Life And Health Insurance State Exam
Periodic health claim payments MUST be made at least monthly weekly daily annually
monthly
Life insurance premiums are computed on what three factors?
mortality, interest, expenses
What is the eligibility requirement for Medicare part B?
must be eligible for Medicare Part A
Law of large numbers enables an insurer to ________ ?
Predict Losses
hospice care
offers family counseling benefit
fee-for-service is a method of administering health insurance benefit payments in which
the cost of each service is scheduled
Medicare part A does not provide coverage for
the first 3 pints of blood
The Optionally Renewable provision allows what party to cancel the contract? the policyowner the insured the insurer either the insurer or policyowner
the insurer
Under the Law of Agency, the principal is considered to be the producer the insurer the plan administrator the insured
the insurer
When does the insured stop making payments under a thirty-payment whole life policy?
AT the time of death or 30 years after the policy's inception, whichever comes first
Which of the following describes coverage for Medicare Part B coinsurance?
Medicare supplement CORE benefit
Which of the following is NOT required in an order from the commissioner? purpose of the order grounds that the order is based on effective date of the order the Governors signature
the Governors signature
The exclusion ratio determines
the amount of an annuity payment subject to income tax
What statement regarding the joint and survivor life insurance settlement option is NOT true?
the amount of each installment is larger than the single life income option
In order to contribute to a Health Savings Account (HSA),
the applicant must be enrolled in a High Deductible Health Plan (HDHP)
Premature IRA distributions are subject to a penalty tax of 0% 10% 15% 20%
10%
Which type of group plan is excluded from HIPPA rules?
disability income
What is not used as a selection criteria in the underwriting process?
national origin
How can an insurance company minimize exposure to loss?
reinsuring risks
How long is individual medical expense insurance normally written for? 1 year 2 years 3 years 4 years
1 year
To be eligible for small employer group coverage, an employee must work a minimum of ____ hours per week 15 20 25 30
25
The time limit an individual has to "rollover" funds from an IRA or qualified plan is 60 days 90 days 120 days no limit
60 days
Under a small group health benefit plan, an insurer is required to provide a newly-married employee at least ____ days to add the new spouse to the plan 10 30 60 90
60 days
At what age do most people become eligible for Medicare? 59 1/2 62 65 72
65
The highest mortality rate belongs to which group?
Age 70 males
Traditional Individual Retirement Annuity (IRA) distributions must start by age 59 1/2 age 65 April first of the year following the year the participant attains age 59 1/2 April first of the year following the year the participant attains age 70 1/2
April first of the year following the year the participant attains age 70 1/2
All parts of the Medicare program (except for public information and enrollment) are administered by which federal agency? the ACA Social Security Administration Dept. of Homeland Security Centers for Medicare and Medicaid Services
Centers for Medicare and Medicaid Services
Before a Medicare Supplement advertisement is released to the public, it must first be approved by the, Commissioner Attorney General Better Business Bureau Chamber of Commerce
Commissioner
Health providers are compensated by a preferred provider organization (PPO) for normal dental procedures by what means?
Decreased fee schedules
Individuals covered with employer-paid group health plans will normally receive tax-free benefits under all of these plans EXCEPT Disability Income HMO Vision Major Medical
Disability Income
Which tax is normally associated with an individual's death? Excise tax Consumption tax Federal estate tax Ad valorem tax
Federal estate tax
Where does the primary funding for Medicare Part A come from? private funding insurance company funding state funding Federal payroll and self-employment taxes
Federal payroll and self-employment taxes
An organization that requires healthcare services to be provided by a network of physicians and hospitals is known as what?
HMO
Which of the following health plans pay benefits on a pre-paid service basis? Medicare Medicaid Group medical expense plans HMO
HMO
An accident and health plan that typically covers ONLY the services of approved providers is called a(n) HMO Plan POS plan PPO plan Major medical plan
HMO Plan
Which license is required in order to solicit Long Term Care insurance in the State of Maryland?
Health Insurance Producer License
The type of health insurance in which underwriting procedures are the most restrictive is Accidental Individual Group Employer-paid
Individual
An insurer is required to offer what to each long-term care applicant at the time of purchase?
Inflation Protection
What statement reflects an accurate portrayal of Medicare Select
Insured uses preferred providers in exchange for paying lower premiums
what statement is true regarding hospital pre admission certification for emergency situations?
Notification is required to be given after insured is admitted to hospital
What is considered interstate travel under the Federal Fraud and False Statements Act?
Puerto Rico (bc US territory)
An insured, age 67, is covered under a disability income policy. What will the insurer normally require in order for the insured to continue coverage?
The insured must be actively at work for a specified number of hours per week.
What is taken into consideration when defining "total disability"?
The insured's education, training and experience
What determines how much an annuitant is paid for a variable annuity?
The market value variations of the securities backing it
How is a community rating used for the underwriting process?
The same rates are charged for individual and group plans in the same geographical area
what is the elimination period of an individual disability policy?
Time period a disabled person must wait before benefits are paid
What is the effect of the market value adjustment in a market value adjustment annuity?
Transfers some of investment risk to policyowner
Speculative risk is
a chance of both a gain or loss and is not insurable
The payment of the first premium, the promise to pay a covered loss, and the agreement to abide by policy conditions are all examples of a. consideration b. legal purposes c. representation d. acceptance
a. consideration
All of the following are typically covered under dental insurance except? a. treatment which began before eligibility date b. fluoride treatment c. teeth cleanings d. x-rays
a. treatment which began before eligibility date
Which benefit is normally payable to a life insurance policyowner when the insured's life expectancy has been severely limited? reduced paid-up option accelerated (living) benefit return of premium benefit extended term option
accelerated (living) benefit
An agent's authority to bind an insurer to an insurance contract may be granted in the
agent's contract and the insurance company's appointment
Which of the following statements BEST describes a double indemnity provision in travel accident insurance? benefits are doubled under certain circumstances stated in policy if claim is disputed in court and insurer loses, the face amount will be doubled benefits cover two people when traveling accidents and illnesses are covered while insured is traveling
benefits are doubled under certain circumstances stated in policy
WHich of these statements regarding Major Medical Insurance is NOT true?
benefits are paid on a capitation basis
what is NOT a condition that must be met for an accidental death benefit to be paid?
cause of death must be from job-related injury
What kind of policy typically offers mortgage protection? whole life decreasing term increasing term level term
decreasing term
An employer pays the accident and health insurance premiums for its employees. The premiums paid by the employer are deducible to the business taxable to the employee tax-deferred to the business reimbursed as tax credit
deductible to the business
Scott has a life insurance policy in which the dividends are left with the insurance company. This particular policy may be paid up when the cash plus accumulated dividends
equal the net single premium for the same face amount at the insured's attained age
Notice of information practices must be given to a policyholder at least ever year every 2 years every 3 years every 4 years
every 3 years
How often must the commissioner examine domestic insurance companies?
every 5 years
Civil insurrections fall under an illegal act or felony, which are typically ___
excluded from coverage as well
How are benefit payments from individually-owned medical expense policies treated for tax purposes? exempt from income taxes taxed as ordinary income taxed as dividend tax credit given for amount of benefit payment
exempt from income taxes
An example of misrepresentation is
falsifying the terms, benefits, advantages or conditions of an insurance policy
Federally qualified HMOs must offer dental coverage urgent care family planning services custodial care
family planning services
Insurable interest in one's own life is legally considered as _____
generally unlimited
For insurance purposes, similar objects which are exposed to the same group of perils are referred to as homogenous perils similar exposure units homogenous exposure units common hazards
homogenous exposure limits
A family counseling benefit is typically offered under which of these coverages? skilled nursing care respite care home health care hospice care
hospice care
Which of these procedures is NOT designed for ambulatory care centers? inpatient surgery vaccinations outpatient surgery physical examinations
inpatient surgeries
Which statement regarding a fixed period settlement option is correct?
installment payment amount is determined by total number of installments
The medical information bureau consists of members from what group? doctors hospitals insurance companies underwriters
insurance companies
The death proceeds of a credit life insurance policy are typically paid to the borrower lender annuitant borrower's dependents
lender
Health care costs can be better controlled by utilizing pre admission testing. Preadmission testing can reduce the surgeon fees prescription drug charges length of hospitalization elimination period
length of hospitalization
Which of these is a typical result of a concurrent review? deductible amount is increased length of time spent in hospital is monitored insured's premiums usually increase coinsurance is waived
length of time spent in hospital is monitored
WHat is covered under a limited accident and health insurance policy? losses that occur only in limited occupations limited pre-existing conditions losses that occur only in limited age groups limited perils and amounts
limited perils and amounts
Insurable interest involves what assumption? insurable interest must exist during the entire life of the insured one person gains from the death of another person one person benefits from another person's continued life insurable interest must only exist at the time of the insured's death
one person benefits from another person's continued life
If group Health benefit levels are too high, what could be the end result? underutilization overutilization normal utilization adverse selection
overutilization of the plan
These are all accurate statements regarding universal life insurance except
policy loans are not permitted
Which of the following BEST describes disability buy-sell insurance policies? benefits are taxable to the business entity premiums are typically tax-deductible policy proceeds are received income tax-free benefits are paid to the disabled
policy proceeds are received income tax-free
Straight whole life insurance can be accurately described in all of these statements EXCEPT policy protection normally expires at age 65 nonforfeiture values are available to the policy owner provides level protection with level premiums cash value loans are permitted
policy protection normally expires at age 65
At what point must a producer give notification to the Commissioner about using an assumed name? within 90 days upon license renewal prior to using the assumed name notification not required
prior to using the assumed name
disability buy-sell insurance policy
proceeds are typically received income tax-free
What action by a producer would NOT result in a license suspension or revocation?
