Life & Health Exam

In a life settlement transaction, the owner must be made aware of his or her right to rescind the contract within how many days after the receipt of the life settlement proceeds?

15 days

What is the penalty tax for nonqualified distributions to a health savings account?

20% An HSA holder who uses the money for a non-health expenditure pays tax on it, plus a 20% penalty.

The Patient Protection and Affordable Care Act mandates that insurers provide coverage for adult children up to the age of?

26 years old

What is the amount a physician or supplier bills for a particular service or supply?

Actual Charge

Guarantee of insurability option in long-term care policies allows the insured to:

Increase benefit levels without providing proof of insurability

What does life contingency mean?

Life contingency is something that can happen, but that generally is not anticipated.

Brad reads a statement on the first page of his health insurance policy, which says "this is a limited policy". What is the name of this statement?

Limited Policy Notice

Cassie severely burns her hand during a 4th of July celebration. She accumulates medical bills but is not classified as "disabled". Which of the following would cover at least a portion of Cassie's medical expenses.

Medical Reimbursement Benefit

Medicare Advantage is known as?

Medicare Part C

Which provision concerns the insured's duty to provide the insurer with reasonable notice in the event of a loss?

The Notice of Claim Provision

How soon following the occurrence of a covered loss, or after the insurer becomes liable for periodic payments for income benefits, must an insured submit written proof of such loss to the insurance company?

Within 90 days or as soon as reasonably possible but not to exceed 1 year.

A policyowner cancels his life policy but instructs the insurance company to transfer the cash value of his policy to an annuity. This nontaxable transaction is called:

1035 Exchange

In a replacement situation, all of the following must be considered EXCEPT?

Assets

Every insurer must file a fraud prevention plan within how many days?

120 days

If a person has been found liable for a civil penalty in a hearing, that ruling can be entered as a judgement and enforced after how many days without court proceedings?

120 days

Which of the following Medicare supplement plans would be available to a reasonably healthy 91-year-old female?

A-N All Medicare supplement plans (A - N) must be made available to qualifying applicants, regardless of age.

What is reinsurance?

An agreement between a ceding insurer and assuming insurer. The originating company that procures insurance on itself in another insurer is called the "ceding insurer." The other insurer is called "assuming insurer."

John owns a medical expense policy that he purchased for his family. John's employer purchased a Group Disability income policy for John and all eligible employees. John subsequently suffered an accident on the job that left him unable to work for four months. If John receives benefits from his disability income policy, what would be true?

Benefits received that are attributable to employer contributions are fully taxable to the employee as income. Group disability income premium payments are considered tax-deductible by the business as an ordinary business expense. In a plan funded by the employer, income benefits are included in the employee's gross income and taxed as ordinary income.

What is the purpose of the New York State Partnership for LTC?

It combines LTC insurance and Medicaid to help people prepare for nursing home care. The New York State Partnership for Long-Term Care is program that combines private long-term care insurance and Medicaid to help New Yorkers prepare financially for the possibility of needing nursing home or home care. The program allows New Yorkers to protect their assets while remaining eligible for Medicaid if their long-term care needs exceed the period covered by their private insurance policy.

How does the premium change in a decreasing term policy?

It doesn't change. It remains level.

Two equal partners in a business worth $150,000 are using a Cross Purchase plan to protect against the death of each other. How would this work?

Partner A would buy a policy on partner B in the amount of $75,000, naming Partner A as beneficiary.

Which health insurance provision describes the insured's right to cancel coverage?

Renewal Provision

Regarding cost containment in medical plans, what type of review process do employers and insurers use to evaluate the utilization review process and the effectiveness of the professionals involved in large insurance claims?

Retrospective review

What are the characteristics of a group long-term disability plan?

The maximum benefit is based upon monthly income. The elimination period is the same as in the short-term plan's benefit period. The benefit period may be to age 65. The benefit can be up to 66 2/3% of one's monthly income.

A policy provision conflicts with state statutes. Which of the following will happen?

The provision may be altered to conform to the state statutes if the Conformity with State Statutes provision is included in the policy.

What is true for both equity indexed annuities and fixed annuities?

They have a guaranteed minimum interest rate. While equity indexed annuities earn higher interest rates than fixed annuities, both types of annuities guarantee a specific minimum interest rate.

Health insurance could provide payments for loss of income. (T/F)

True

Optional policy provisions can be changed by an insurer, as long as the changes do not adversely affect the policyholder. (T/F)

True

In a survivorship life policy, when does the insurer pay the death benefit?

Upon the last death

What types of services may NOT be provided under the long-term care's assisted living care?

Visits by a registered nurse The following services may be provided: linens and personal laundry service, assistance with dressing and bathing, reminders regarding medication, assistance with eating. Assisted living offers non-medical assistance.

What types of services may NOT be provided under the long-term care's assisted living care?

Visits by a registered nurse.

Life settlement brokers must keep a record of commission and compensation disclosures for life settlement contracts for the minimum of how many years?

3 years

Even though sickness is a peril covered by a health insurance policy, coverage may not be limited or excluded because of what?

Exemption periods

Using a class designation for beneficiaries means:

Naming beneficiaries as a group.

How long after a policy's effective date may an insurer cancel the policy?

90 days

Regarding long-term care coverage, as the elimination period gets shorter, the premium?

Gets higher

Every authorized domestic insurer and every rate service organization which makes or files rates will be examined at least..?

Once every 5 years

The dividend option in which the policy-owner uses dividends to purchase a term policy for one year is referred to as the:

One Year Term Option

Which document helps ensure that full and fair disclosure is provided to the recipient of a policy?

Outline of Coverage The Outline of Coverage is created to ensure full and fair disclosure to the recipient of a new policy. This document can be released at the time of application or upon delivery of the policy.

How are the three basic charges for medical expense insurance grouped?

Hospital, Surgical and Medical

When will Medicare cover nursing home care?

If it is part of the treatment for a covered illness.

A tornado that destroys property would be an example of what?

A peril A peril is the cause of loss insured against in an insurance policy.

Which of the following would be a covered employment under the NYS Disability Benefit Law?

An advertising executive.

Which of the following provisions must be included on the first page of a Medicare supplement policy, which states the insurer's right to change premium amounts?

Continuation Provision also known as the "Renewal Provision"

A reinstated policy provides immediate coverage for illness. (T/F)

False. Accidental injury is covered immediately, but to protect the insurer against adverse selection, losses resulting from sickness are covered only if the sickness occurs at least 10 days after the reinstatement date.

Cost of living rider

Increases DB to keep pace with inflation

All of the following statements are true regarding installments for a fixed period annuity settlement option except:

It is a life contingency option. The benefit will only be paid for a designated period of time.

Which of the following would be entitled to mental health benefits through Timothy's Law?

New York residents covered by group health insurance or a school blanket health insurance policy are entitled to benefits through Timothy's Law.

Premium payments for personally-owned disability income policies are?

Not tax deductible.

Which of the following is not covered under Basic Hospital Expense coverage?

Surgeon's fees

Which of the following statements is true regarding the cash value in a Universal life policy?

The insurer credits the cash value in the policy with a current interest rate. The insurer credits the cash value in the policy with a current (nonguaranteed) interest rate and backs the cash value with a lower guaranteed (contract) rate of interest.

How many days of inpatient care for treatment of mental, nervous, or emotional disorders must be provided under Timothy's Law?

30 days Policies must cover at least 30 days of inpatient care for treatment of mental, nervous, or emotional disorders.

Which of the following is a feature of a variable annuity?

Benefit payment amounts are not guaranteed. The issuing insurance company does not guarantee a minimum interest rate or the benefit payment amounts.

Which of the following groups may be eligible for benefits under the Healthy New York Program?

Employees not covered by health coverage through their employer.

What is the difference between the Medicare approved amount for a service or supply and the actual charge?

Excess Charge

Cassie severely burns her hand during a 4th of July celebration. She accumulates medical bills but is not classified as "disabled". Which of the following would cover at least a portion of Cassie's medical expenses.

Medical Reimbursement Benefit.

To sign up for a Medicare prescription drug plan, individuals must first be enrolled in:

Medicare Part A To receive Medicare prescription drug benefits, beneficiaries must sign up for a plan offering this coverage in their area and must be enrolled in Medicare Part A or in Parts A or B.

Do benefits stop at the annuitant's death with an annuity certain?

No. Annuities Certain are short-term annuities which limit the amount paid to a certain fixed period or until a certain fixed amount is liquidated. There are no life contingencies.

Guaranteed Insurability Rider

Policyowner can increase the DB for specific ages or events.

Payor Benefit Rider

Premium is paid if payor becomes disabled or dies. DB does not increase.

Which of the following answers does NOT describe a principal goal of a Preferred Provider Organization?

Provide medical benefits only from physicians in the network.

Benefit periods for individual short-term disability policies will usually continue from:

Six months to two years. Short-term disability is defined as a disability lasting not more than two years.

Which of the following best describes the "first-dollar coverage" principal in basic medical insurance?

The insured is not required to pay a deductible. The three basic types of coverage (hospital, surgical, and medical) are often referred to as first-dollar coverage because they usually do not require the insured to pay a deductible.

Your client plans to retire at age 50. He would like to purchase an annuity that would provide income from the time he retires to the age when social security and other pension funds become available. What settlement options should he consider?

Annuity Certain Annuity Certain option allows the annuitant to select the time period or the amount for the benefits. Under the installments for a fixed period, distribution begins on a specific date and ends on a specific date.

Benefits from Business Overhead Expense (BOE) policies are usually limited to 6 months. (T/F)

False. BOE policies are sold to small business owners for the purpose of reimbursing the policyowner for business overhead expenses during a period of total disability. Premiums are tax-deductible for a business, but any premiums 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.

When health care insurers negotiate contracts with health care providers or physicians to provide health care services for subscribers at a favorable cost, it is called:

Preferred Provider Organization (PPO) The insurer negotiates the rates for specific procedures for their subscribers. If the subscriber chooses to go to a provider outside the preferred provider, they will have to pay a part of the cost of the service.

If a court ordered payment for a loss that was not covered in the policy even if it was clearly worded, it would be an example of which legal concept?

Reasonable expectations If, because of advertising or sales literature or statements by an agent, an insured could reasonably expect the coverage, the courts have held that the insurer must provide that coverage. For example, if a person orders a new automobile, even though the order form does not state that it will have a steering wheel, the buyer could reasonably expect the automobile to include a steering wheel

A medical expense policy that establishes the amount of benefit paid based upon the prevailing charges which fall within the standard range of fees normally charged for a specific procedure by a doctor of similar training and experience in that geographical area is known as?

Usual, customary and reasonable

Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary?

Life income with period certain The life income with period certain option guarantees payments for the life of the recipient and also specifies a guaranteed period of continued payments. If the recipient should die during this period, the payments would continue to a designated beneficiary for the remainder of the period.

What is the maximum amount of co-insurance in New York's major medical plans?

25%

Under SIMPLE plans, participating employees may defer up to a specified amount each year, and the employer then makes a matching contribution up to an amount equal to what percent of the employee's annual wages?

3% Contributions and earnings are both tax-deferred until funds are withdrawn.

If forms are not furnished, what should the insured do?

If forms are not furnished, written proof of the occurrence, nature of the loss, and extent of loss must be submitted to the insurer.

K purchased a $90,000 annuity with a single premium, and began receiving payments 2 months after that. What type of annuity is it?

Immediate With an immediate annuity, distribution starts within 1 year of purchase.

Which insurance principle states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost?

Indemnity

Under an individual disability policy, what is the minimum schedule of time in which claim payments must be made to an insured?

Monthly

Premium payments for personally-owned disability income policies are tax deductible?

No. Tax deductible to the extent that they exceed 10% of the adjusted gross income of those itemizing deductions. Premiums for personally-owned individual disability income policies are not deductible.

An employee insured under a group health policy is injured in a car wreck while performing her duties for her employer. This results in a long hospitalization period. Will the group health plan pay?

No. Because the injuries were work related, the group health policy would not respond. The injured would have to rely on worker's compensation for coverage.

Is there are limit on when benefits are paid in a Business Overhead Expense (BOE) plan?

No. The purpose of the plan is to reimburse the policyholder for business overhead expenses during a period of total disability.

Which nonforfeiture option provides coverage for the longest period of time?

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

Which of the following is not covered under Basic Hospital Expense coverage?

Surgeons' fees

A certificate of appointment is valid until any of the following except:

The agent becomes a nonresident licensee in another state. A certificate of appointment is valid until the agent's license is suspended or revoked; agent's license expires and is not renewed; or appointment is terminated by the insurer under the terms of the agent's contract. A licensee can transact business in another state as a nonresident as long as it offers reciprocity.

What determines the extent of benefits offered under group disability income insurance?

The extent of benefits is determined by the insured's income.

What decreases in a decreasing term policy?

The face amount decreases...the premium remains level.

How soon is the insured required to give notice of claim?

The insured is customarily required to give notice of claim within 20 days.

An insured has a major medical policy with a $500 deductible and a coinsurance clause of 80/20. If he incurs medical expenses of $4,000, the insurer would pay:

$2,800 The insurer would pay 80% of covered expenses after the $500 deductible is satisfied.

What is the maximum amount of coinsurance in New York's major medical plans?

25%

If a consumer requests additional information concerning an Investigative Consumer Report, how long does the insurer or reporting agency have to comply?

5 days

An employer offers a short-term disability plan to its employees. How much of a given employee's income would be covered under the plan?

70%

Under the uniform required provisions, proof of loss under a health insurance policy should normally be filed within:

90 days of a loss

What can contribute proof of death for the purposes of insurance benefits payment?

A death certificate and a form provided by the insurance company.

Who may share in the commission from the sale of a life insurance policy?

A licensed life insurance agent of the same insurer involved with the sale of the transaction. Only licensed agents of the same insurer, and involved with the actual transaction may share commissions.

Fixed Settlement Option

Both the principal 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.

An individual has been making periodic premium payments on an annuity. The annuity income payments are scheduled to begin 2 years after the annuity was purchased. What type of annuity is it?

Deferred Deferred annuities may be purchased with either a single lump sum or periodic payments, but they do not begin the income payments until sometime after 1 year from the date of purchase.

In which of the following situations may the policy-owner be allowed to sell a life insurance policy purchased 1 year ago for a life settlement contract?

Divorce, Terminal or chronic illness, death or retirement. The 2-year prohibition does not apply in the following cases: the owner or insured is terminally or chronically ill; death, divorce, retirement and other conditions. Temporary disability or nonpayment of premium are not allowable reasons for converting a life policy into a life settlement contract.

A policy which covers medical costs related to a specific condition is called what?

Dread Disease Policy

What are the three basic types of coverage?

Hospital, surgical and medical

Accidental Death Rider

If insured dies from an accident, DB is a multiple of the face amount.

Life income joint and survivor settlement option guarantees:

Income for 2 or more recipients until they die. The Life Income Joint and Survivor option guarantees an income for two or more recipients for the duration of their lives. Most contracts stipulate that the surviving partner will receive a reduced payment after the other dies, although some will continue to pay the same amount. There is no guarantee that all the life insurance proceeds will be paid out.

The policy owner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. What settlement option should the policy owner choose?

Interest-only option With the interest-only option, the insurance company retains the policy proceeds and pays interest on the proceeds to the recipient (beneficiary) at regular intervals.