missed
$100,000 Only the face amount is paid out to the beneficiary.
A $100,000 policy with a waiver of premium rider and $30,000 of cash value is in force when the insured dies at age 65. The beneficiary receives how much of the policy's values?
$440,000 A $500,000 policy is sold for $50,000. After the sale the new owner pays $10,000 in life insurance premiums while the insured is alive. Upon death of the insured $60,000 ($50,000 + $10,000) of the death benefit is received income tax free to the beneficiary while $440,000 is taxable ($500,000 - $60,000).
A $500,000 policy is sold for $50,000. After the sale, the new owner pays $10,000 in life insurance premiums while the insured is alive. Upon death of the insured, how much of the death benefit is taxable?
Annual Election. A Medicare beneficiary may enroll in a Medicare Advantage plan when they are first eligible for Medicare, or during the Annual Election Period where a person may change to another Medicare Advantage plan, or switch from Original Medicare to a Medicare Advantage Plan.
A Medicare beneficiary may enroll in a Medicare Advantage plan when they are first eligible for Medicare or during the _____________ Period, where a person may change to another Medicare Advantage plan or switch from Original Medicare to a Medicare Advantage Plan.
Formulary A 'formulary' is a listing of prescription drugs that are covered under Part D and varies by insurance carrier.
A listing of prescription drugs that are covered under Medicare Part D and varies by insurance carrier is called a:
Long-Term Care The question is describing a Long-Term Care Policy. Medicare Supplement covers acute care expenses and related post-hospitalization skilled
A product designed to provide coverage for necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services provided in a setting other than an acute care unit of a hospital is called:nursing care only.
The insurer must pay out the death benefit of the policy to the named beneficiary After the policy has been in force for 2 years, except for cases of nonpayment of premium, meaning the policy has lapsed, the insurer cannot contest any claim. The policy has become incontestable
After a life insurance policy has been in force for 5 years the insured dies. During the claims process, the insurer discovers that the insured did not disclose material health information that had it known, would have caused the application to be rejected. What can the insurer do at this point in time?
Partial disability payments are usually 75% of the total disability benefit Partial disability is an inability to perform one or more of the regular duties of an occupation. The benefit may be related to the percentage of lost wages, or a flat 50% of a total disability benefit. The contract will detail the maximum benefit period.
All of the following are correct concerning partial disability, except
Cancelling a policy due to nonpayment of premium A Long-Term Care policy may only be cancelled by the insurer for nonpayment of premium.
All of the following are prohibited provisions in a long-term care policy, except:
Hold a Certificate of Authority issued by the Commissioner An administrator is any person who collects any charges or premium from, or who adjusts or settles claims on, residents of this state in connection with life, health or annuity insurance coverage and must hold a Certificate of Registration as an administrator issued by the Commissioner. An administrator must have a written agreement with an insurer. A copy of the agreement must be kept for 5 years after the agreement has ended.
An Administrator who collects any charges or premium from or adjusts claims on California residents in connection with life, health, or annuity insurance meet all of the following requirements, except:
The employee chooses which type of insurance to convert to The greatest advantage of group life conversion is that evidence of insurability is not required. The insurance company requires conversion to a permanent policy, which will be more costly.
An employee who is covered under an employer group life insurance plan may assume all of the following are TRUE of the opportunity of conversion, except:
Up to 100 days Medicare Part A will provide coverage for up to 100 days of post-hospital skilled nursing care. Only the first 20 days are covered at 100% of the actual cost.
An insured is hospitalized for at least 3 days. How long will Medicare pay for confinement in a skilled nursing facility?
Refund of premiums paid only. Suicide within 2 years of policy issue is a common exclusion in life insurance (the time can vary by state). Only premiums paid are
An insured, whose policy is in force, intentionally kills herself 7 months after purchasing the policy. How much will the insurer pay refunded?
She cannot change the distribution once commenced The selection of a lifetime annuity payment option is critical because once chosen it typically may not be changed. An alternative to annuitization is a 'systematic withdrawal plan' that allows the amount of withdrawal to be changed in the future. It is not a lifetime income guarantee, and the payments will end when the last dollar of cash value is taken.
At the time of her retirement at age 62, Jolene chose a Life Income Payment Option to have her annuity distributed. Five years later, when her health declines, she needs the distribution to be increased. How is this accomplished?
Misstatement of age on the application Misstatement of age would not avoid a claim, but could cause a reduced benefit to be paid. The Insurance With Other Insurers, Illegal Occupations and Actions, and Intoxicants and Narcotics are each optional provisions that could allow an insurer to avoid liability for a claim.