producing an inadequate amount of new premium
A producer has indicated to a potential client that the proposed life insurance policy is covered by the MAryland Life and Health Insurance Guaranty Association. The action taken by the producer is permitted and encouraged prohibited by law legal in every state permitted only with the commissioners authorization
prohibited by law
A certificate of coverage for a group health policy is best described as
proof of coverage for the employee
What is the elimination period of an individual disability policy?
time period a disabled person must wait before benefits are paid
As of January 1, 2014, small group health insurance can be rated on the basis of
tobacco use
Giving up a known right on a voluntary basis is called a(n)
waiver
Giving up known right on voluntary basis is known as a
waiver
What best describes the presumptive disability provision?
waives the typical total disability requirements
Which of the following best describes the presumptive disability provision? reduces incontestability period increases monthly benefits stated in policy waives typical total disability requirements assumes all injuries result in total disability
waives typical total disability requirements
during the application process, the statement made by the applicant that becomes a part of the contract is a ________ warranty representation waiver exclusion
warranty
At what point are death proceeds paid in a joint life insurance policy?
when the first insured dies
A medicare supplement policy is required to do which of the following?
provide a 30 day free-look period
Which of the following best describes the tax treatment of medical expense policies for the self-employed? 100% tax deductible 50% tax deductible 7.5% tax deductible 0% tax deductible
100% of medical expenses are tax deductible
How many days notice must a producer be given prior to a scheduled hearing? 10 14 21 30
10 days
A medicare supplement policy may exclude coverage for a preexisting condition for up to ____ months 6 12 18 24
6 months
How long can an insurer legally defer paying the cash value of a surrendered life insurance policy? 2 months 4 months 6 months 12 months
6 months
If an insurer refuses to pay a claim, how many days must the insured wait to take legal action against a health insurer after submitting written proof of loss? 30 40 50 60
60 days
Under a small group health plan, an insurer is required to provide a newly-married employee at least _____ days to add the new spouse to the plan. 10 30 60 90
60 days
At what age does the open enrollment period typically begin for Medicare Supplement Coverage? 62 65 67 70 1/2
65
Proof of loss on a health insurance claim must be submitted to an insurer within ____ days after the insured's date of loss. 30 60 90 120
90
ERISA requires that a summary plan description must be provided to a new plan member within how many days following the new member's eligibility date? 30 45 90 120
90 days
What best describes coverage for the Medicare Part B conisurance?
A Medicare supplement core benefit
What describes coverage for Medicare Part B Coinsurance?
A Medicare supplement core benefit
Which of the following combinations best describe a universal life policy?
A flexible premium deposit fund and a monthly renewable term insurance policy
Which of these is an accurate statement regarding the fixed period settlement option on a life insurance policy?
A portion of the payments paid to the beneficiary comes from interest calculated on the proceeds of the policy
Which of the following statements accurately describes the "time limit on certain defenses?
After a stated period of time, claims cannot be denied due to material misrepresentation on the application
Which of the following distinguishes field underwriting from home office underwriting? agent has no contact with an applicant agent has personal contact with an applicant agent issues the policy for which the applicant applied no difference
An agent has personal contact with an applicant
What is NOT a valid contract exchange?
An annuity exchanged for a life insurance policy
WHich is an accurate description of the premium in a graded premium life insurance policy?
Annual increases in premium for a stated number of years than remains level
Which statement is incorrect concerning a tax-sheltered annuity (TSA)?
Annual investment gains are included in participants gross income.
During the liquidation phase of an annuity contract, to whom are the income benefits normally payable to? trustee beneficiary policyowner annuitant
Annuitant
What is the Federal income tax liability of a death benefit paid from a health insurance policy to a named beneficiary?
Benefits are not taxable
According to the Affordable Health Care Act (ACA), new health insurance marketplaces are established by the
CCIIO
Which of these is NOT considered a type of limited payment whole life insurance?
Endowment at age 70
Which of the following health insurance provisions requires that the application becomes part of the policy? consideration clause insuring clause Entire Contract clause Application clause
Entire Contract clause
An agreement is reached when an insurance contract is formed. Which of the following is NOT considered to be an element of an agreement? Meeting of the minds Offer Acceptance Equity
Equity
Kyle is an insured who disregarded an accident and health insurance policy provision that requires him to seek a second surgical opinion. What will the end result be?
He may be reimbursed for the surgical procedure at a reduced benefit level.
What is NOT true of a preferred provider plan?
Hospitals can only initiate preferred provider plans.
Which of the following is associated with an immediate annuity?
Lack of an accumulation period
Respite Care coverage is typically found in a(n) HMO PPO Long Term Care Policy Major Medical Expense Policy
Long Term Care Policy
Which individual would be best suited for Medicare supplemental insurance? medicare enrollee medicaid enrollee social security recipient HMO Subscriber
Medicare Enrollee
Insurable interest involves what assumption?
One person benefits from another person's continued life
What term describes the elimination of a hazard?
Risk Avoidance
Example of an endodontic treatment is a _________ ?
Root Canal
What does a fixed life annuity offer protection against?
Savings depletion due to longevity
Who regulates the quality of care provided by a health maintenance organization (HMO)? Secretary of Dept. of Health and Mental Hygiene National Association of Insurance Commissioners Maryland Insurance Commissioner Governor of Maryland
Secretary of Dept. of Health and Mental Hygiene
What does "SHOP" stand for in SHOP exchange? Standardized health operational plan Social health optonal plan Small business health options program SIngle health option program
Small Business Health Options Program
If an individual would like to enroll in Medicare seek public info about Medicare, which federal agency handles this? Dept. of Health and Agins Social Security Administration Center for Medicare and Medicaid Services Dept. of homeland security
Social Security Administration
What happens if the owner of an IRA names their spouse as the beneficiary, but then dies before any distributions are made?
The account can be rolled into the surviving spouses IRA
What statement regarding a fixed period settlement statement is correct?
The installment amount is determined by by the total number of installments
Which reinsurance contract between two insurers involves an automatic sharing of the risks assumed?
Treaty reinsurance
______ can be defined as "replacing a policy when it is NOT in the best interest of the client" Coercion Subrogation Twisting Rebating
Twisting
Under which circumstance is the interest rate guaranteed within a market value adjusted annuity?
When the contract has been held for the period specified in the policy
Which of the following can be defined as the potential for loss? hazard risk transference peril
risk
Failing to promptly provide a reasonable explanation for the denial of a claim is considered to be a(n) fiduciary act unfair claim settlement practice fraudulent act claim liability
unfair claim settlement practice
In an individual retirement account (IRA), rollover contributions are subject to capital gains tax subject to ordinary income tax partially limited by dollar amount unlimited by dollar amount
unlimited by dollar amount
A policyowner has ___ days after policy delivery to return a major medical policy (or life insurance policy) for a full refund. 10 15 20 30
10 days (free-look period)
When a 10-year renewable term life insurance policy issued at age 45 is renewed, the premium rate will be the current rate for 10-year term insurance for a person aged 55 10-year term insurance for a person aged 45 yearly renewable term insurance for a person aged 55 yearly renewable term insurance for a person aged 45
10 year term insurance for a person aged 55
What describes the financial impact of total disability?
may be worse than financial impact of death
What must be disclosed in a universal life policy?
surrender charges
Prior to conducting an HIV-related test, the insurer must obtain a(n) written authorization from the proposed insured oral authorization from the proposed insured authorization from the commissioner written authorization from the insured.s physician
written authorization from the proposed insured
According to the Federal fraud and false statements regulation, what is required for a prohibited person to transact insurance business in this state? completing 24 hours of ethics education completing 3 years of community service written consent from the U.S. Attorney General written consent from the state insurance regulatory agency
written consent from the state insurance regulatory agency
Medicare supplement insurance that provides a preventative medical care will often cover respite care hospitalization custodial care yearly physical examinations
yearly physical examinations
An eligible employee can be excluded from group health coverage for up to __ months if he/she is considered a "late enrollee". 6 12 18 24
18 months
What minimum percentage of all employees must participate in a group life insurance plan if the premiums are completely paid for by the employer? 0% 25% 50% 100%
100%
What best describes the tax treatment of medical expense policies for the self-employed?
100% of medical expense plan premiums are tax-deductible
What is the maximum Social Security Disability benefit amount an insured can receive?
