:

Point of service plans (pos), preferred provider organization (ppo), health maintenance organization (hmo)...not medical information bureau (mib)

Which of these do NOT constitute policy delivery?

Policy issued with a rating....policy mailed to applicant, agent, delivered to applicant by the agent

Equity indexed annuities typically invested in:

S&P 500

T would like to be assured $10,000 is available in 10 years to replace a roof on his hose. What kind of $10,000 policy should T purchase?

Ten-year endowment...to ensure funds will be available when needed

G is an accountant who has ten employees and is concerned about how the business would survive financially if G became disabled. The type of policy which BEST addresses this concern is

Business overhead expense

Which of these statements accurately describes the waiver of premium provision in an accident and health policy?

premiums are waived after the insured has been totally disabled for a specific period of time

The coordination of benefits provision:

prevents an insured covered by two health plans from making a profit on a covered loss

A medical information report (mib) report may disclose which of the following:

prior use of marijuana

Time period after health policy is issued, during which no benefits are provided for illness

probationary period

Statements made on an insurance application that are believed to be true to the best of the applicant's knowledge are called:

representations

D is an architect receiving Disability Income benefits who is not able to return to work full time, but can work on a part-time basis. Which of these features would allow D to continue receiving benefits?

residual benefit clause

What is the suicide provision designed to do?

safeguard the insurer from an applicant who is contemplating suicide

P is a producer who notices 5 questions on a life application were not answered. What actions should P take?

set up a meeting with the applicant to answer the remaining questions

The percentage of an individual's Primary Insurance Amount (PIA) determines the benefits paid in which of the following programs?

social security disability income

The percentage of an individual's primary insurance amount (pia) determines the benefits paid in which of the following programs?

social security disability income

The insurance clause

states the scope and limits of the coverage

Which of the following is the reimbursement of benefits for the treatment of a beneficiary's injuries caused by a third party?

subrogation

Which of the following services is not included under the hospitalization expense coverage?

surgical fees....while an insured is hospitalized, the hospitalization expense coverage includes benefits for the cost of daily room and board, intensive care, miscellaneous expenses

A(n) ____ rider may be used to include coverage for children under their parents life insurance policy.

term

What type of life insurance are credit policies issued as?

term...the type of insurance used is decreasing term, with the term matched to the length of the loan period (though usually limited to 10 years or less) and the decreasing insurance amount matched to the declining loan balance

Which of the following statements is correct about an agent who is taking an insurance application?

the agent should have the applicant initial any changes made on the application

A contract owner terminates an annuity before the income payment period begins. The owner will then receive

the current contract surrender value

The additional period of time after a premium payment is due that will allow the policy to remain in force in the event of nonpayment

the grace period

During the application process, the agent's primary responsibility is to

the insurance company

Which of the following statements best defines usual, customary, and reasonable (ucr) charges?

the maximum amount considered eligible for reimbursement by an insurance company under a health plan.

A disability elimination period is best described as a

time deductible

J is an agent who has induced an insured through misrepresentation to surrender an existing insurance policy. What is J guilty of?

twisting...is inducting or attempting to induce any insured person through misrepresentation to lapse forfeit, or surrender insurance is considered twisting

which of the following phrases refers to the fees charged by a healthcare professional (physician, dentist, etc)

usual, customary, and reasonable expenses

What type of annuity has a cash value that is based upon the performance of it's underlying investment funds?

variable

Which of the following policies is characterized by a flexible premium and death benefit and allows the policyowner control the investment aspect of the plan?

variable universal life

A life policy that contains a monthly mortality charge as well as self- directed investment choice is called a (n)

variable universal life policy

Primary factor that determines the benefits paid under a disability income policy

wages

At which point does an informal contact become binding?

when one party makes an offer and the other party accepts that offer

A policy that becomes a modified endowment contract (mec):

will lose many of its tax advantages

B owns a Whole Life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts of

additional whole life coverage at specified times

L takes out a life insurance policy and dies 10 years later. During the claim process, the insurer discovers that L had understated her age on the application. Under the Misstatement of Age provision, the insurer will

adjust the death benefit to a reduced amount

What is one of the roles of the commissioner?

administering insurance laws

A qualified profit-sharing plan is designed to:

allow employees to participate in the profits of the company. One of the purpose of a qualified profit-sharing plan is to distribute a portion of company earnings to employees.

An insurance agent is in violation of the rules governing advertisement of life insurance and annuities if the agents takes which of the following actions during a sales presentation?

analyzes another insurance company's policy

Which premium schedule results in the lowest cost to the policyowner?

annual...normally an additional charge to pay premium more than once a year because the company will have additional charges in billing and collecting premium payments

What is the initial source of underwriting for an insurance policy?

application containing statements from the insured

S has a Whole Life policy with a premium payment due soon. Which provision would keep the policy in force if S does not make the required payment and the policy has adequate cash value from which the premium payment can be made?

automatic policy loan

Medicaid was designed to assist individuals who are

below a specific income

Whole life policy

cash value may be borrowed against

Whose life is covered on a life insurance policy that contains a payor benefit clause?

child...a payor benefit clause is generally added to a life policy that insures the life of a juvenille. it provides continuation of insurance coverage in the event of the death or total disability of the individual responsible for the payment of premiums.

A major medical policy typically contains a provision that requires the insurer to pay only part of a loss, while the balance is paid the insured. This provision is called:

coinsurance

Insurance policies are offered on a "take it or leave it" basis, which make them:

contracts of adhesion

When a policyowner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply?

conversion provision...the option to convert gives the insured the right to convert or exchange the term policy for a whole life (or permanent ) plan without evidence of insurability

What is the purpose of the U.S.A. Patriot Act?

detect and deter terrorism

A characteristic of preferred provider organizations would be:

discounted fees for the patient...patient fees are discounted in return for using listed providers

M becomes disabled and is unable to work for six months. M dies soon after from complications arising from this disability. M has a Disability Income policy that pays $2,000 a month. Which of the following statements BEST describes what is owed to her estate?

earned, but unpaid benefits

non-occupational disability coverage is designed for:

employees who suffer non-work related disabilities, since work-related disabilities are covered by workers' compensation

S takes out an accident and sickness insurance policy which contains a provision that states that the agent does not have the authority to change the policy or waive any of its provisions. Which health policy provision is this?

entire contract

Which of the following policy provisions prohibits an insurance company from incorporating external documents into an insurance policy

entire contract

Important underwriting principle of group life insurance

everyone must be covered in the group...all or a large percentage must be covered by the insurance

Which of these statements describe a modified endowment contract (mec)?

exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract

In a life insurance policy, which feature states that the policy will not cover certain risks?

exclusion

The sections of an insurance contract which limit coverage are called

exclusions

The sections of an insurance contract which limit coverage are called:

exclusions

Which of the following is not included in the policy face?

exclusions

N is a student pilot with a large life insurance policy. Which of these features would limit the insurer's obligation in the event N was killed while flying as a student pilot?

exclusions are specified hazards listed in a policy for which benefits will not be paid

A comprehensive major medical health insurance policy contains an eligible expenses provision which identifies the types of health care services that are covered. All of the following health services are typically covered, except for:

experimental and investigative services...include hospital charges, physician fee, nursing services

An underwriter determines that an applicant's risk should be recategorized due to a health issue. This policy may be issued with a(n)

extra premium

Examples of unfair claim settlement practice.

failing to acknowledge and act promptly with respect to an insurance claim, compelling an insured to initiate a lawsuit by offering less on an insurance claim, failing to accept of deny a claim within reasonable time after proof of loss is submitted...not an example is needing written documentation of claim details

After an insured gives notice of loss, what must he/she do if the insurer does not furnish forms?

file written proof of loss

What action should a producer take if the initial premium is not submitted with the application?

forward the application to the insurer without the initial premium

Under the time limit of certain defenses provision in an individual health insurance policy non fraudulent misstatements first become incontestable two years...

from the date that the policy was issued

Which of these is considered a true statement regarding medicaid?

funded by both state and federal government

With Accidental Death and Dismemberment policies, what is the purpose of the Grace Period?

gives the policy owner additional time to pay overdue premiums

Credit life insurance is typically issued with which of the following types of coverage?

group term

A nonforfeiture clause gives the policyowner

guaranteed values if the policy has lapsed...a nonforfeiture clause stipulates that a policyowner can receive full or partial benefits or a partial refund of premiums after a lapse due to non-payment

In regards to representations or warranties, which of these statements is TRUE?

if material to the risk, false representations will void a policy

The ____ clause identifies which losses resulting from an accident or sickness are insured by the policy

insuring

Health insurance policy provisions specifies the health care services a policy will provide:

insuring clause

All of these Settlement options involve the systematic liquidation of the death proceeds in the event of the insured's death EXCEPT

interest only...fixed period, fixed amount and life income

Quarterly premium payments increase the annual cost of insurance because

interest to the insurer is decreased while the administrative costs are increased. the hgher the frequency of payments, the higher the premium

A foreign insurance company doing business in Georgia

is a company that was formed under the laws of another state

Which of the following actions will an insurance company most likely not take if an applicant who has diabetes, applies for a disability income policy?

issue the policy with an altered time of payment of claims provision

K is looking to purchase Renewable Term insurance. Which of these types of Term insurance may be renewable?

level...a level term policy pays the same benefit amount if death occurs at any point during the term. Level term policies may be renewable.

Which of theses are not an example of a nonforfeiture option?

life income....extended term, reduced paid-up, cash surrender

Life insurance that covers an insured's whole life with level premiums paid over a limited time is called:

limited pay life

The Accelerated Death benefit provision in a life insurance policy is also known as

living benefit

Convincing a prospective insured to buy an insurance policy based on exaggerations is called

misrepresentation

All of these insurance products require an agent to have proper FINRA securities registration in order to sell them EXCEPT for

modified whole life...variable life, modified variable life, variable annuity

Periodic health claim payments must be made at least:

monthly

K owns a whole life policy. If K wants an increasing death benefit to protect against inflation, which dividend options should she choose?

paid up additional insurance

k owns a whole life policy. if k wants an increasing death benefit to protect against inflation, which dividend option should she choose?

paid-up additional insurance

Medicare part c is:

part c (medicare advantage) is offered by private insurers and available to those who are enrolled in medicare part a and part b

M had an annual life insurance premium payment due January 1. She died January 10 without making the premium payment. What action will the insurer take?

pay face amount minus the past due premium

insurance policies are considered aleatory contracts because

performance is conditioned upon a future occurrence. Aleatory means there is an element of chance and potential for unequal exchange of value or consideration for both parties. An aleatory contract is conditioned upon the occurrence of an event

J has an Accidental Death and Dismemberment policy with a principal sum of $50,000. While trimming the hedges, J cuts off one of his fingers. What is the MAXIMUM J will receive from his policy?

$25,000

An agent must have ___ hours of ethics per continuing education reporting period.

3

A producer must notify the commissioner within __ days of an address change

30

In Georgia, an accident and sickness policy that is paid on a quarterly basis requires a grace period of

31 days

All accident and sickness plans must provide coverage on newborn children for ___ days

31....All individual and group health plans which provide coverage to family members of the insured must provide coverage for the insured's newborn child from the moment of birth through the 31st day. If a premium is required to continue the newborn's coverage it must be paid within the 31st day period

J's Major Medical policy has a $2,000 deductible and an 80/20 Coinsurance clause. If J is hospitalized and receives a bill for $10,000, J would pay

3600....2000+20% of the remaining bill=3600

M's insurance company denied a reinstatement application for her lapsed health insurance policy. The company did not notify M of this denial. How many days from the reinstatement application date does the insurance company have to notify M of the denial before the policy will be automatically placed back in force?

45 days

Reason for not purchasing life insurance on the life of a minor

An insurance policy on a child would not pay any benefits if one or both parents died

An incomplete life insurance application submitted to an insurer will result in which of these actions?

Application will be returned to writing agent

A disability income policyowner submitted a claim for a chronic neck problem that has now resulted in total disability. Neck injury occurred 5 years ago. Neck injury not disclosed to the insurer at time of application. How will the insurer handle the claim?

Claim will be paid and coverage will remain in force. After a policy has been in force for 2 sometimes 3 years, it enters incontestable period, in which the insurer may not deny a claim based on information not disclosed at the time of application.

Which of the following organizations would make reimbursement payments directly to the insured individual for covered medical expenditures?

Commercial health insurance companies use the reimbursement approach, which allows policyowners to seek medical treatment then submit the charges to the insurer for reimbursement

P, age 50, purchased an annuity that P will fund with $500/ month for 15 years. The annuity will then pay P retirement payments after the 15 years. Which type of annuity did P purchase?

Deferred

Which statement is true in regards to a policy loan?

Past-due interest on a policy loan is added to the total debt

Under federal tax laws, what is the tax treatment for an employer providing $50,000 of a contributory group Term Life plan to all its eligible employees?

Portion of the premiums paid for by the employer may be a tax deduction

P is an employee who quits her job and wants to convert her group health coverage to an individual policy. After the expiration of COBRA laws, which of the following statements is TRUE?

She does need to provide evidence of insurability. Under COBRA, conversion of group accident and health coverage to an individual policy does not require evidence of insurability. However, this only applies during the COBRA period. Once COBRA laws expire, enrollment in an individual policy requires evidence of insurability.

Which of the following statements is correct regarding an employer/employee group health plan?

The employer receives a master policy and the employee receive certificate.

Which health policy clause stipulates that an insurance company must attach a copy of the application to the policy to ensure that it is part of the contract?

The entire contract provision states that the health insurance policy, together with a copy of the signed application and attached riders and amendments, constitutes the entire contract.

J, an Accidental Death and Dismemberment (AD&D) policy holder, dies after injuries sustained in an accident. J's age as stated on the application five years ago was found to be understated by ten years. Which of the following actions will the insurance company take?

The insurer will adjust the benefit to what the premiums paid would have purchased at the insured's actual age

T was insured under an individual Disability Income policy and was severely burned in a fire. As a result, T became totally disabled. The insurer began making monthly benefit payments, but later discovered that the fire was set by T in what was described as arson. What actions will the insurer take?

The insurer will rescind the policy, deny the claim, and recover all payments made

Why is an applicant's signature required on a life insurance application?

To attest that the statements on the application are accurate to the best of the applicant's knowledge

All of the following statements regarding a Tax sheltered annuity (tsa) are true except:

income derived from the tsa is received income tax free...upon retirement, payments received by employees from the accumulated savins in tax-sheltered annuities are treated as ordinary income. TSA's are available to public school employees, contributions to the tsa are tax deductible, interest earned by tsa is tax deferred

A life insurance policy would be considered a wagering contract without:

insurable interest

What would be an accurate definition of "controlled business"

insurance business that is written on the agent's own life, property, or interests