Based upon Optional Uniform Provisions, an insurer would have the right to deny claim payment in all of the following circumstances, except:
Estoppel prevents one from denying a fact, if the fact was admitted to be true by a previous action This is the legal definition of estoppel. (The intentional misrepresentation of a material fact defines Fraud; the intentional abandonment of a known right defines Waiver; the failure to disclose known facts defines Concealment).
Estoppel is defined as which of the following?
Mental illness and substance abuse Every Medical Expense Policy must offer coverage for mental illness and substance abuse that will be subject to the same deductibles and coinsurance factors as those that apply to any physical illness and include coverage on an inpatient and outpatient basis.
Every Medical Expense Policy must offer coverage for which one of the following conditions that will be subject to the same deductibles and coinsurance factors as those that apply to any physical illness and include coverage on an inpatient and outpatient basis?
$5,000 Civil penalties for persons who furnish false information to the Commissioner may be issued up to $100,000 per violation, as well as a $5,000 penalty for every 30-day period during which the person fails to comply with a request.
Furnishing false information to the Commissioner is subject to a civil penalty of $100,000 plus what amount per 30 days period of noncompliance?
$10,000 The amount contributed is after tax dollars and is considered the cost basis.
H has an annuity funded with after-tax contributions. So far, H has placed $10,000 into the policy and it is now worth $25,000. If H cashes out the annuity, what is H's cost basis?
Open panel, closed panel As the terms imply, the open panel is open to all patients, and the closed panel is closed to all but the HMO's subscribers
HMOs are established as either ________, which means the doctor can work with anyone, including HMO members, or ________, which means the doctor can only work with HMO members.
60 According to the Legal Actions Provision (a Mandatory Uniform Provision), the insured must wait at least 60 days after proof of loss before legal action can be brought against the insurer.
If an insurer makes a payment for a claim but the insured is dissatisfied with it, he/she must wait _____ days after proof of loss before he/she might take any legal action.
Advise the producer that he/she is entitled to a public hearing The Commissioner must advise the producer that he/she is entitled to a hearing before taking action against a producer.
If the Insurance Commissioner has reason to believe that a producer has engaged in unfair competition, he/she is required to:
Failing to obtain proper type, or amount of coverage for a client. Failing to obtain proper type, or amount of coverage for a client is the definition of inadequacy.
In Errors and Omissions terms, what does inadequacy mean?
Earning potential Insurance companies writing disability income generally have an occupational classification system based on considerations, such as job duties, claims history of the occupation, and stability of the industry. Earning potential is not one of the criteria in determining occupational classifications.
Insurance companies writing disability income generally have an occupational classification system based on considerations of all of the following, except:
John is liable for all expenses According to the Intoxicants and Narcotics Provision (an Optional Uniform Provision), the insurer may deny coverage for John's injuries, making John liable for all expenses.
John has had his individual Health and Disability Income policies for many years. While intoxicated, he was injured as the driver in a single car accident. Who covers the medical expenses for John?
The California Employment Development Division Most employers in California must participate in the State Disability Insurance (SDI) Program unless a voluntary plan has been approved by the California Employment Development Division.
Most employers in California must participate in the State Disability Insurance (SDI) Program unless a voluntary plan has been approved by the:
Stop-loss Once the out-of-pocket limit has been reached, the stop-loss provision kicks in and the policy will cover 100% of covered losses for the balance of the year.
Once the out-of-pocket limit has been reached, the _________ provision kicks in and the policy will cover 100% of covered losses for the balance of the year.
Insurer Optional Uniform Provisions are designed to protect the insurer.
Optional uniform provisions found in health insurance policies are designed to protect the:
Assignment of benefits When a policy pays on a reimbursement basis, benefits are paid directly to the insured. Benefits may be assigned directly to the service provider, who then becomes responsible for filing the claim.
Reimbursement benefits may be paid directly to the medical providers under which condition?
Policyowner The policyowner is the person applying for insurance coverage and is responsible for completing an application.
The __________ is the person applying for insurance coverage and is responsible for completing an application.
$300,000 $300,000 is the maximum covered in life insurance death benefit.
The maximum amount of life insurance death benefit on any one insured life, regardless of the number of policies, covered by the California Life and Health Guarantee Association is:
Attained The insured's age at time of policy renewal is referred to as the insured's attained age.
