MOO Insurance 4/10/17
How many inpatient treatment periods must be included in coverage for alcoholism during the lifetime of a policy?
2. (Basic coverage for the treatment of alcoholis includes coverage for primary and outpatient treatment. The coverage must provide for at least 30 days of treatment coverage for the primary treatment of alcoholism in any 365-day benefit period with at least 2 inpatient treatment periods available during the lifetime of the policy, and 60 outpatient treatment visit during the lifetime of the policy.)
Which of the following is NOT required to be included in the certificate of insurance delivered to each insured by the policyholder?
A letter of approval by the Commissioner. (The insurer must issue a certificate of insurance to the insured that includes information about the insurance protection, beneficiaries, a statement of dependent's coverage, and the insured's rights and conditions.)
Representations are written or oral statements made by an applicant which...
Are considered true to the best of the applicant's knowledge. (Representations are statements made by an applicant which they believe to be true.)
Which of the following is incorrect regarding a $100,000 20 year level term policy?
At the end of 20 years, the policy cash value will equal $100,000. (Term policies do not develop cash values.)
An insurer that holds a Certificate of Authority in the state in which it transacts business is considered a/an...
Authorized insurer (Insurers who meet the state's financial requirements and hold a Certificate of Authority to transact business in the state are considered authorized or admitted.)
When a life insurance policy is canceled and have it they issued has selected the extended term nonforfeiture option, the cash value will be used to purchase Term Insurance that has a face amount
Equal to the original policy for as long a period of time at the cash values will purchase
Uninsured has medical insurance coverage through two different providers, both covering the same expenses on an expense incurred basis. Either company knows in advance that the insured has covered through other insurers. The insured submit a claim to both insurers. House of the claim be handled?
Ethan sure should pay a portion of it share of the claim
Which policy component decreases in decreasing term insurance?
Face amount. (Decreasing term policies feature a level premium and a depth benefit that decreases each year over the duration of the policy term.)
Which rider, when attached to a permanent life insurance policy, provides an amount of insurance on every family member?
Family term rider. (A single rider that provides coverage on every family member is called a "family rider".)
Which of the following policies is characterized by a provision where the premiums are lower in the early years of the policy and increase over time to a point where they become level for the remainder of the policy?
Graded premium whole life
Are universal life insurance policy has two types of interest-rate and that are called
Guaranteed and current
A new employee who meets HIPPA eligibility requirements must be issued health coverage on what basis?
Guaranteed. (If a new employee is eligible, under HIPPA regulations, the new employer but offer coverage on a guaranteed issue basis.)
Courts will interpret any ambiguity in the insurance contract
In favor of the insured
In order to minimize adverse selection, employer group dental plans may require employees who enroll after they were initially eligible to participate to do all of the following except
Increased benefits for a period of one year
The section of a health policy that states the causes of eligible loss under which an insured is assumed to be disabled is the...
Insuring clause. (The Insuring Clause is a provision on the first page of the policy that states the coverage and when it applies.)
What is the main purpose of the seven pay test
It determines the insurance policy of MEC
What is franchise insurance?
It is health coverage for small groups whose numbers are too small to qualify for true group insurance. (Franchise insurance provides health coverage for small groups who numbers are too small to qualify for true group insurance. Franchise insurance is not group insurance, since individuals policies are issued for each participant. Individual underwriting is done for each person, submitting his or her own application and medical history. Premiums charged are generally less than for an individual policy, but more than group coverage.)
If a contract provides a set amount of income for two or more persons with income stopping upon the first death of the insured, it is called a...
Joint life annuity. (Joint life annuity settlement option pays benefits to two or more annuitants, but stops upon the death of the first.)
Which law is the foundation of the statistical prediction of loss upon which rates for insurance are calculated?
Law of large numbers. (The law of large numbers, which states that the larger a group is, the more accurately losses reported will equal the underlying probability of loss, is the basis for statistical prediction of loss upon which rates for insurance are calculated.)
A policyowner is reading a statement on the first page of his health insurance policy, which says "this is a limited policy." What is the name of this statement?
Limited Policy Notice (It is required by law that a Limited Policy Notice must be printed on the first page of insurance policies. The statement reads "this is a limited policy," which means that the benefits offered by the policy are limited.)
All of the following are characteristics of a Major Medical Expense policy EXCEPT
Low maximum limits. (Major medical expense contracts are characterized by high maximum limits, blanket coverage, coinsurance, and a deductible.)
Z fall through the roof of his house while fixing it damages his spinal column enough to render him disable for a year. His insurance policy carries a disability income benefit rider. Which of the following benefits will Z receive
Monthly premium waiver and monthly income
A person who does not lock the doors or does not repair leaks shows and in different attitude. This person presents what type of hazard?
Morale. (A morale hazard is someone who has an indifferent attitude towards an insurance company. He is careless or irresponsible because he knows his loss will be covered by insurance.)
Which of the following is NOT true regarding the Needs Approach method of determining the value of an individual's life?
Need is predicted using the number of years until the insured's retirement. (In the Needs Approach method, need is determined by the predicted needs of the family after the premature death of the insured, which must be assumed will happen immediately. The policy allows for benefits to be collected upon the insured's death.)
When the insured has the right to continue the policy by making timely premium payments, and the insurer has no right to change any provision or the rate of the premium, the policy is...
