Life and Health Insurance AD Study Quiz
An individual has been working for 8 years while the Hospital Insurance tax has been getting deducted from her paycheck. How many more years must she work before she can get Medicare Part A coverage premium-free? A 2 B 12 C 4 D 7
A 2 *Part A coverage is premium-free for workers who have paid the Hospital Tax for 10 years. The individual has paid for 8 years, so she has 2 more years to go.
Under the Do Not Call Registry, telephone solicitation calls before _____ or after _____ are prohibited. A 8:00 a.m. / 9:00 p.m. B 9:00 a.m. / 8:00 p.m. C 7:00 a.m. / 10:00 p.m. D 10:00 a.m. / 7:00 p.m.
A 8:00 a.m. / 9:00 p.m. *The hours during which calling is prohibited are before 8 a.m. and after 9 p.m.
Which of the following business disability plans can create a taxable event: A Business overhead expense B Disability buy-sell agreement C Accidental death and dismemberment D Key person disability insurance
A Business overhead expense *Benefits received from the business overhead expense plan are taxable to the business owner and must be reported as income; however, to the extent that benefits are offset by deductions for payments made to others (to suppliers for inventory items, employees' salaries, taxes, rent, and other business expenses), only the net benefit is taxable as income.
The ____________ has the power to issue rules and regulations to help enforce insurance statutes. A Commissioner B Executive branch C Judicial branch D Legislative branch
A Commissioner *The Commissioner has the power to issue rules and regulations to help enforce insurance statutes.-
The withholding of important known facts, that if disclosed would change the decision of an insurer's underwriting or premium determination, is known as which of the following? A Concealment B Waiver C Fraud D Misrepresentation
A Concealment *To withhold is to conceal.
Which of the following is not a Metal plan category? A Copper B Gold C Silver D Bronze
A Copper *The four Metal categories are bronze, silver, gold, and platinum.
Those insurers that are incorporated in another state, but doing business in this state, are considered: A Foreign B Domestic C Alien D Stock
A Foreign *An insurer operating in this state, but incorporated in another state, would be referred to as foreign.
The intentional distortion of the truth in order to induce another to part with something of value or to surrender a legal right is: A Fraud B Misrepresentation C Concealment D Warranty
A Fraud *The question states the definition of fraud.
An insurance policy labeled _________ cannot be cancelled for any reason other than nonpayment of premium. A Guaranteed renewable B Free access C Guaranteed issue D Noncancellable
A Guaranteed renewable *An insurance policy labeled Guaranteed Renewable cannot be cancelled for any reason other than nonpayment of premium. An insurer is not prohibited from discontinuing a plan for all persons enrolled, but must give at least 60 days' advance notice of a plan's discontinuance.
Andrew discovered that the consumer directed health plan he had established was subject to new contribution limits when he switched the Tier 1 payment mechanism from a/n: A HRAs to an HSA B HSAs to an HRA C FSAs to an HRA D MSAs to an HSA
A HRAs to an HSA *Employer contributions to HRAs are not limited, but they are limited to HSAs.
What is a High Deductible Health Plan? A It is a health plan which requires the insured to absorb a relatively high deductible in exchange for a greatly reduced out-of pocket-premium B It is a tax-favored savings account established by an employer for each covered employee C It is a health plan offered by large companies who are trying to minimize the growing cost of providing employee health insurance D It is a tax-favored Health Reimbursement Account established by an employer for its highly-compensated executives
A It is a health plan which requires the insured to absorb a relatively high deductible in exchange for a greatly reduced out-of pocket-premium *A High Deductible Health Plan is designed for those who are proactive about managing their health care expenses. By opting for this type of plan the premium savings can be substantial. If an insured stays healthy they also save out of pocket costs for health care such as for office visits, prescriptions, medical tests, etc. These savings can be used to fund a Health Savings Account.
What is the Health Insurance Marketplace? A It is a resource where consumers can learn about their health insurance coverage options and compare plans B It is like a stock exchange where insurers can make offers to obtain more business from their competitors C It is a physical location in every major city where consumers can go to shop and compare insurance policies and companies D It is a clearinghouse where consumers are automatically matched with companies and enrolled in their plans
A It is a resource where consumers can learn about their health insurance coverage options and compare plans *The Health Insurance Marketplace is a resource where individuals, families, and small businesses can learn about their health coverage options, compare health insurance plans, choose a plan, and enroll in coverage.
All of the following are acceptable methods of policy delivery, except: A Leaving it with a neighbor if they are not at home at their scheduled delivery appointment time B Registered mail with a signed receipt of delivery C Certified mail with a signed receipt of delivery D Personal delivery, with signed receipt of delivery
A Leaving it with a neighbor if they are not at home at their scheduled delivery appointment time *Policy delivery will be accomplished by: personal delivery, with signed receipt of delivery or registered or certified mail with a signed receipt of delivery.
Part 1 of the application consists of all of the following information, except: A Medical status of immediate family members, their ages and causes of death B Place of residence C Gender D Occupation
A Medical status of immediate family members, their ages and causes of death *Part 1 of the application consists of general questions about the applicant, such as gender, marital status, residence, date of birth, occupation, and past and present life insurance.
A (an)_________ is used when the insured's age, medical history, or amount of coverage does not require a medical exam for underwriting purposes. A Nonmedical application B Short form C Agent's report D Inspection report
A Nonmedical application *A nonmedical application is used when the insured's age, medical history, or amount of coverage does not call for a medical exam.
If an individual wants to change from a Medicare Advantage plan back to Original Medicare, he could do so during which of the following? A Open Enrollment Period B General Enrollment Period C Initial Enrollment Period D Special Enrollment Period
A Open Enrollment Period *Open Enrollment is the period between October 15 and December 7 each year when Medicare beneficiaries can make changes to their coverage.
If someone has Original Medicare, in which part or parts of Medicare is he or she enrolled? A Parts A and B B Parts A, B, C, and D C Parts A, B, and C D Part C
A Parts A and B *Parts A and B are referred to as Original Medicare because they were enacted together when the So-cial Security law was originally amended to create Medicare. Parts C and D were added later.
In the event a parent becomes disabled or dies while paying premiums on a life insurance policy for a minor child, which provision would allow the policy to continue in force until the child reaches a predetermined age? A Payor Benefit (Waiver of Payor Premium) B Cost of Premium Rider C Minor Child Rider D Return of Premium Rider
A Payor Benefit (Waiver of Payor Premium) *A Payor benefit rider waives the policy premium in the event of the death or total disability of the premium payor. Usually found in policies covering children to the child's age 21 or 25.
Which of the following is considered not to be an Essential Health Benefit? A Personal care B Ambulatory patient services C Behavioral health treatment D Mental health services
A Personal care *Personal care is not considered an essential benefit.
Which of the following covers the greatest percentage of the benefit cost of the plan under the Affordable Care Act? A Platinum B Silver C Bronze D Gold
A Platinum *Platinum covers 90%.
All of the following are essential elements of a legal contract, except: A Representations B Competent Parties C Legal Purpose D Consideration
A Representations *Representations are not one of the four essential elements of a legal contract. Offer and Acceptance is the essential element missing in the responses.
If incorrect or unverifiable information is found on an applicant's Credit Report, the Fair Credit Reporting Act requires the reporting agency to: A Send the correct information to parties who received a report within the prior 24 months B Send a copy of the report to the applicant C Send out a letter of apology D Send a correction to the applicant's insurer
A Send the correct information to parties who received a report within the prior 24 months *In this event, the reporting agency must provide the correct information to all parties who requested a report within the last 2 years.
Dividends issued by Stock insurers are paid to: A Stockholders B Policyholders C Directors D Members
A Stockholders *Stockholders may receive taxable corporate dividends as a share of the stock insurer's profit.
All of the following are primary plans, EXCEPT: A TRICARE for Life B TRICARE Standard C Medicare D TRICARE Prime
A TRICARE for Life *TRICARE for life is similar to a Medicare Supplement, and it is secondary to Medicare. All of the other plans are designed to be primary plans.
In order to achieve its goals, the Affordable Care Act instituted a variety of measures, including all of the following, except: A Universal use of Consumer Driven Health Plans (CDHPs) B Medicare coverage C Private insurance which is subsidized and regulated D Broader Medicaid eligibility
A Universal use of Consumer Driven Health Plans (CDHPs) *CDHPs are still allowed, but to some extent de-emphasized.
What is the maximum annual contribution to an FSA, which is allowed by law? A There is no limit B $2,550 C 10% of AGI D 20%
B $2,550 *The limit is $2,550 per year.
If an individual waited for 30 months after he first became eligible to sign up for Medicare Part B, what percentage would his late enrollment penalty be? A 10% B 20% C 30% D 25%
B 20% *The Part B late enrollment penalty is 10% for every 12-month period that the individual delayed signing up. 12 goes into 30 only 2.5 times, but only full 12-month periods count. So the penalty is 2 times 10%, or 20%.