The name used to indicate the insured's age at time of policy renewal is the ________ age.
Extended Term Extended term provides the most amount of coverage for the least amount of time, whereas reduced paid-up provides the least amount of coverage for the longest period of time.
The nonforfeiture option that provides the most amount of coverage is:
Job change The Guaranteed Purchase Option (Guaranteed Insurability, Future Increase) Rider guarantees that on specified dates, ages, or occurrences, such as marriage, birth of a child, etc., the insured may purchase additional monthly benefits, if income justifies it, without proof of insurability. Rates are based on attained age.
The optional guaranteed purchase option rider allows the insured to purchase additional coverage in all of the following situations, except:
Medicaid Policy asset disregard means whatever benefit amount a partnership policy paid will be disregarded from a person's assets if Medicaid is applied for in the future.
Under a California LTC Partnership policy asset disregard means whatever benefit amount a partnership policy paid will be disregarded from a person's assets if _________ is applied for in the future.
When a transfer of ownership takes place while the insured was alive If a transfer of ownership takes place while the insured was alive the death benefit becomes income taxable unless an exception applies.
Unless an exception applies, life insurance proceeds are income taxable in which of the following circumstances?
It excludes specific conditions that normally would cause the entire policy to be declined An impairment rider is a rider added to a policy that will exclude specific conditions that would normally cause a policy to be declined. The use of this rider allows an insured to qualify for a policy with the exclusion attached, where they would otherwise be declined altogether.
What is an impairment rider?
The insured can submit written proof of the loss The claim form must be received by the insured from the company within 15 days after notice of claim. If forms are not furnished, the insured may submit written proof of occurrence, character, and extent of loss.
What is the result of an insured not receiving a claim form within the time period allotted after submitting a notice of claim?
Multi-Employer Welfare Associations (MEWAs) Multi-Employer Welfare Associations (MEWAs) are generally formed by larger employers for the purpose of obtaining more favorable rates for life and health insurance.
What type of organization is generally formed by larger employers for the purpose of obtaining more favorable rates for life and health insurance?
The policy is a Contract of Adhesion. A Contract of Adhesion is a contract between two parties that does not allow for negotiation, i.e. take it or leave it. An insurance policy, drawn up by the insurer, is such a contract. Any ambiguity in the contract is construed against the party who drew it up.
When an insurance policy is not clear, the court will usually interpret in favor of the insured because:
When all the premiums paid in have been fully recovered Policy dividends become taxable only after all premiums paid in have been recovered. Subsequent dividend payments become fully taxable as income.
When are dividend payments received by a policyholder fully taxable?
Each member of the group is covered regardless of his or her health history Group health insurance does not usually require individual underwriting, and the group is either accepted or rejected as a whole. If accepted, all of the group members are covered, regardless of their health history.
Which of the following is consistent with group health underwriting?
Tom Thumb Tailors, a business operated by Tom Thumb, a sole proprietor A natural person is a living (or formerly living) human being. A business entity is not a natural person, even when operated as a sole proprietorship.
Which of the following is not a natural person?
Outpatient hospital care Outpatient care is covered under Medicare Part B.
Which of the following is not covered with Medicare Part A?
Joint and Survivor If owned by an irrevocable trust, a Joint and Survivor policy can keep the value of the policy out of the estate and create much needed cash to pay for estate taxes, which come due 9 months after the second spouse dies.
Which of the following life insurance policies is ideally suited for estate planning purposes?
Business overhead expense Since the premiums are deductible, the benefit is taxable.
Which of the following plans could generate a taxable event to the recipient?
Variable Whole Life Variable Whole Life is a security. It is required that the producer have a securities registration in order to sell it and the policy must be sold with a prospectus detailing all fees, charges, risks, and expenses.
Which of the following policies must be sold by prospectus?
Legal Actions The only choice which is a Mandatory Uniform Provision is Legal Actions. All other responses are Optional Uniform Provisions.
Which of these is a Mandatory Uniform Provision?
Administered by the state using federal guidelines; funded federally and by states for poor persons of all ages; for poor persons 65+, disabled, or blind, may qualify for nursing home benefits Medicaid is a state medical benefit program for persons whose incomes and resources are insufficient to pay for health care, regardless of age.
Which reference to Medicaid is true?
The salary or profit of the business owner A Business Overhead Policy does not pay the owner's salary or profit. Virtually all other financial aspects of running a business are covered.
With a Business Overhead Expense Policy, all of the following are claims that are covered, except:
