Life/Health Insurance Practice

Which is the major reason why long term care insurance is becoming increasingly important?

As life expectancy increases, the chances of needing long term care also increase

What does first dollar coverage mean?

As soon as covered medical expenses are incurred, the policy begins to pay.

At which point are contractual death benefit settlement options determined and by whom?

At the time the policy is purchased by the owner of the policy.

Which of the following is covered by a dread disease policy?

illnesses that do not occur frequently but incur significant costs when they do occur

Why is rehabilitation considered worthy of federal help under workers' compensation?

it reduces insurance losses and helps regain the worker's dignity

What type of insurance should a company purchase if it wants to insure the life of its CEO?

key person insurance

Which problem was universal life insurance designed to address?

low interest rates during periods of high inflation

What is the return of premium rider?

An increasing amount of term insurance that always equals the total of premiums paid up to the current point.

Example of premium payment mode.

Annual premium payment.

All of the following are features of the spendthrift clause EXCEPT

the beneficiary may encumber the proceeds.

All of the following statements define preexisting conditions EXCEPT

Any chronic health condition that presents symptoms and which was unknown at the time of application.

Which of the following amends the Social Security Act to make Medicare secondary to group health plans?

TEFRA

States generally define a true "group" for insurance as requiring a minimum of how many participants?

10

Noncontributory plans

100% of eligible members must participate.

How long after being entitled to disability benefits will an individual be eligible to receive Medicare benefits?

2 years

What is the maximum amount of time the insured has to file legal action against the insurer after written proof of loss is provided?

3 years

Why are insurance policies considered conditional contracts?

Certain conditions need to be met to make the contract legally enforceable

Which of the following is the most common method to supplement Medicare coverage?

Coverage offered by private insurers

Which of the following coverage types pays a monthly cash benefit following the elimination period for total disability due to accident or sickness?

Disability income insurance

What specific new procedures does the USA Patriot Act require of insurance companies?

Establish an anti-money laundering program

Obtaining consumer information reports under false pretenses is prosecutable by which of the following?

Fair Credit Reporting Act

In which of the following does a covered employee agree to a reduction in compensation so the amount can be used to cover medical expenses?

Flexible Spending Account (FSA)

Which of the following is exempted from the incontestability provision in insurance policies?

Fraudulent misstatements

Which policy provision permits the policy owner to take a specified number of days to examine the contract, and allows for cancellation and a full refund if the policy owner rejects the terms or costs?

Free look

Which of the following is TRUE of an equity-indexed annuity?

It has a guaranteed minimum interest rate.

Why is relying solely on employer group life insurance generally considered inadequate for most individual's needs?

It is financially insufficient to cover end of life expenses.

Which type of annuity covers two or more annuitants and provides monthly income only until the first annuitant dies?

Joint life annuity

Which type of rider reimburses health and social service expenses incurred in a convalescent or nursing home facility?

Long-Term Care Rider.

Which insurance plans are commonly offered through the worksite (employer sponsored) EXCEPT?

Medicare

All of the following are classifications of risk EXCEPT

Non-nicotine

Short term disability insurance generally only covers injuries due to which of the following?

Non-occupational injuries

Which of the following must be given to the insurer within 20 days after occurrence or commencement of any loss covered by the policy, or as soon thereafter as is reasonably possible?

Notice of claim

Which is the difference between participating and non-participating policies?

Participating policies pay dividends while non-participating policies do not.

During which period of a Disability Income Policy is coverage effective but during which no benefits will be paid under the policy?

Probationary period.

All of the following are tax qualified retirement plans EXCEPT

Section 529 plan

Which of the following is defined as the dollar amount beyond which the insured no longer participates in payment of medical expenses?

Stop Loss Limit

All of the following are ownership rights EXCEPT

Switching the policy from one insured to another.

What procedure is used by an insurer to protect itself in the event a dispute arises and the applicant and the agent do not recall the changes that were made in a completed application?

The applicant and possibly the agent initial any changes made.

When the courts look at a contract to determine the intent of the parties which of the following is considered?

The entire contract.

Which of the following is true about a decreasing term life policy?

The face amount reaches zero at policy expiration

In a case where an individual's health is insured by both their own policy and their spouse's policy, which policy pays in the event of an illness?

The individual's policy pays first, the spouse's policy pays the remaining up to coverage amount.

Under normal conditions which of the following is TRUE for proof of loss when a single loss is claimed?

The insured has 90 days from the date of loss to provide proof of loss.

What does coinsurance mean?

The insurer and the insured share expenses over the deductible.

Which one of the following represents an advantage of obtaining a policy loan versus a withdrawal?

The loan is not taxed while a withdrawal is taxed for amounts above the contract cost basis.

What is the purpose of Stranger-originated life insurance (STOLI)?

The policy is originated primarily or solely for the purpose of resale.

The right to change the beneficiary or dispose of the policy or its benefits in any manner one chooses is reserved to the policy owner UNLESS which of the following is true?

The policy owner has named an irrevocable beneficiary.

Which of the following is TRUE for a flexible premium annuity?

The purchaser has the option to vary the amount of each premium payment falling between a minimum and maximum amount.

Which is the primary purpose of Health Reimbursement Accounts (HRAs)?

To assist covered employees with the payment of medical expenses on a high deductible plan funded through pre-tax contributions.

Which of the following lists the three common types of permanent individual life insurance?

Variable Life, Whole Life, Universal Life

Under which situation must insurable interest exist between the applicant and insured at the time of application?

When a third-party applicant names themselves beneficiary.

A group conversion option may be used in all the following instances EXCEPT

a life-changing event, such as marriage, divorce, or childbirth.

How do warranties differ from representations?

a warranty is guaranteed to be true, a representation is believed to be true to the best of one's knowledge.

Which of the following policy types is considered double indemnity?

accidental death

For an individual long-term care policy there is an annual dollar limit for tax deductions that is based on which of the following?

age

Under the misstatement of age or gender provision, what happens if it is determined at death that the insured's age or gender was misstated on a life insurance policy application?

benefits are adjusted to an amount that the premium would have purchased at the correct age or gender.

Which type of receipt makes the insurer liable for the risk from the date of application, regardless of the applicant's insurability?

binding receipt

In a home healthcare benefit, all of the following are eligible expenses EXCEPT

blood transfusions

All of the following are characteristics of COBRA EXCEPT

change in medical privacy procedures.

The group conversion option is allowed for all of the following EXCEPT

during the annual benefits enrollment period.

Compared to basic hospital, medical and surgical policies, which type of insurance provides broader coverage, fewer gaps, higher individual benefits, and higher policy maximums?

major medical insurance

What is a MIB report?

medical information on an applicant for assessing life or health insurance risk

A consumer report used to determine eligibility for insurance may include all of the following EXCEPT

medical underwriting exam.

Which of the following is characteristic of a nonqualified plan?

plan does not meet federal guidelines for tax benefits

Which of the following is a characteristic of Preferred Provider Organizations (PPOs)?

prearranged costs for services rendered

Which type of life policy can be continued year after year without a required medical examination but rates are dependent on the insured's current age?

renewable term

A basic vision care package includes all of the following EXCEPT

safety glasses

All of the following are TRUE regarding incomplete applications EXCEPT

the incomplete application can be accepted with the missing information added later.

All of the following are required signatures on a life insurance application EXCEPT

the minor in a juvenile policy.

If the insurer wishes to share an applicant's HIV status, the applicant must be given full notice of all of the following EXCEPT

the treatment procedures that are covered by the policy.

Which of the following occurs immediately after the application is submitted and the initial premium paid?

the underwriting process begins

All of the following are characteristics of variable whole life EXCEPT

there is no guaranteed minimum death benefit.

Managed care plans increase efficiency by all of the following means EXCEPT

transferring the management of costs to the insureds.

All of the following are requirements to qualify for Social Security disability benefits EXCEPT when

unable to work in occupation in which the worker was trained or educated.

When does insurable interest come into play in a life insurance policy?

when the applicant for the policy is not the insured

When can the premiums of an individually owned health insurance policy be deducted from the individual's income tax?

when the taxpayer's medical expenses exceed 7.5% of adjusted gross income during a taxable year