If a life insurance applicant's answers on the application indicate that he/she is in good health, when in fact the applicant has a disease that he/she is not aware of, the statement on the application is considered: A Fraudulent B A representation C A warranty D A concealment
B A representation *Representations are statements which are 'true and complete to the best of one's knowledge.' Warranties are statements of absolute truth. Concealments occur when known information is not communicated.
Industrial Life Insurance is also referred to as a: A Nonparticipating Policy B Debit Policy C Participating Policy D Group Policy
B Debit Policy *Industrial life policies are also known as home service and debit policies where premiums are collected by a Debit Agent.
When an insured decides to change her mode of premium payment from monthly to annually, the total premium due would: A Fluctuate B Decrease C Increase D Remain the same
B Decrease *Additional charges are included in modes other than annual to offset the lost interest earnings and increased administration costs. For this reason, the annual mode is the least amount of total premium outlay.
Ashley wanted to establish her company benefit plan so that it could cover her individual health insurance premiums and out-of-pocket expenses without group insurance or loss of unused benefits. After some research, she established a: A HSAs B HRAs C FSAs D MSAs
B HRAs *A self-employed entrepreneur may establish an HRA without also establishing an HDHP.
Sharon, age 64 is getting ready to file her taxes. Which of the following statements regarding the deductibility of her various, personally-owned health insurance policies is true? A If her medical expense premiums and out-of-pocket expenses total at least 7.5% of her income, the excess amount is tax deductible B If her deductible long-term care insurance premiums, her medical expense premiums, and her after-tax, out-of-pocket expenses total at least 10% of her income, the excess amount is tax deductible C If her disability income premiums and long-term care insurance costs total at least 10% of her income, the excess amount is tax deductible D If her medical expense premiums and out-of-pocket expenses total at least 10% of her income, they are all tax deductible
B If her deductible long-term care insurance premiums, her medical expense premiums, and her after-tax, out-of-pocket expenses total at least 10% of her income, the excess amount is tax deductible *The 10% threshold is a floor. Only amounts above the floor can be deducted.
Which of the following best describes 'Capital Retention/Conservation' in an effort to meet an income objective? A Principal is paid out but investment earnings are reinvested B Investment earnings are paid out C Principal and investment earnings are paid out D Principal is paid out
B Investment earnings are paid out *In a capital retention/conservation strategy only the investment earnings are paid out the principal is retained or conserved for future purposes. Each payment would fluctuate as it would be based on the earnings and no principal would be used to make up for any shortfalls.
A generic brochure was developed by the ________ to assist prospective buyers of life insurance, which includes descriptions of all the basic types of life insurance and comparisons of their relative costs. A SEC B NAIC C FINRA D FIO
B NAIC *A buyer's guide is a generic brochure developed by the NAIC to assist prospective buyers of life insurance, which includes descriptions of all the basic types of life insurance, as well as comparative costs of each type of plan.
When the employer pays some or all of the cost of medical insurance for its employees, the annual amount of each employee's claims is _______________________. A Taxable to the insurance company B Not taxable to the employee C Deductible to the employer D Taxable to the employer
B Not taxable to the employee *Medical insurance premiums paid by the insured's employer are deductible to the employer and not taxable to the employee. The benefits paid are not taxable to the employee because the employee did not derive any income benefit. Taxes, if any, would be paid by the service provider.
Which of the following statements regarding the taxation of personally owned health insurance is false? A Medical expense insurance benefits are received tax-free B Premiums are never deductible if benefits are received tax-free C Premiums paid for personally-owned disability insurance policies are not tax-deductible D The same person may receive long-term care insurance benefits tax free, and deduct long-term care insurance premiums in the same tax year
B Premiums are never deductible if benefits are received tax-free *Premiums may be deductible if tax-free benefits are paid. It depends on the personally-owned policy.
Active duty members of the military are required to enroll in which TRICARE plan? A Standard B Prime C Select D Choice +
B Prime *All active duty members must enroll in TRICARE Prime. There is no out-of-pocket cost for enrollment or services received from a participating provider or in a military treatment facility.
A person may not fund an HSA unless they also do which of these? A Designate up to $2500 of pre-tax income to be withheld for payment of medical expenses B Purchase a High Deductible Health Plan C Fully fund their 401(k), 403(b), or Roth IRA D Purchase basic health insurance through an Exchange
B Purchase a High Deductible Health Plan *Funding an HSA is only permitted in a year in which the contributor is covered by a High Deductible Health Plan ("HDHP").
Statements made on the application by the applicant that are believed to be true to the best of his/her knowledge are: A Conditions B Representations C Warranties D Waivers
B Representations *Statements made on the application by the applicant that are believed to be true to the best of his/her knowledge, but are not guaranteed to be true, are known as representations.
This organization is licensed in one state and may insure members in other states consisting of a large number of similar units with similar risk exposures such as theme parks, go-cart tracks, or water slides is known as a(n) _________. A Lloyd's of London Association B Risk Retention Group C Reciprocal Insurance Company D Fraternal Benefit Association
B Risk Retention Group *A risk retention group is a group owned insurer that primarily assumes and spreads the liability of related risks of its members with each member assuming a portion of the risks insured.
The Underwriting Department of an insurer is charged with the responsibility of: A Rate setting B Risk selection C Regulating D Advertising
B Risk selection *Underwriting is responsible for risk selection, classification, and rating.
Which of the following statements regarding TRICARE is correct? A TRICARE standard is an optional coverage for service members on active duty B TRICARE Prime is mandatory for active duty members C TRICARE Standard requires a primary care manager or approved referrals D TRICARE Life is mandatory for active duty members and their dependents
B TRICARE Prime is mandatory for active duty members *Prime is required for activity duty service members, and is available but not mandatory for dependents. Prime also requires referrals or a primary care manager in order to benefit from its low co-pay formula. TRICARE Standard does not.
Which rating classification is typically used in the senior marketplace so that policies can be issued without a medical exam? A The flat amount B The lien plan C Substandard table rate D Rated up age
B The lien plan *With the lien plan, initially, only the premium would be refunded in case of death. The death benefit increases over time with the full face amount eventually payable. This is generally used with Senior Life Insurance plans to provide minimal benefits without a medical examination.
When a disability buy-sell is funded by the partnership, what is the tax liability? A The premiums are tax deductible and the value of the benefit is taxable as income B The premiums are not deductible and the value of the benefit is not taxable as income C The premiums are not tax deductible and the value of the benefit is taxable as income D The premiums are tax deductible and the value of the benefit is not taxable
B The premiums are not deductible and the value of the benefit is not taxable as income *A buy-sell funded plan provides that premiums are not deductible, but benefits will be received by the business tax-free.
Harry and Sally were equal partners in a catering business worth $400,000. They entered into a buy-sell agreement that provided funding whether one of them died or was disabled. The annual premium for each of the disability insurance policies was $2,000. All of the following statements are correct, except: A Harry and Sally each own the policy on the other partner B The premiums are tax deductible C Harry and Sally are each respectively named as the beneficiary on the policy which each of them owns D Harry and Sally would receive the policy benefit, which each would use to buy out the disabled partner, on an income tax free basis
B The premiums are tax deductible *The premiums would not be deductible since the non-disabled partner would individually receive the benefit from a disability policy that he or she individually owns.
Group health insurance plans apply which of the following restrictions to dependent coverage on children of the primary insured? A They must be students B They must be under age 26 C They must be claimed as dependents on the insured's taxes D They must be single
B They must be under age 26 *The ACA expanded dependent coverage to all children of the insured to age 26.
All of these groups are considered to be exempt from the Affordable Care Act's requirement to purchase coverage, except: A Undocumented immigrants B Those who must pay less than 9.5% of their income for health insurance C Members of a religion opposed to acceptance of health care benefits D Those whose household income does not require the filing of a tax return
B Those who must pay less than 9.5% of their income for health insurance *Those that must pay more than 9.5%, even after subsidies, are exempt.
After enrolling in Medicare and purchasing a supplement, Rachel withdrew $2,000 from her HSA. She used $600 to pay her Medicare Supplement premium, $200 for out-of- pocket medical expenses, and the remaining $1,200 on a trip to celebrate her retirement. When preparing her taxes for the year, she discovered that: A The entire amount was tax free B $2000 was subject to income tax and a 20% penalty C $1,200 was subject to income tax D $1,200 was subject to income tax plus a 20% penalty
C $1,200 was subject to income tax *Rachel must pay income tax on the $1,200, but not the 20% penalty, because she is at least 65 years of age, as indicated by the fact that she was eligible for Medicare, a Medicare supplement and retired.
Evelyn paid a $700 annual premium for a business overhead expense policy that paid a monthly benefit of up to $4,000 for a benefit period of 6 months. When Evelyn became disabled she used the entire benefit for 3 months, which covered $8,000 of employee salaries, as well as $3,000 in rent and utilities. This means that the amount of the benefits which was reported as income equaled: A $3,000 B Zero C $12,000 D $8,000
C $12,000 *All benefits are considered taxable income.
Which of the following best describes a Conditional Contract? A A contract submitted on a take it or leave it basis B A contract in which the exchange of values may be unequal C A contract in which both parties must perform specified duties in order for the contract to remain enforceable D A contract in which only one party is legally bound to contractual obligations
C A contract in which both parties must perform specified duties in order for the contract to remain enforceable *A Conditional Contract is one in which both parties to a contract must perform certain duties to make the contract enforceable.
Larry and his insurance company disagree over some ambiguous language in Larry's life insurance policy. If the parties end up in court, which principle would direct the court to rule in favor of Larry? A Indemnity B Reasonable expectation C Adhesion D Good faith
C Adhesion *In a contract of adhesion, ambiguity and questionable wording are interpreted in favor of the party who did NOT write the contract.
Insurance ____________ are captive or independent organizations that recruit, contract with, train, and support insurance producers. A Companies B Personal producing general agents C Agencies D Producers
C Agencies *Agencies are responsible for recruiting, contracting, training, and supporting insurance producers.
Confidential information shared by the producer to the insurer and does not become part of the policy is the __________. A Consumer Investigative Report B Medical Examination C Agent's Report D Attending Physician Statement
C Agent's Report *An agent's report is a personal statement submitted by the producer to the insurer about information the agent would like to share with the insurer on a confidential basis that they may have learned during the application process while at the applicant's home or place of business.
Under the ACA, Stephen purchased a Silver plan that covered him, his wife and his 2 children, ages 17 and 24. Since he is a sole proprietor with no employees, what portion of his premiums is he able to deduct? A Those in excess of 10% of his AGI B Only the premiums paid for the coverage on his children and himself C All of the premiums paid D Only the premiums paid for his portion of the coverage
C All of the premiums paid *The deduction applies to premiums paid to cover all family members.
An insurable interest must exist between the _______ and the ________ at the time of application for life insurance to be valid. A Insured/Beneficiary B Applicant/Owner C Applicant/Insured D Owner/Beneficiary
C Applicant/Insured *The insurable interest relationship must exist between the applicant and insured, at the time of application and policy issuance, in order for the contract to be valid.
When will people retiring today at Social Security's normal retirement age usually sign up for Medicare? A At the same time they retire B After they retire C Before they retire D Before they retire and again after they retire
C Before they retire *For people retiring today, Social Security's normal retirement age is 66. The age of eligibility for Medicare is 65.
_________ refers to the jurisdiction where an insurer was formed or incorporated. A Approved B Admitted C Domicile D Authorized
C Domicile *Domicile refers to the jurisdiction either state or country where an insurer was formed or incorporated.
What is the difference between a Health Reimbursement Account (HRAs) and a Health Savings Account (HSA)? A Employer contributions to health reimbursement accounts are limited B Cash disbursements from an HRA for non-medical reason are allowed but incur a tax-penalty C HRAs are owned by the employer, and are not portable when an employee leaves D HRAs are portable
C HRAs are owned by the employer, and are not portable when an employee leaves *HRAs are owned by the employer, and are not portable when an employee leaves. There is no limit on employer contributions, and non-qualified cash disbursement are not allowed.
The National Association of Insurance Commissioners (NAIC): A Requires only 30 Commissioners to be members at any time B Requires each legislature to accept recommendations C Has no legal authority over insurance regulation D Sets legislation and policy
C Has no legal authority over insurance regulation *The NAIC does not have legal authority over insurance regulation, but promotes uniformity in the interpretation of insurance legislation and regulation.
Ultimately it is up to the _______ to determine if the proposed insured is an acceptable risk. A Insured's primary care physician B Home office actuary C Home office underwriter D Field underwriter
C Home office underwriter *It is ultimately up to the insurer's home office underwriter to determine whether or not the insured is an acceptable risk or not and at what rate classification.
___________ manufacture and sell insurance coverage in the form of policies or contracts of insurance. A Agencies B Insureds C Insurers D Producers
C Insurers *Insurers manufacture and sell insurance policies through agencies and producers to applicant/insureds.
All of the following are Anti-Money Laundering 'red flags', except: A Early cancellation of the policy, regardless of cancellation fees (surrender charges) B Strong reliance on wire or electronic fund transfers to foreign accounts C Paying annual policy premiums D Paying for an entire policy up front with cash
C Paying annual policy premiums *Most red flags involve practices that are outside the norm for life insurance transactions, such as paying for an entire policy up front with cash; early cancellation of the policy, regardless of cancellation fees (surrender charges); the heavy use of third parties for policy transactions; and strong reliance on wire or electronic fund transfers to foreign accounts.