100% of the insured's Primary Insurance Amount (PIA)
Part A Medicare includes coverage for all of the following services EXCEPT first 60 days of hospitalization 120 days of skilled nursing facility care Hospice care inpatient mental health care limited to 190 days in a lifetime
120 days of skilled nursing facility care
The maximum prison sentence given under Federal law for unfair and deceptive insurance practices is 15 years 10 years 5 years 1 year
15 years
A life insurance policy sold in Maryland can be canceled for non fraudulent misstatements for up to ___ years 1 2 3 4
2 years
How long after its effective date will an individual life insurance policy become incontestable? 1 year 2 years 3 years 4 years
2 years
Once a health insurance policy has been in force for ____ years, the policy may not be contested by the insurer. 1 2 3 4
2 years
Once a health insurance policy has been in force for _______ years , the policy may NOT be contested by the insurer, 1 2 3 4
2 years
Written notice of a health insurance claim should be given to the insurer within _____ days after the occurence of any loss covered by the policy. 20 30 45 60
20 days
How many employees must an employer have for the Consolidated Omnibus Budget Act of 1985 (COBRA) to apply? at least 10 at least 15 20 or more 100 or more
20 or more
Mary has a Health Savings Account (HSA). Distributions that have been made for anything other than qualified medical expenses are considered taxable and subject to a penalty of 10% 20% 30% 50%
20%
What's the tax withholding requirements for a rollover from a profit-sharing plan? 10% 20% 30% none
20%
Maryland requires that a licensee completes ____ hours of continuing education on the subject of ethics every reporting period 1 2 3 4
3
A liscensee who is required to take continuing education must complete 24 hours of continuing education, which includes __ hours of ethics coursework 1 2 3 4
3 hours
Tim's individual life insurance policy has just recently lapsed. His policy may be reinstated at anh time within ______ years. 1 2 3 4
3 years
How many days notice does the Affordable Health Care Act require insurers to give before rescinding coverage? 10 20 25 30
30 days
If a producer has been engaged in an administrative action by any government agency, within how many days following the final deposition must the producer report the action to the Commissioner? 7 15 30 45
30 days
Interest on death benefits are NOT required to be paid by an insurance company as long as proceeds are paid within _____ days after the date of the death of the insured
30 days
The standard grace period for a life insurance policy in MAryland is ______ 15 days 30 days 45 days 60 days
30 days
The standard grace period for a life insurance policy sold in Maryland is 15 days 30 days 45 days 60 days
30 days
The free-look period for a Medicare Supplement policy sold in Maryland is ___ days 10 20 30 40
30 days (refund will be given if requested in this time frame)
In Maryland, a full-time employee of a small employer MUST work an average of at least ___ hours a week 10 20 30 40
30 hours
A description of a qualified plan's insurance contract may be found in which ERISA reporting form? Annual return/report (form 5500) Shareholder's report IRS form 1040 Summary report (form 6500)
Annual return/report (form 5500)
According to HIPPA regulations, which of following may reduce a medical plans pre existing conditions exclusion?
Any period of prior coverage
In what situation could an insurance policy's coverage be modified?
Applicant is a substandard risk
________ is the authority given to a producer to sell, solicit, or negotiate insurance on behalf of the insurer appointment admission adjustment authorization
Appointment
Accident and Health insurance claim handling is made more convenient to the insured by utilizing
Assignment of Benefits
The change of occupation provision in a Disability Income policy states that in the event the insured changes to a less hazardous occupation, which of the following may apply?
Benefits can be increased in the event of a covered claim
Which of the following is considered a limited accident and health plan? HMO PPO Cancer Plan Major Medical Plan
Cancer Plan
An accident and health insurance policy's premiums requirements are set forth in which of the following provisions? insurance clause entire contract clause consideration clause premium mode
Consideration Clause
Which report contains information regarding an individual's general reputation and credit standing? Credit Report Consumer report MIB Report Agents Report
Consumer Report
In regards to the ACA, which of these is NOT a role of a health insurance exchange? Offer individual, unique to consumers to evaluate different health plan options certified that a health plan is qualified to be offered on the exchange Contact the employer if if an employee stops coverage under a plan offered on the exchange resolve and verify an applicants inconsistent or incomplete information
Contact the employer if an employee stops coverage under a plan offered on the exchange
An insurance application requires an applicant to make a full, accurate disclosure of the risk factor involved. Using this criteria, an insurance policy is considered what type of contract? Aleatory contract Estoppel contract Contract of utmost good faith Unilateral contract
Contract of utmost good faith
How often must the commissioner examine each domestic insurance company? Every year every 2 years every 3 years every 5 years
Every 3 years
Which life insurance settlement option pays a stated monthly benefit until both principal and interest are exhausted?
Fixed AMOUNT installment option
When the disclosure of an insured's nonpublic information is involved, what is the insurer obligated to do?
Give notice, explain and allow opting out
WHich statement is incorrect about the interest-only settlement option in a life insurance policy?
Interest on proceeds must be paid by the beneficiary
Which of these is a type of private insurance that covers the cost-sharing amounts under Medicare? Major medical insurance Medicaid Disability income Medicare Supplement
Medicare Supplement
After the initial enrollment period for Medicare part B has expired, when may an individual purchase again? January through March of each year October through December of each year six months after the individuals birthday month of each year three months after the individuals birthday month of each year
January through March of each year
Skilled nursing facility expenses are sometimes covered by _____ , but only if the insured was hospitalized prior to entering the facility HMOs Medicare Medicaid Medicare Supplements
Medicare (part A)
A health plan offered by private insurance companies is Social Security Medicaid Medicare Medicare Supplement
Medicare Supplement
Speciality care is provided by which of the following Health Maintenance Organization (HMO) providers? neurologist HMO administrator HMO director Gatekeeper
Neurologist
Beginning January, 1, 2014, the restricted annual limits for plans under the Affordable Care Act will be $500,000 $1,000,000 $1,500,000 No Limit
No Limit
Medicare supplement Insurance requires an individual to be at least how old for open enrollment?
No age requirement
If a Medicare Supplement policy is canceled by the insurer, which of these circumstances does NOT require prior approval from the commissioner? Multiple medicare supplement policies on the same person nonpayment of premium Unsuitable coverage canceling a class of insureds
Nonpayment of premium
All of these statements correctly describe an aleatory contract EXCEPT legal wager is considered an aleatory contract potential unequal exchange of value for both parties Only one party makes any kind of legally enforceable offer element of chance is involved
Only one party makes any kind of legally enforceable offer
Which of the following is NOT true of participants in multiple-employer trusts?
Participants must purchase all coverage the trust offers
Which of these plans allow a participant to choose either a network or non-network provider at the time when medical cafe is needed? HMO Medicare Supplement Point-of-Service Limited benefit
Point-of-service
Which of the following is true regarding universal life insurance?
Policy states how much of each premium is used towards company expenses
What is a true statement regarding medicare supplement policy purchased during the open enrollment period?
Policy will be issued regardless of health
Which of these is NOT required to extend a newborn's health plan coverage beyond the initial coverage period? Policyholder must certify the newborn's insurability policyholder must pay an additional premium for the initial period of coverage policyholder must pay an additional premium for continued coverage policyholder must forward notification of birth to the insurer
Policyholder must certify the newborn's insurability
Which of the following guidelines does NOT apply under the pregnancy provision of the Civil Rights Act?
Posy-termination extensions of medical benefits must apply equally to pregnancy
The agreement in which hospitals and physician groups in a specific area contract with an insurance company to provide medical care at predetermined costs is Preferred Provider Organization (PPO) Health Maintenance Organization (HMO) Designated Provider Organization (DPO) Professional Service Organization (PSO)
Preferred Provider Organization (PPO)
The agreement in which hospitals and physician groups in a specific area contract with an insurance company to provide medical care at predetermined costs is called
Preferred Provider Organization (PPO)
WHich of the following would NOT be a reason for purchasing life insurance on a child's behalf Provide benefits for the child if the parent dies pay for the child's funeral expenses provide a start on the child's personal insurance help provide funds for the child's education
Provide benefits for the child if the parent dies
Switching Life insurance policies without tax consequences is permitted under MEC rules Section 1035 rules the Exclusion Ratio Replacement rules
Section 1035 rules
Medicare Part A covers which type of care? Skilled nursing facility care custodial care respite care intermediate nursing facility care
Skilled nursing facility care
An individual may receive Medicare part A benefits as long as the person has received which of the following benefits for at least 24 months? unemployment workers compensation Medicaid Social Security Disability
Social Security Disability
Which life insurance policy provision prohibits a beneficiary from commuting encumbering withdrawing or assigning proceeds prior to actual receipt from the company? insuring clause spendthrift clause nonforfeiture provision collateral provision
Spendthrift cause
What statement is true concerning the Entire Contract provision in an individual accident and health insurance policy?
The agent doesn't have the authority to change the policy or waive the provisions.