Which of the following statements regarding the termination of coverage under the ACA is true? A Policies may be terminated for fraud if there is at least 90-days notice B Policies must have a 30 day grace period C Policies may be terminated for non-payment after 90 days with 30 days notice D Coverage may be rescinded for non-payment
C Policies may be terminated for non-payment after 90 days with 30 days notice *There is a 90-day grace period, and notice of potential termination must be given 30-days in advance. Coverage may only be rescinded for fraud or intentional misrepresentation of material fact, with 30 days notice.
A financial incentive for providers to be more efficient in delivering care is created by which of the following? A Quality Improvement Organizations B Utilization and Review Committees C Prospective Payment System D State Departments of Health
C Prospective Payment System *Under the Prospective Payment System, providers are paid by a beneficiary's diagnosis. If they can successfully treat the beneficiary's condition at a lower cost than the amount designated for that diagnosis, they profit from the difference.
A ________ is usually treated as an insurance company liability. A Gross premium B Dividend C Reserve D Net premium
C Reserve *A reserve is an amount representing actual or potential liabilities kept by an insurer to cover debts to policyholders. A reserve is usually treated as a liability.
Which of the following is not a factor in premium determination? A Expenses B Interest C Reserves D Mortality
C Reserves *Premiums are based on expected mortality, interest, and expenses.
Karen, age 50, withdraws $1,000 from her Health Savings Account (HSA) for a purpose other than a qualified medical expense. As a result of this action: A The $1,000 is taxed as ordinary income, with an additional $150 penalty tax applied B The $1,000 is taxed as ordinary income, with no penalty tax applied C The $1,000 is taxed as ordinary income, with an additional $200 penalty tax applied D The $1,000 is taxed as ordinary income, with an additional $100 penalty tax applied
C The $1,000 is taxed as ordinary income, with an additional $200 penalty tax applied *The $1,000 would be taxed as any other income with an additional 20% penalty tax of $200 applied. The penalty tax is not applied if the taxpayer is age 65 or older, or if a withdrawal is due to the death or disability of the account owner.
If the producer discovers that the applicant is not in good health at time of policy delivery, what should the next step be? A Obtain copies of any and all medical records and order a medical exam B Field underwrite in order to determine the additional premium that needs to be collected C The policy should be returned to the insurer, or the deliver the policy only after the insurer grants permission D Hold onto the policy until the client recovers from their condition, then deliver the policy
C The policy should be returned to the insurer, or the deliver the policy only after the insurer grants permission *If the applicant is not in good health, the policy should be returned to the insurer, or the producer may deliver the policy only after the insurer grants permission.
Premiums paid by employees for group health insurance are only deductible to the extent that ______________________. A They exceed the national average cost of health insurance B They exceed what the employer pays for the coverage C They exceed 10% of adjusted gross income D They are not offset by contributions to a FSA
C They exceed 10% of adjusted gross income *Deductibility of health insurance and long-term care insurance premiums is limited to the amount (with unreimbursed medical expenses) that exceeds 10% of adjusted gross income.
For which of the following reasons do most people become eligible for Medicare? A Kidney failure B Receipt of Social Security disability benefits for 2 years C Turning age 65 D Payment of the Hospital Insurance payroll tax for 10 years
C Turning age 65 *Medicare eligibility age is 65. Most people become eligible for Medicare by reason of age.
The contract type in which only one party is legally bound to its contractual obligations after a premium is paid is a(n)_______ contract. A Personal B Aleatory C Unilateral D Conditional
C Unilateral *In insurance, only the insurer is legally bound once the premium is paid by the insured, which is why it is a unilateral contract.
ACA Insurance plans must include coverage for preventive health services including all of the following, except: A Mammography screening B Prostate cancer screening C Well-child care up to the age of 26 D Cervical cytology screening
C Well-child care up to the age of 26 *Well-child care is mandated up to age 19.
An applicant completes the application and submits it to the insurer along with a premium check. When is the applicant's offer considered accepted? A When the application and premium check arrive at the insurer's home office B Upon cashing the premium check C When the insurer issues a policy D Only after the policyowner completes any required medical exams
C When the insurer issues a policy *The applicant's offer to be insured is accepted when the insurer issues a policy.
Victoria, age 62, calculated last year's gross income to be $60,000. When she totaled up the cost of individual Medical and Long-term Care insurance, as well as her various out-of-pocket medical costs, she discovered the total was $7,500, which meant she could deduct _______ from her taxable income. A $7,500 B $6,000 C $3,000 D $1,500
D $1,500 *$1,500 is the excess over 10%. $3,000 is the excess over 7.5% and the other options misunderstand the nature of the threshold.
One of the changes to take effect following passage of the PPACA was to allow children to remain covered under a parent's policy to age: A 21 B 18 C 29 D 26
D 26 *One of the first changes in health care mandated by the PPACA was extending the availability of coverage for children to age 26 under their parents' health insurance policy.
Which of the following would be considered legally competent to enter into a contract? A A person deemed to be mentally incapacitated B A person who is under the influence of drugs or alcohol C A 13-year-old honor student D A 25-year-old self-employed person
D A 25-year-old self-employed person *A person who has reached the age of majority, is not under the influence of drugs or alcohol, and is mentally competent can enter into a legally binding contract.
Which of the following disability income benefits would be received free of federal income tax? A Employee paid-group insurance through a Cafeteria Plan B Employer-paid group insurance C Business overhead expense insurance D A personal disability income insurance policy benefit
D A personal disability income insurance policy benefit *The beneficiary must also be the premium payer, and the premiums must be paid with after-tax dollars.
All of the following are true regarding an Attending Physician's Statement (APS), except: A The insurer pays the physician for completing and forwarding the APS B They are used in cases where the application or medical records reveal conditions that require further explanation C Applicants must sign a release in order for their physician to respond to an APS request D An MIB report can be used in place of an APS
D An MIB report can be used in place of an APS *An Attending Physician's Statement (APS) is used in cases in which the individual application and/or medical reports reveal conditions for which more information is required. An applicant must sign a written release to enable a release of the APS. The insurer pays for this.
If an individual turns age 65 in November, when does her Initial Enrollment Period for Medicare begin? A June 1 B November 1 C October 1 D August 1
D August 1 *An individual's Initial Enrollment Period for Medicare starts 3 months prior to the month in which the individual turns age 65.
When the owner of the policy and insurer must meet certain conditions in order for the health insurance policy to be enforceable, it is referred to as a(n): A Contract of adhesion B Unilateral contract C Aleatory contract D Conditional contract
D Conditional contract *A Conditional Contract is one in which both parties to a contract must perform certain duties to make the contract enforceable.
In a legal sense, premium functions as the insured's _______. A Credit B Fee C Tender D Consideration
D Consideration *The premium paid by the insured represents their consideration--a required element of a legal contract.
Health Savings Accounts and Health Reimbursement Arrangements are both types of what form of health insurance? A Employer-sponsored group health plans B Flexible spending arrangements C Individual and Group Medical IRAs D Consumer-driven health plans
D Consumer-driven health plans *HSAs and HRAs are two of the more popular Consumer-driven health plan options available in America. HSAs allow individuals to set aside their own money on a pre-tax basis for the later payment of health care expenses (employers can also contribute). HSAs can be either individual or group plans. HRAs are only group plans and are funded exclusively with employer contributions.
A contract that is drafted by an insurer and receives no input or alteration from the insured, is considered a(n): A Aleatory Contract B Conditional Contract C Unilateral Contract D Contract of Adhesion
D Contract of Adhesion *A Contract of Adhesion is submitted on a take it or leave it basis.
_______ income benefits received by an employee are subject to taxation in proportion to the amount of premium that the employer paid. That income attributable to the employee's premium is not taxable. A Dental B Medical C Long-Term Care D Disability
D Disability *Disability income premiums paid by the employer are deductible to the employer and are not considered part of the employee's income. Because of this, benefits received are treated as income to the employee to the extent that the employer paid the premiums.
The insurance company must meet requirements under the _____ when gathering information about an applicant from a third party. A SEC B FINRA C NAIC D FCRA
D FCRA *The insurance company must meet requirements under the FCRA when gathering information about an applicant from a third party.
The Needs Analysis Approach always assumes the death of the insured to be: A Within 10 years of the assessment B At age 100 C Within 20 years of the assessment D Immediate
D Immediate *The Needs Analysis Approach always assumes the death of the individual to be immediate, and assesses various factors to calculate all financial needs caused by an immediate death.
The ___________ branch is responsible for interpreting and determining the constitutionality of the statutes. A Electoral B Executive C Legislative D Judicial
D Judicial *The judicial branch is responsible for interpreting and determining the constitutionality of the statutes.
The ___________ branch writes and passes state insurance laws, or statutes, to protect the insuring public. A Electoral B Executive C Judicial D Legislative
D Legislative *The legislative branch writes and passes state insurance laws, or statutes, to protect the insuring public.
When an individual pays the full cost of disability income insurance, a disabled employee's benefit will be ____________________. A Taxable in full, regardless of the employee's wage B Taxable in part, up to 60% of the employee's pretax wage C Nontaxable up to 60% of the employee's pretax wage D Nontaxable in full, regardless of the employee's wage
D Nontaxable in full, regardless of the employee's wage *Individual insurance premiums are not deductible and the benefits payable are not taxable.
If after a policy has been issued and delivered, the insurer discovers unanswered questions on the application, what can the insurer legally do at this point? A Increase the policy's premium B Require the applicant/insured to answer the questions and re-underwrite the policy C Cancel the policy D Nothing, the insurer has waived its right to that information
D Nothing, the insurer has waived its right to that information *If a policy is issued with a question unanswered, the contract will be interpreted as if the question had not been asked, and is therefore waived by the insurer.
When an individual is covered by a three-tiered, consumer driven health plan, the second source or tier of payment usually comes from: A A High Deductible Health Plan B A Flexible Spending Account C A Health Savings Account D Out-of-pocket funds
D Out-of-pocket funds *The Tier 1 source is usually a pre-tax plan, which may often cover less than the deductible of an associated High Deductible Health Plan. The participant covers such gaps with out-of-pocket funds.
Medicare Advantage is another name for what part of Medicare? A Part A B Parts A and B C Part D D Part C
D Part C *Medicare Part C is also called Medicare Advantage.
When an applicant does not smoke, exercises regularly, seldom drinks, and eats moderately and is considered to be a better-than-average risk, they would likely qualify for: A Substandard status and pay a higher premium B Preferred status and pay a higher premium C Standard status and pay a standard premium D Preferred status and pay a lower premium
D Preferred status and pay a lower premium *Individuals who meet certain requirements (such as ideal health, height and weight, low occupational stress, etc.) are preferred risks.
Suppose a worker's income is between 120% and 135% of the federal poverty level. What is the name of the Medicare Savings Program for which she is eligible? A Specified Low-Income Medicare Beneficiary B Medicare Advantage C Qualified Medicare Beneficiary D Qualifying Individual
D Qualifying Individual *The Qualifying Individual program pays the Part B premium for persons whose income is less than 135% of the federal poverty level but higher than the requirements for other Medicare savings pro-grams.
In a replacement sale all of the following are producer responsibilities, except: A Obtain information regarding the in force policies including name and policy numbers B Provide copies of the notice regarding replacement and any sales proposals to the applicant and replacing insurer C Complete a notice regarding replacement with applicant and producer signatures D Reimburse the applicant for any surrender charges that may be incurred as a result of the transaction
D Reimburse the applicant for any surrender charges that may be incurred as a result of the transaction *Reimbursing the applicant for any surrender charges that may be incurred is not permitted, but may indicate an improper replacement.
When, Peter, an independent contractor, purchased his own personal medical and dental insurance, he discovered that: A Self-employed persons may deduct up to 100% of the cost of health insurance, including long-term care insurance, for themselves and their dependents B Self-employed persons may deduct up to 100% of the cost of health insurance for themselves and their dependents over the 10% of AGI threshold C Self-employed persons may deduct up to 100% of the cost of their medical insurance for themselves and their dependents, but not dental insurance D Self-employed persons may deduct up to 100% of the cost of health insurance for themselves and their dependents
D Self-employed persons may deduct up to 100% of the cost of health insurance for themselves and their dependents *These costs are deductible without regard to the 10% of AGI threshold, but this does not apply to long-term care insurance.
When an insurer accounts for the interest and mortality factors, then adds additional charges to meet all costs of a contract, it derives __________. A The net premium B The policy reserves C The dividends D The gross premium
D The gross premium *Insurer expenses (loading) are added to the net premium rate to enable an insurer to meet all costs under the contract, such as operating costs, commissions, medical examination costs, etc.
In which of the following circumstances was the small business owner able to deduct the premiums they paid for insurance? A The employer buys a key employee policy on their top sales executive B The sole proprietor buys a policy on him or herself C The partners purchase a policy to fund a buyout plan D The sole proprietor of a small firm buys an overhead expense policy
D The sole proprietor of a small firm buys an overhead expense policy *Business disability insurance premiums are not deductible if the business (or proprietor/partner) both pays the premium and directly receives the benefit. In the case of the business overhead expense policy, the benefit covers business expenses, not the owner's salary, and is therefore considered a cost of doing business.
Timothy is the insured/owner of a universal life insurance policy and is concerned that in the event of disability, the policy might lapse. Which rider would keep the policy from lapsing if he became disabled? A Waiver of Premium Rider B Guaranteed Insurability Rider C Return of Premium Rider D Waiver of Cost of Insurance
D Waiver of Cost of Insurance *Tim has a Universal Life Policy which needs to have enough cash value in it in order to pay the monthly cost of insurance. If he is disabled, the Waiver of Cost of Insurance will keep the policy in force.
Indemnity
Only replacing what is actually lost