Medicare can be described as
a federal health insurance program for individuals over the age of 65 or permanently disabled
Medicare can described as
a federal health insurance program for individuals over the age of 65 or permanently disabled
The Affordable Care Act (ACA) established "exchanges" in order to
assist individuals and small businesses when making their health insurance purchases
A(n) ______ insurance company is one that was formed under the laws of another country outside of the US. alien foreign international reciprocal
alien
The absolute assignment of a life insurance policy results in
all incidents of ownership transferred to the assignee
Advertising regulations exist to _______
assure full and truthful disclosures to the public
Emergency health care coverage for Medicare enrollees traveling abroad is excluded from a Medicare Supplement a core benefit under a Medicare Supplement a Medicare supplement additional benefit a Medicare part D benefit
a Medicare supplement additional benefit
What does the term "field underwriting" refer to?
a producers contact with the applicant
An Insurance producer agrees to pay the first monthly premium for an insurance applicant. This is called a(n) incentive rebate gift offer
a rebate (which is illegal)
Proceeds payable under a life insurance contract to a policy owner in anticipation of death or upon the occurrence of specified life-threatening conditions as defined by the policy are best described as: accelerated benefits expedited benefits cash surrender benefits proceed benefits
accelerated benefits
A prepaid dental plan has an agreement in place with a network of dentists which
accepts an established amount as payment in full for the dentists service rendered
Which of these is NOT a reason to buy a term life policy? to pay a mortgage payment if an insured dies offer temporary protection offer low-cost insurance coverage accumulate savings
accumulate savings
disability income insurance normally excludes coverage for disabilities that arise from automobile accidents injuries sustained while studying abroad occupational injuries active military duty
active military duty
Which of the following is NOT covered by a comprehensive long-term care policy? custodial care acute care physical therapy skilled nursing care
acute care
Which statement regarding a single premium life insurance policy is NOT correct? no further premiums are necessary policy loans are permitted cash value is immediately created additional premiums may be required under certain conditions
additional premiums may be required under certain conditions
Which of the following life events would allow an uninsured employee to qualify for special enrollment in a small employer health benefit plan? adoption of a child serious health diagnosis on-the-job injury birth of godson
adoption of a child
An insured is covered under a group long-term disability policy. Under this type of policy, the definition of disability based on any occupation typically applies only to part-time employees only to white-collar employees during the probation period after two years of disability
after two years of disability
Insurance is NOT characterized as
as the number of insureds increase the number of losses decrease
When a large sum of money is used to structure monthly payments, which product is typically used? A 401(k) plan A 403(B) plan A deferred annuity An immediate annuity
an immediate annuity
An individual who purchases a modified life insurance policy expects
an improvement in future income
The surrender charge on many deferred annuity contracts are waived when the annuitant becomes unemployed annuitant dies or becomes disabled contract's interest rate falls below a stated percentage contract is cancelled within first year
annuitant dies or becomes disabled
Which of the following situations would a medical exam NOT be required for an individual life insurance applicant? applicant was recently hospitalized applicant has not had a physical exam in a number of years applicants family members have a history of cancer applicant has no prior health insurance
applicants family members have a history of cancer
The entire contract provision states that an entire contract consists of the actual policy and the investigative report provisions personal interview application
application
When there is a named beneficiary on a life insurance policy, the death benefits
are paid directly to the beneficiary without interference from the insured's creditors
In a qualified retirement plan, the yearly contributions to an employee's account
are restricted to maximum limits set by the IRS
How may an insurance company classify an accidental death benefit on a life policy? as an optional policy rider as provision of policy rider as nonforfeiture option as mandatory policy rider
as an optional policy rider
Which of these statements regarding insurance is false? One way insurers deal with catastrophic loss is through reinsurance as the number of insured units increases, the losses decreases speculative risk cannot be insured pure risk can be insured
as the number of insured units increases, the losses decreases
which of the following is NOT a requirement for soliciting insurance in Maryland? pass insurance exam at least 21 years old good character appointed by an insurer
at least 21 years old
A(n) __ company is licensed by the Commissioner to conduct insurance business in Maryland authorized captive reciprocal domestic
authorized
Medicare part A Hospital insurance cover is _____
available through application to social security
Which statement regarding the cash value of a whole life insurance policy is correct?
available to the policyowner when policy has been surrendered
The coordination of benefits provision is added to a group health plan in order to avoid adverse selection permit primary and secondary carriers avoid overinsurance insure community ratings
avoid overinsurance
When an applicant applies for a large amount of life insurance coverage, which of the following would likely NOT be an underwriting requirement? a. consumer report b. eye examination c. urine sample d. blood sample
b. eye examination
With life insurance, the needs approach is used primarily in determining a. which insurance company to purchase the coverage from b. how much life insurance a client should apply for c. the type of life insurance that should be purchased d. a budget for the surviving dependents to follow in the event of the client's death
b. how much life insurance a client should apply for
The _____ of coverage describes policy features, benefits, exclusions, and riders in a long-term care policy a. description b. outline c. proof d. summary
b. outline
An accelerated death benefit decreases the death benefit
bc using up more $$$ before dying soon
In long-term care insurance, what is the length of time for which claims will be paid? benefit period free-look period grace period elimination period
benefit period
ABC Corporation purchases and is a beneficiary of an individual disability income insurance policy on a key employee. Which of the following statements is true? premiums paid by the company are tax-deductible benefits are taxable to the key employee benefits are received tax-free by the company premiums paid by the company are tax-deductible to the key employee
benefits are received tax-free by the company
Coverage for newborns under a health plan MUST provide coverage for
birth abnormalities
A preferred provider plan and an indemnity plan are similar in what way? only select providers may be used both pay on a fee-for-service basis any provider may be used both operate on a prepaid basis
both pay on a fee-for-service basis
A disabled business owner who has payroll and business expenses paid for has what kind of insurance policy? key person franchise disability business overhead expense disability income
business overhead expense
Tina is insured under a business overhead expense insurance policy. Which of the following would be covered if she became disabled? decrease in the company's valuation business property rental expense Tina's salary dividends owed to shareholders
business property rental expense
Nonqualified medical expense distributions from a Health Savings Account (HSA) have a tax penalty of a. 7.5% b. 10% c. 20% d. 30%
c. 20%
A health reimbursement arrangement must be established a. with employee funding b. with other employer-sponsored benefits c. by the employer d. only during specific open enrollment periods
c. by the employer
which of the following is NOT guaranteed in a whole life policy? a. settlement options b. nonforfeiture options c. dividend scale d. policy loan values
c. dividend scale
A signed good health statement may be requested by a life producer a the time of a. policy issue b. application c. policy delivery d. physical examination
c. policy delivery
What does a 401k plan generally provide its participants? a. tax-free distributions b. salary-deferral distributions c. salary-deferral option d. defined retirement benefit
c. salary-deferral option
Which of the following does a Medicare Advantage enrollee typically pay for a. retainer fee b. annual deductibles c. small co-pay d. capitation
c. small co-pay
Individuals who participate in an HMO plan are called? a. certificate holders b. policyowners c. subscribers d. beneficiaries
c. subscribers
Voluntarily terminating an insurance policy is also known as discontinuation elimination estoppel cancellation
cancellation
An example of replacement is ______
cancelling a term life policy to buy a whole life policy
Taking a sum of money and decreasing it in size is called capital gains capital appreciation capital liquidation capital sum
capital liquidation
A(n) _____ agent is an insurance agent who represents only ONE insurance company. exclusive captive domestic inclusive
captive
Which of the following types of insurers limits the exposures it writes to those of its owners? restricted insurer limited insurer confined insurer captive insurer
captive insurer
What of these is NOT an advantage of term life insurance?
cash benefit will be provided if the insured is alive at the end of the policy period
Which statement regarding the waiver of premium rider is accurate? policy loans are used to keep the policy active cash payment is not directly provided to the policy owner insurance companies are required to offer this to all policy owners premiums are waived in the event of bankruptcy
cash payment is not directly provided to the policyowner
A source of supplemental income for a life insurance policy owner can be derived from the cash value payor benefit consideration face amount
cash value
Which statement regarding universal life insurance is correct? cash value accumulations have a guaranteed minimum interest rate policyowner can change face amount but not premium policyowner can change premium but not face amount partial withdrawals cannot be made from policy's cash value
cash value accumulations have a guaranteed minimum interest rate
An order issued by the commissioner that prohibits a specific practice listed in the order is called suspension order interdiction order subrogation order cease and desist order
cease and desist order
What is a PAP test designed to detect? cervical cancer prostate cancer oral cancer breast cancer
cervical cancer
Which would be described as a beneficiary designation by class? children of the insured estate of the insured tertiary beneficiary a specific named beneficiary
children of the insured
Which of these is NOT a true statement of the war exclusion? civil insurrections apply prevents an insurers financial catastrophe typically applies to declared and undeclared wars war risk is typically uninsurable
civil insurrections apply
Which of the following statements is true regarding accident and health insurance claims that reimburse on an indemnity basis? no proof of loss is needed claims can be sent directly to the insurer claims are required to be sent to health provider no claim form is needed
claims can be sent directly to the insurer
Which of the following basics is a producer's fiduciary responsibility? collecting premiums and paying them to the insurance company maintaining a separate bank account for each insurance company the producer represents acting as a referee in event of a disagreement between an insured and the insurance company advising prospective insureds of the lowest rates available
collecting premiums and paying them to the insurance company
Chris has a single major medical contract which covers all medical expenses. His plan is considered to be comprehensive supplemental limited basic
comprehensive
The insurer's obligation to pay a claim depends on whether the insured or beneficiary has complied with all policy conditions. This makes the policy a(n) agency agreement aleatory agreement contract of good faith conditional contract
conditional contract
An accident and health insurance policy's premium requirements are set forth in which of the following provisions?
consideration clause
What does a Mandatory Second Surgical Option provision provide to an employer-paid health insurance plan? no pre-existing condition exclusions higher employee retention containment of the employer's premium cost increase in surgical procedures
containment of the employer's premium cost
An annuity's accumulation period may continue after the purchase payments stop continue after benefit payments start continue after annuitant dies continue after the annuity has been surrendered
continue after the purchase payments stop
An insurance policy is a(n) warranty contract aleatory contract contract of adhesion unilateral contract
contract of adhesion
The total premiums paid into a policy minus total dividends received in cash or used to offset premiums is referred to as the premium basis net proceeds cash basis cost basis
cost basis
Reductions in coverage are one feature of _______ in Health insurance policies. optional provisions mandatory provisions cost containment the insuring clause
cost containment
Any employee insured under a group life insurance plan is normally
covered with term life insurance
The main purpose of an annuity is to provide a tax shelter create an estate create a stream of income provide a death benefit
create a stream of income (liquidating a sum of money)
Which of the following is not the intended use of an annuity?
create new funds upon the death of a wage-earner
Jim recently sold his whole life insurance policy under a viatical settlement contract. The proceeds of this contract could be subject to the claims of debtors creditors beneficiaries the insurer
creditors
A disablity buy-sell agreement best suited for businesses with a limited number of partners is called a ________ _____ ______
cross purchase agreement
What disability buy-sell agreement is best suited for business with a limited number of partners? split dollar plan entity agreement cross-purchase agreement key person plan
cross-purchase agreement
All of the following long-term benefits encourage home health care EXCEPT custodial care home health care adult day care respite care
custodial care
Custodial care is typically associated with a nursing home
custodial care=nursing home
Medicare will cover a maximum of how many days per benefit period in a skilled nursing facility? a. 10 days b. 30 days c. 60 days d. 100 days
d. 100 days (Hospital Insurance)
Which of the following is NOT an allowable exclusion for long-term care insurance policies? a. self-inflicted injuries b. acute care c. custodial care outside of the U.S d. care for incurable conditions
d. care for incurable conditions
Any employee insured under a group life insurance plan is normally a. given a master certificate b. covered on a noncontributory basis c. required to show proof of insurability d. covered with term life insurance
d. covered with term life insurance
When using the needs approach for life insurance planning, a lump sum may be created to provide for all the following EXCEPT a. final expenses b. charitable donation c. education d. employee benefits
d. employee benefits
What are premiums for group life insurance based on? a. age of borrower at time debt is incurred b. age of borrower when debt is paid off c. average age of borrower over life of the debt d. flat rate unrelated to borrower's age
d. flat rate unrelated to borrower's age
Which of these is NOT a common life insurance nonforfeiture option? a. reduced paid-up insurance b. extended term option c. cash surrender option d. life income annuity
d. life income annuity
Inpatient Psychiatric Care is covered under part A medicare for 190 days per a. admission b. year c. benefit period d. lifetime
d. lifetime
What effect can a long-term care benefit rider have on a life insurance policy? a. increased cash value b. decreased cash value c. increased death benefit d. reduced death benefit
d. reduced death benefit
Which of these annuity contract features is meant to discourage withdrawals and exchanges? a. annualization b. annual fees c. withdrawal penalty d. surrender charges
d. surrender charges
Mike applied for life insurance and was issued a conditional receipt. He is later found to be insurable and is issued a policy. when does his coverage become effective? date of issuance of the conditional receipt date the policy was approved date of policy delivery date the insurer received the application
date of issuance of the conditional receipt
When a sum of money undergoes capital liquidation, that sum will increase in value remain the same indefinitely decrease in size create tax deductions
decrease in size
What effect does interest income have upon insurance premiums? increases premium decreases premium levels premium adjusts premium on a quarterly basis
decreases premium
what affect does interest income have on insurance premiums? increases premium decreases premium levels premium adjusts premium on quarterly basis
decreases premium
Which annuity allows contributions to an IRA? Single Premium Annuity Annuity Certain Deferred Life with period certain
deferred
Which of these is typically regarded as a major treatment in an indemnity dental plan? fluoride treatment x-rays restorative fillings dentures
dentures
When a ceding insurer transfers a portion of its risk to an assuming insurer on a case by case basis, this process is referred to as treaty reinsurance quotative pooling reciprocity facultative reinsurance
facultative reinsurance
Which of these is NOT an unfair claims settlement practice? refusing to pay claims without a reasonable investigation compelling insureds to initiate a lawsuit by offering less on insurance claims denying unsubstantiated claims on a timely basis failing to acknowledge and act promptly with respect to insurance claims
denying unsubstantiated claims on a timely basis
All of these type of benefits may be covered by a nonprofit health service plan EXCEPT dental disability income vision hospital expense
disability income
Elimination periods typically apply to hospital policies short-term policies disability policies blanket policies
disability policies
Elimination periods typically apply to hospital policies short-term policies disability policies blanket policies
disability policies
A qualified profit sharing plan is designed to
distribute a portion of company earnings to its employees
For purposes of disability income insurance, earned income would include all of the following EXCEPT salary commissions bonus dividends
dividends
Which statement about group life insurance is INCORRECT? costs can be shared between employer and employee each participant requires evidence of insurability a minimum number of employees is required employer is issued a master policy
each participant requires evidence of insurability
Disability income policies provide protection for which of the following? economic death physical death hospital expense custodial care
economic death
Which of the following would permit an insurer to delay a covered disability policy claim? probationary period service waiting period elimination period grace period
elimination period
When using the needs approach for life insurance planning, a lump sum may be created to provide for all of the following except, final expenses charitable donations education employee benefits
employee benefits
Which of the following situations would allow funds to be deposited into a rollover IRA? individual receives $100,000 inheritance family receives $1,000,000 in a wrongful death lawsuit employee quits her job and receives $50,000 from her qualified plan policyowner surrenders his life insurance policy's $25,000 cash value
employee quits her job and receives $50,000 from her qualified plan
A health Reimbursement Arrangement MUST be established by the ____
employer
Christopher is issued an insurance policy that contains an attached agreement which alters the terms of the policy. This attached agreement is called a(n) extension endorsement sanction restriction
endorsement (sometimes called a rider)
All of these are responsibilities of the Commissioner EXCEPT administering oaths subpoena a witness approving policy forms endorsing insurers
endorsing insurers
The benefit period of Medicare Part A begins on the first day the insured notices symptoms enters a hospital becomes eligible for Medicare is diagnosed for an illness
enters a hospital
Long term care policies will usually pay for eligible benefits using which of the following methods? delayed fee for service expense incurred respite
expense incurred
Which of the following are used by most insurers when determining the premiums for large groups? large number rating group rating area rating experience rating
experience rating
The powers directly given to a producer in an agency contract are called express apparent implied assumed
express
An appointed producer's implied authority is derived from
express authority
Which life insurance policy option allows the policyowner to have coverage equal to the net death benefit of the lapsed policy? reduced paid-up nonforfeiture option accelerated benefits option extended term nonforfeiture option cash surrender option
extended term nonforfeiture option
Which statement concerning a decreasing term life policy is accurate? cash value decreases over the policy period premium decreases face amount decreases face amount stays same
face amount decreases over policy period
All of these statements concerning group credit life insurance are false except cash value loans are allowable dividends can reduce the premium payments face amount and premiums are flexible face amount is based on the outstanding loan balance
face amount is based on the outstanding loan balance
The type of health insurance in which underwriting procedures are the most restrictive is accidental individual group employer-paid
individual
Which of these is NOT considered a preventative service in a dental plan? Fluoride treatment oral examination teeth cleanings fillings
fillings
Violation of US Code Title 18 Section 1033, may result in fine and/or imprisonment termination of appointment revocation of license cease and desist order
fine and/or imprisonment (up to $50,000 & max of 15 years)
The renewability provision for an individual long-term care insurance policy must be located on the policy form's schedule page last page second page first page
first page
Which settlement option makes minimum guaranteed dollar payments over a stated number of years? interest-only fixed-amount fixed-period life income
fixed-period
Major medical policies are typically characterized by which of the following? corridor deductible flat deductible probationary period first-dollar coverage
flat deductible
Death proceeds from a life insurance policy are typically included in a deceased insured's gross estate for federal income tax purposes for federal and state income tax purposes onlyif the insured's estate is ;listed as beneficiary only if the policy is owned by the beneficiary
for federal income tax purposes
A _____ insurance company is one that was formed under the laws of a state other than Maryland alien foreign reciprocal domestic
foreign
Which of these is NOT a factor during the health insurance underwriting process? current residence physical condition occupation former residence
former residence
Which life insurance policy provision allows a policyowner to cancel the policy and receive a full refund within limited time period after policy delivery?
free-look period
What is considered a valid reason for small corporations to insure the loves of its major stockholders? provide an income for surviving dependents reduce company's tax liability pay for final expenses fund a buy-sell agreement
fund a buy-sell agreement
What is an insurance contract that identifies individuals by relationship to a specific organization? employer insurance group insurance COBRA Plan industrial insurance
group insurance
What is the name of the rider that provides an additional purchase option in a life insurance policy? Payor rider Cost of living rider waiver of premium rider guaranteed insurability rider
guaranteed insurability rider
Guaranteed Insurability Rider
guarantees insured to purchase additional amounts of disability income insurance at future dates
A Buyers Guide MUST
have its content approved by the commissioner
A buyers guide must
have its content approved by the commissioner
Some standard Medicare Supplement policies include which benefit? Hospice care respite care vision care custodial care
hospice care
With life insurance, the needs approach is used primarily in determining which insurance company to purchase the coverage from how much life insurance a client should apply for the type of life insurance that should be purchased a budget for the surviving dependents to follow in the event of the client's death
how much life insurance a client should apply for
Which of the following is NOT subject to the promise to pay in an insuring clause? how premium is calculated policy provisions policy conditions policy exclusions
how the premium is calculated
Which tax would an IRA participant be subjected to on distributions received prior to age 59 1/2? 10% tax penalty capital gains tax income tax and penalty tax ordinary income tax
income tax and penalty tax
Which life insurance clause prohibits an insurance company from questioning the validity of the contract after a stated period of time has passed? entire contract provision grace period provision incontestable clause insuring clause
incontestable clause
A single deferred annuity sometimes contains a bailout feature. Which statement regarding the feature is correct?
if the interest rate falls below a specified level, the surrender charge is waived.
ABC Insurance Agency is entering each applicant who purchases insurance through their agency into a drawing to win a free trip. This is an unlawful insurance practice known as illegal inducement false advertising concealment fraud
illegal inducement
THe unwritten authority given to a producer to carry out a necessary incidental act of the agency agreement are called express authority implied authority apparent authority acknowledged authority
implied authority
An individual who purchases a modified life insurance policy expects a higher rate of return coverage for 2 people improvement in future income flexible face amount
improvement in future income
A policyowner has just borrowed from a life insurance policy cash value. which statement is true about this?
in event of death, the loan amount is deducted from the policy proceeds
Which of the following does NOT help determine group health insurance premiums? average age of group claims experience of group income level of group groups size
income level of groups members
group insurance can be converted to
individual insurance
Which type of policy can group term life insurance normally be converted to? individual renewable policy individual-level term policy individual permanent life insurance policy group permanent life insurance policy
individual permanent life insurance policy
What would be considered an advantage of purchasing term life insurance?
initial premium is lower compared to an equivalent amount of whole life coverage
All of these are considered features of whole life insurance EXCEPT cash value accumulation permanent coverage initial premium is lower than for an equivalent amount of term insurance policy loans are allowed
initial premium is lower than for an equivalent amount of term insurance
Medicare Part A typically covers inpatient drugs custodial care disability income respite care
inpatient drugs
Medicare part A typically covers inpatient drugs custodial care disability income respite care
inpatient drugs
Which statement regarding whole life insurance is accurate? cash value loans are not permitted insurance coverage can continue for life policy normally matures at retirement no cash value accumulation
insurance coverage can continue for life
The MAryland Life and Health Guaranty Association protects the ____ in the event of insurer insolvency. state beneficiary insurer insured
insured
A life insurance policy that contains an (accelerated) living benefit rider will provide funds if the insured is expected to be confined to a nursing home for life insured recently had a minor heart attack insured had lost the use of one arm insured is having dire financial problems
insured is expected to be confined to a nursing home for life
The ____ is required to notify the Commissioner in the event of appointment termination producer insurer underwriter insured
insurer
Which of these statements is NOT true regarding a cash value loan against a life insurance policy? interest normally accrued on unpaid balances loan cannot exceed the policy's cash value policy contract term dictates the interest rate interest rates made by policy owner are deductible
interest rates made by policy owner are deductible
When compared to a fixed annuity, a variable annuity has what distinguishing feature? flexible premium according to a stock index investment risk is assumed by the insurer investment risk is assumed by the purchaser payout option can be changed after the accumulation phase
investment risk is assumed by the purchaser
An existing health benefit plan offered by a small employer may be replaced by a SHOP exchange Navigator onl if the small employer pays a surrender charge signs a release form votes to replace the existing coverage is eligible for a federal tax credit through the SHOP exchange
is eligible for a federal tax credit through the SHOP exchange
Upon receiving a producer complaint, the commissioner may immediately
issue a cease and desist order
What is NOT a valid reason to add the waiver of premium rider to a life insurance policy?
it allows a policy loan to cover premium payments if the policyowner becomes completely disabled
Which of these would NOT be a valid reason to add the waiver of a premium rider to a life insurance policy? prevents a policy from lapsing in the event of total disability premiums waived by the insurer do not have to be repaid by the policyowner policy's cash value would still increase as policy premiums are being waived it allows a policy loan to cover premium payments if the policyowner becomes totally disabled
it allows a policy loan to cover premium payments if the policyowner becomes totally disabled
In regards to health insurance, what is meant by the term "primary policy"?
it is the policy that will pay up to its ;imit before any other policy pays
What type of insurance policy covers two or more persons and pays the face amount upon the death of the first insured? joint and survivorship surviroship universal life joint life
joint life
A life insurance beneficiary died after receiving only six payments under policy's life income settlement option. What happens with the remaining balance of the death proceeds?
kept by insurance company
How much is normally paid to a policy owner in a life (viatical) settlement? total premiums paid plus interest full face amount more than the face amount less than the death benefit
less than the death benefit
What is the guaranteed cash value of a whole life insurance policy when the insured turns 65 years old? greater than the face amount less than the face amount depends on the performance of the separate underlying investment account equal to policy's face amount
less than the policy's face amount
During the early years of a whole life insurance policy, the cash value will normally be equal to the total premiums paid more than the total premiums made less than the total premiums made unavailable as a policy loan
less than the total premiums made
What type of premiums are associated with an individual mortgage protection life insurance policies? level flexible modified decreasing
level premiums
Laura added a children's rider to her life insurance policy. What type of coverage was added? level term increasing term decreasing term juvenile term
level term
After the extended term life nonforfeiture option is chosen, the available insurance will be
level term for a stated period of time
Group life insurance is typically issued as whole life insurance decreasing term insurance increasing term insurance level term insurance
level term insurance
What is another term used for a "pure" life annuity? annuity certain immediate annuity life income joint annuity
life income
Which of these is NOT a common life insurance nonforfeiture option? reduced paid-up insurance extended term option cash surrender option life income annuity
life income annuity
Which of the following financial products creates an instant estate, no matter when the date of death? mutual funds life insurance certificate of deposit deferred annuity
life insurance
All of these are common limiting factors with dental insurance EXCEPT the limit placed on the number of teeth that may be treated annually limit on cosmetic-related procedures limit on number of x-rays per year limit on number of annual teeth cleanings
limit placed on the number of teeth that may be treated annually
What action can an insurer take to discourage malingering and false disability claims?
limit the amounts of benefits an insured can receive from two disability policies with the same insurer.
How can a group dental insurer discourage adverse selection?
limit the duration of coverage
What kind of insurance provides coverage for one or more necessary or appropriate diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services in a setting other than an acute care unit of a hospital? long-term care disability income limited care special risk
long-term care
Tim is confined to a nursing home but doesn't have a terminal illness. Which life insurance rider is designed to help pay for this type of expense? cash value rider viatical rider accelerate (living) benefit rider long-term care benefit riderF
long-term care benefit rider
Custodial care is normally covered under major medical insurance Medicare Part B Long-term disability insurance long-term care insurance
long-term care insurance
A life policy's spendthrift clause would have no effect if the beneficiary is paid the proceeds as a
lump-sum payment
Which of these policies is considered to be a comprehensive health policy? major medical policy surgical policy limited benefit policy health savings account
major medical policy
The owner of a single premium deferred annuity is entitled to do all of these EXCEPT make additional payments into the annuity chose the length of the payout period choose who will be the recipient of the annuity payments cash surrender the contract
make additional payments into the annuity
Rick recently died and left behind an individual IRA account in his name. His widow was forwarded the balance of the IRA. The widow qualifies for the marital deduction death benefits section 1035 exchange capital gains tax
marital deduction
A MET third party administration may NOT perform which of the following functions? claims processing marketing the plan underwriting the plan insuring the plan
marketing the plan
Bert's spouse passed away recently. Bert was covered under his spouse's group family health insurance plan but now is covered under COBRA. How much of the active-employee cost may be passed on to Bert for continued coverage? no maximum maximum of 50% max of 100% max of 102%
maximum of 102%
A producer is proposing that a policyowner replace an existing individual health policy with a new one. Under the new contract, a pre-existing conditions exclusion may increase insured's benefits is optional for policyowner may reduce insured's benefits does not affect new policy
may reduce the insured's benefits
Field Underwriting by a producer
may result in the disclosure of hazardous activities of the applicant
Under the Maryland Health Insurance Plan, comprehensive health benefits are provided to
medically uninsurable residents
The Life and Health Guarantee Association provides funds to carry out its powers and duties by assessing taxpayers policyowners beneficiaries member insurers
member insurers
Which of the following does TRI-CARE provide accident and health coverage to? military families social security recipients permanently disabled individuals children
military families
Why do insurers require a minimum number of employees participate in a group insurance plan? efficiency is maximized minimize adverse selection profits are maximized claims are minimized
minimize adverse selection
A life policy that has premiums that are lower than normal during the early years is called decreasing term modified life variable life limited-pay life
modified life
All of the following are typically included in a life insurance policy illustration EXCEPT premium of the policy names of the beneficiaries interest charged for policy loans cash surrender value in 20 years
names of the beneficiaries
Jose recently had his long-term care policy replaced with a new policy. The new long-term care policy may NOT impose a(n) new pre-existing conditions exclusion increased premium free-look-period physical exam
new pre-existing conditions exclusion
Jose recently had his long-term care policy replaced with a new policy. The new long-term care policy may not impose a _____
new pre-existing conditions exclusion
How would preventative care be encouraged in a dental plan? deductibles exclude pre-existing conditions closed dental panels no deductible on routine examinations
no deductible on routine examinations
The disability income policy most likely to have been issued on a substandard basis is non-cancelable with a 60-day elimination period conditionally renewable non-cancelable with a health exclusion rider guaranteed renewable with an inflation rider
non-cancelable with a health exclusion rider
Which of the following health insurance plans charges a premium that cannot be increased? guaranteed renewable cancelable noncancelable conditionally renewable
noncanceable
Which of the following health insurance plans charges a premium that cant be increased? guaranteed renewable cancelable noncancelable conditionally renewable
noncancelable
The contractual rights which allow the owner of a deferred annuity to surrender the cash value several years before the annuity date are called nonforfeiture options settlement options conversion options surrender options
nonforfeiture options
A producer who is licensed in MAryland, but resident in another state is called nonresident producer foreign producer reciprocal producer limited lines producer
nonresident producer
A producer who is licensed in Maryland but resident in another state is called a ______ nonresident producer foreign producer reciprocal producer limited lines producer
nonresident producer
How are the premiums for an individually-owned disability income policy treated for tax purposes? Amount spent on premiums over 7.5% of gross income is tax deductible partially tax deductible fully tax deductible not tax-deductible at all
not tax-deductible at all
The Food and Drug Administration approves prescription drugs for treatment as stated on the drug's labeling. The prescription of a drug for treatments other than what's labeled is known as ____ use illegal trial generic off-label
off-label
Which element of a contract constitutes a definite and unqualified proposal by one party to another? adhesion consideration acceptance offer
offer
When a deferred annuity is surrendered, who must sign the authorization to do so? owner annuitiant and beneficiary annutiant all parties involved
owner
Which statement best describes a single premium whole life policy?
paid-up policy that offers lifetime protection
A policyowner suffers an injury that renders him incapable of performing one or more important job duties. Any decrease in income resulting from the injury would make him eligible for benefits under which provision? partial disability nondisabling injury presumptive disability flay amount disability
partial disability
A physician who accepts assignment on all MEdicare claims is called a participating provider authorized provider registered provider admitted provider
participating provider
Employers often purchase life insurance on a key employee in order to
pay for finding and training a replacement if the employee dies prematurely
A major medical expense policy typically does NOT contain a deductible have a high limit of coverage contain a coinsurance provision pay surgeon fees on a first-dollar basis
pay surgeon fees on a first-dollar basis
What is not a function of accident and health insurance?
pays a death benefit as a result of natural causes
Which type of deductible must be satisfied again for each illness or accident in a major medical plan? specific-cause per-cause all-cause comprehensive-cause
per-cause
Which of the following can be defined as the cause of a loss? adversity risk hazard peril
peril
A life annuity feature which provides benefit payments for a minimum number of years, no matter when the annuitant dies, is called fixed period period certain installment period straight life
period certain
A life insurance guaranteed insurability rider gives the insured the right, without providing insurability, to
periodically purchase additional insurance
A life insurance policy's contingent beneficiary is the
person who receives the death benefits if the primary beneficiary dies before the insured
A life insurance policy's contingent beneficiary is the primary person who receives the death benefits if the insured dies person who receives the death benefits if the primary beneficiary dies before the insured
person who receives the death benefits if the primary beneficiary dies before the insured
Which would NOt be a location where skilled nursing care is provided? Hospital Custodial Care Facility Nursing home personal residence
personal residence
Twisting means
persuading an insured, to the insured's detriment, to switch policies
What statement accurately portrays an adjustable life insurance policy?
policy can alternate between forms of term and whole life insurance
A signed good health statement may be requested by a life producer at the time of policy issue application policy delivery physical examination
policy delivery
What is a true statement regarding universal life insurance?
policy indicates how much of each premium is used towards company expenses
Which action will trigger a penalty tax on premature distributions from a modified endowment contract (MEC)? policy loans claim on a death benefit extender term settlement option policyowner reaching age of 70 1/2
policy loans
Which of the following is a true statement regarding a Medicare Supplement policy purchased during the open enrollment period? there will be reduction in benefits elimination period will be longer than normal cost of premiums will be higher than normal policy will be issued regardless of health
policy will be issued regardless of health
What happens to a life insurance policy when the policy loan balance exceeds the cash value? nonforfeiture options are offered policy becomes paid-up automatic premium loan provision is utilized policy will no longer be in force
policy will no longer be in force
The standard provisions of an accident and health insurance policy require thatp
policy, endorsements, and attached papers constitute the "entire contract"
Dividends from a mutual insurance company are paid to whom? policyholders beneficiaries preferred stockholders stockholders
policyholders
The ___ may change a revocable beneficiary as part of an accident and health policy. agent beneficiary policyowner insurer
policyowner
WHose interests are being protected under replacement rules? beneficiary insurer policyowner producer
policyowner
A disability income insurance policy was recently issued with a rating. what does this mean?
policyowner will be charged an additional premium
All Medicare supplement policies MUST contain which provision? unemployment benefits must be provided short-term disability must be covered pre-existing conditions may only be excluded from coverage for a maximum of 6 months substance abuse treatment must be covered
pre-existing conditions may only be excluded from coverage for a maximum of 6 months
What typically changes at the re-entry option date found in some term life policies? beneficiary amount of coverage premium contestable period
premium
Where is the difference between a standard risk and a substandard risk reflected?
premium charges
Where is the difference between a standard risk and a substandard risk reflected? backdating coverage is not offered premium charges back-end charges
premium charges
How is the insured protected if a payor benefit rider is attached to the life insurance policy?
premium payments are waived in the event the premium payor dies or becomes disabled
Which statement regarding the life insurance premium for a children's rider is true? decreasing premium as child becomes an adult premium remains same no matter how many children are added increasing premium as additional children are born no premium is normally charged for a children's rider
premium remains same no matter how many children are added
How are level term policies able to provide level premiums? policy dividends yearly policy fees yearly reductions in face amount premiums are averaged over the term of the policy
premiums are averaged over the term of the policy
A guaranteed renewable provision allows ________
premiums which can only be increased per rate class
home health care benefits typically DO NOT include coverage for nursing care wheelchairs physical therapy prescription medication
prescription medication
Karen is a health maintenance organization (HMO) subscriber. who provides all of her preventive and routine care? primary care physician provider specialist preventative coordinator HMO Director
primary care physician
When must a claim on a life insurance policy be paid after proof of loss has been received by the insurer? promptly within 10 days within 20 days within 30 days
promptly
The dental speciality which deals with the replacement of missing teeth is called periodontics otology pediatrics prosthodontics
prosthodontics
Which of the following could be a future use of the cash value that builds in a recently-purchased whole life insurance policy? convert the cash value to a paid-up term policy gives policyowner ability to borrow against funds within two years increases policy's face amount provide supplemental income in 35 years
provide supplemental income in 35 years
Group accident and health insurance may be offered by an insurer when the sponsoring group _______
provides an employer-employee relationship
Automatic Premium Loan Provision can be described as
provision that provides a policy loan to pay any premiums by the end of the grace period
What type of risk involves the potential for loss with no possibility for gain? speculative risk pure risk adverse risk morale risk
pure risk
what could improve an insurers ability to reduce premiums?
rate of earnings on investments increases
During an annuity's liquidation phase, the annuitant normally receives nothing receives benefit payments at regular intervals can borrow against cash value can increase premium payout period
receives benefit payments at regular intervals
During an annuity's liquidation phase, the annuitant normally receives nothing receives benefit payments at regular intervals can borrow against the cash value can increase premium payout period
receives benefit payments at regular intervals
Which of the following is NOT a reason the Govt provides insurance? stimulate economic development reduce fradulent claims ensure social needs are being met increase availability
reduce fraudulent claims
what happens to the death benefit of a life insurance policy if the insured elects a partial payment from the accelerated (living) benefit provision? none will be given increased reduced no change
reduced
Which of the following statements BEST describes the HIPPA probability rules for an individual who changes from one group medical plan to another? reduces or eliminates any pre-existing conditions excluded under the new plan requires that an employer pays for health coverage reduces or eliminates the deductible under the new plan allows the employee to convert to individual coverage
reduces or eliminates any pre-existing conditions excluded under the new plan
What is normally the consequence for NOT obtaining pre admission certification prior to receiving inpatient medical care? reduction in benefits delay in payment of benefits cancellation of coverage taxation of benefits
reduction in benefits
A life insurance policy owner would like a dividend option that results in a limited number of funds. Which dividend option would be chosen? paid-up additions Accumulation at interest 1-year term reduction of premium payment
reduction of premium payment
How do benefit payments fluctuate over time in a variable life annuity?
reflects changes in the market value of assets in a seperate account
Which type of policy pays benefits to a policyholder covered under a Hospital Expense policy? limited special risk reimbursement blanket
reimbursement
Which type of policy pays benefits to a policyholder covered under a Hospital Expense policy? limited special risk reimbursement blanket
reimbursement
When a lapsed policy's premium has been paid current, it has the potential of being restored renewed reinstated reinstituted
reinstated
A(n) ____ insurer assumes risks from another insurance company reinsurance captive assumption recipricol
reinsurance
ABC insurance company transfers part of their risk to XYZ Insurance Company. This situation is called reciprocity reinsurance conservation risk transfer
reinsurance
An insurer has a contractual agreement which transfers a portion of its risk exposure to another insurer. What type of contractual arrangement is this? coinsurance contract mutuality agreement reinsurance contract reciprocity agreement
reinsurance contract
An insurer has a contractual agreement which transfers a portion of its risk exposure to another insurer. What type of contractual arrangement is this? coinsurance contract mutuality agreement reinsurance contract reciprocity arrangement
reinsurance contract
A life insurance policy's waiver of premium rider has the ability to _____
relieve the insured of premium payments following an initial waiting period after the insured becomes totally disabled
Twisting is _____
replacing an insurance policy from one insurer to another based on misrepresentation
Statements made by an insured on an accident and health insurance application are considered to be representations warranties conditional aleatory
representations
Which of the following would provide a reimbursement of some premiums when a long-term care policy is canceled? return of premium rider return of cash value rider reimbursement rider cost of living rider
return of premium rider
Which of the following describes the act of insuring a risk against possible loss? risk avoidance risk transfer hazard reduction loss management
risk transfer
How is a community rating used for underwriting purposes? same rates are charged for individual and group plans in the same risk category same rates are charged for group plans in the same geographical area
same rates are changed for group plans in the same geographical area
When a health insurance policy includes a Mandatory Second Surgical Opinion provision, the insured must
seek a second opinion for specified elective surgeries
Third-party administration has become fairly common in accident and health insurance due to the growth of Affordable Care Act self-funding of benefits health savings account Medicaid
self-funding benefits
Which of these factors does NOT influence an individuals need for life insurance? lifestyle of applicant number of dependents future educational costs of dependents self-maintenance expenses
self-maintenance expenses
A material change in a modified endowment contract (MEC) results in the contract becoming void new contestable period seven pay test, adjusted for cash value, applies again tax penalty
seven pay test, adjusted for cash value, applies again
Which of the following does medical expense NOT typically cover? x-rays treatment in a government facility hospitalization diagnostic testing
treatment in a government facility
All of the following actions are considered rebating except sharing commissions with other licensed and appointed agents refunding part of the premium as an inducement for purchase offering special dividends offering of anything value not specified in the policy
sharing commissions with other licensed and appointed agents
When issuing disability income coverage to a substandard risk, an insurance company may raise the deductible shorten the benefit period raise the benefit limits reduce the premium
shorten the benefit period
Laura is a new employee and will be obtaining non-contributory group Major Medical insurance from her employer. Which of the following actions must she take during the open enrollment period? authorize for payroll deductions agree to a physical exam sign an enrollment card register with her state of residency
sign an enrollment card
Which of these policies is considered a whole life policy? credit life single premium life renewable life convertible life
single premium life
Medicare Part A covers which type of care? skilled nursing facility care custodial care respite care intermediate nursing facility care
skilled nursing facility care
What do limited accident and health policies normally cover? specific illness or event specific age group specific income group specific geographical location
specific illness or event
Which one of these is NOT considered to be an element of insurable risk? speculative risk pure risk loss cannot be catastrophic loss must be due to chance
speculative risk
XYZ Corporation gives money to an employee to purchase a life insurance policy and allows the employee to select the beneficiary. What kind of plan is this? split-dollar cross purchase key employee deferred compensation
split-dollar
What happens to the cash value of a market value adjusted annuity if it's surrendered prior to the end of the stated guarantee period? subject to market value adjustment subject to no adjustments subject to surrender charge only cash value is forfeited
subject to market value adjustment
Which of the following actions is REQUIRED by a producer who is replacing an existing life insurance policy? keep replacement files on record for at least 10 years notify the existing insurer of the proposed replacement submit to the replacing insurer a list of the policies to be replaced off the insured a 60-day free-look period
submit to the replacing insurer a list of the policies to be replaced
How does the cost for a survivorship life policy compare to the cost of combining two separate individual insurance policies?
survivorship life policy is lower
Qualified long-term care premiums are treated for tax purposes as qualified retirement plans always non-deductible 100% tax deductible tax-deductible to the extent they exceed 7 1/2% AGI
tax-deductible to the extent they exceed 7 1/2% AGI
Benefits to key employees are received _____
tax-free by the company
Under a key person disability income policy, benefits will be received as taxable income to the key employee tax-free to the key employee tax-free income to the business taxable income to the business
tax-free income to the business
what is payable to the policyowner if a whole life policy is surrendered prior to the maturity date?
the cash value
A life insurance policy that includes a return of premium rider will pay the beneficiary how much upon the insured's death? total premiums paid plus the policy face amount face amount plus interest accrued interest accrued plus total premiums paid face amount minus any outstanding loan balances
total premiums paid plus the policy face amount
A business becoming incorporated is an example of risk ____. retention reduction transfer severance
transfer
A hold-harmless clause is an example of risk avoidance retention transfer sharing
transfer
Which of the following involves sharing an uncertain risk with another similar group? transfer speculative operational physical
transfer
Purchasing insurance is an example of risk transference avoidance retention sharing
transference
What is considered the collateral on a life insurance policy loan? no collateral needed policy's cash value policy's face value equity in a policyowner's home
the policy's cash value
Which of these statements regarding the extended term insurance nonforfeiture option in a life policy is accurate? evidence of insurability is required coverage remains until the death of the insured the premium to purchase the coverage comes from the policy's cash value cash will continue to grow
the premium to purchase the coverage comes from the policy's cash value
Darell has a group long-term disability income policy paid by his employer. Which of these statements is true? Any benefits received will be tax-free The premiums paid by the employer are not tax-deductible the specified benefit amount is a percentage of his wages long-term policy benefits are not coordinated with Social Security benefits
the specified benefit amount is a percentage of his wages
How is an insured's accident and health claim handled by an insurer if it occurs during the policy's grace period? the claim has to be approved by an officer of the insurer no claim will be paid until premium is paid current claim is paid in full and the unpaid premium will be waived by the insurer unpaid premium may be subtracted from the reimbursement
the unpaid premium may be subtracted from the reimbursement
Under HIPAA requirements, eligibility for pre-existing conditions exclusion waiver under new coverage is lost if
there is a break in coverage for more than 63 days
The reason for backdating a policy is to avoid being considered a substandard risk due to a recent cancer diagnosis to obtain a premium rate based on an earlier age to decrease the face amount to decrease the Contestable period
to obtain a premium rate based on an earlier age
The owner's cost basis for a non-qualified deferred annuity is typically the same as the annuity's cash value total premiums paid benefits payable to the annuitant interest earned within the annuity
total premiums paid
How is a collateral assignment used in a life insurance contract?
transfers specific ownership rights to a creditor
Every ___ years a producer's license in Maryland must be renewed one two three four
two
Which of the following best describes a "partial disability" becoming deaf in one ear unable to perform job duties due to a short-term disability unable to perform one or more job duties when disability occurs from previous illness or accident
unable to perform one or more job duties
How long does protection normally extend to under a limited pay whole life policy? depends on the performance of an underlying investment account when premiums are no longer required as stated in the contract until age 65 until age 100
until age 100
When does interest income for a flexible premium deferred annuity get reported for Federal income taxes?
upon receiving distributions from the contract
An insurance policy that can also be classified as a securities product is called variable life modified life universal life Modified Endowment Contract
variable life
Which type of life insurance policy allows a policyowner the choice of investments along with flexible premium payments? variable universal life modified endowment contract adjustable life graded premium whole life
variable universal life`
Terminally-ill life insurance policyowners may sell their policy at a discount to a third-party. This type of agreement is called a
viatical settlement
Michelle recently purchased a long-term care policy. Her policy may exclude health conditions during a stated initial period of coverage that
were treated during a specific period preceding the policy date
A policyowner is permitted to take out a policy loan on a whole life policy at what point? when policy has a cash value when policy has been in force for 2 years when cash value equals face amount when policyowner has demonstrated financial need
when the policy has a cash value
Which life insurance policy would be eligible to include an automatic premium loan provision? increasing term level term decreasing term whole life
whole life
The fair credit reporting act protects consumers from insolvent insurers by recommending insurers with good AM Best ratings with guidelines regarding credit reporting and distribution by providing consumer credit counseling
with guidelines regarding credit reporting and distribution
A health insurer must provide a proof of loss form within 10 days of actual loss within 10 days of receipt of notice loss within 15 days of actual loss within 15 days of receipt of notice of loss
within 15 days of receipt of notice of loss