Noncancellable. ( When the insured has the right to continue the policy by making timely premium payments during which period the insurer has no right to change any provision or the rate of the premium.)
An insured has a life insurance policy from a participating company and receives quarterly dividends. He has instructed the company to apply the policy dividends to increase the death benefit. The dividend option that the insured has chosen is called...
Paid-up Additions (When this option is selected, the annual dividend acts as a single premium each year to buy additional amounts of insurance, based on the insured's currently attained age.)
Which clause allows both the insured and dentist to know in advance which benefits will be paid?
Precertification. (The Predetermination of Benefits Clause, also known as "precertification" and "prior authorization", allows both the insured and dentist to know in advance which benefits will be paid. The clause is found in most dental plans.)
Any occupation disability typically means that an individual is unable to perform the duties of the occupation for which he or she is suitable by all of these EXCEPT...
Preference. (By definition used by most insurers, any occupation disability typically means that an individual is unable to perform the duties of the occupation for which he or she is suited by education, training, and experience.)
Which of the following is correct regarding the taxation of group medical expense premiums and benefits?
Premiums are tax deductible and benefits are not taxed (Premiums paid by employers for Group Medical Expense insurance are tax deductible for the employer as a business expense. Also, policy benefits paid out to employees are not taxable as income to the employee.)
A medical insurance plan in which the healthcare provider is paid a regular fixed amount for providing care to the insured and does not receive additional amounts of compensation dependent upon the procedure performed is called...
Prepaid plan. (Under a prepaid plan, the health care provides are paid for services in advance, whether or not any services are provided. The amount paid to the provider is based upon the projected annual cost as determined by the provider.)
If an individual is covered by the policy that includes an accidental death and dismemberment writer, what term describes the maximum benefit he will receive if he loses sight in both eyes as a result of a fire?
Principal sum
An employer has sponsored a qualified retirement plan for its employees where the employer will contribute money whenever a profit is realized. What is this called?
Profit sharing plan. (A profit sharing plan is one where the employer will contribute monies into an employee's retirement plan when the company shows a profit. The others are all qualified plans, but company profit isn't an issue with them.)
What form of the annuity settlement options provides payments to an annuitant for the rest of the annuitants life and ceases at the annuitants death?
Pure life. (A Pure Life Annuity has the potential for providing the maximum income per dollar of premium if the annuitant lives beyond their life expectancy. However, if the annuitant dies before his or her life expands, and before the total benefit has been paid out, payments cease and there is no refund of payments to survivors.)
Which of the following would help prevent a universal life policy from lapsing?
Target premium. (The target premium is a recommended amount that could be paid on a policy in order to cover the cost of insurance protection and to keep the policy in force throughout its lifetime.)
Which of the following is NOT the consideration in a policy?
The application given to a prospective insured. (Consideration is something of value that is transferred between the two parties to form a legal contract.)
Premiums paid by the employer's for group medical expense insurance are taxable for the employer as a business expense. Also, policy benefits paid out to employees are not taxable as income to employees.
The application given to the prospective insured
An applicant signs an application for a 25,000 life insurance policy, pays the initial premium, and received a conditional receipt. If the applicant is killed in an automobile accident the next day.
The beneficiary would receive 25,000 if the determined that the insured qualify for the policy applied for
Which of the following is not a characteristic of a group long-term disability plan?
The benefit can be up to 50% of one's yearly income
An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit a medical exam. If the policy is issued, what would be the policy's effective date?
The date of the medical exam. (If the company acknowledges receipt of the premium with a conditional receipt, the policy is in effect on the date of the application or the date of the medical exam (whichever is later), provided that the applicant is found insurable at the rate applied for.)
An applicant is considered to be high-risk, but not so much that the insurer wants to deny coverage. Which of the following is NOT true.
The insurer will issue a conditional coverage.
An insurer hires a representative to advertise its company at a local convention. The representative lies about the details of the policies, in an attempt to secure more business for the company. Who is responsible for the representative's claims?
The insurer. (An insurer is completely responsible for advertisements regarding its company, regardless of who creates, presents, or distributes the material.)
And insurance advisement exaggerates the benefits of the insurance policy, due to human error at the insurer's advertising agency. Who will the Department of Insurance hold responsible for the exaggeration?
The insurer. (Insurance companies must adhere to strict advertising requirements. the insurer whose policies are depicted is ultimately responsible for its advertisements.)
Which of the following is true regarding health insurance underwriting for a person with HIV?
The person may not be declared for medical coverage solely based on HIV status
All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT
The policy is owned by the company. (The policy is owned by the employee.)
A group of 15 skydivers met at a seminar and begin talking about life insurance during a break. Because it is expensive to get individual life insurance, they decided to band together to form a small group so that they could qualify for group life insurance. After they applied for group life insurance, they were rejected. Why?
The purpose of a group was to purchase life insurance. (In order to qualify for small group life insurance, a group must be formed for a purpose other than attaining life insurance.)
Under an extended term nonforfeiture option, the policy cash value is converted to ...
The same face amount as in the whole life policy. (Under this option the insurer uses the policy cash value to convert to term insurance for the same face amount as the former permanent policy.)
A deferred annuity is surrendered prior to annuitization. Which of the following best describes the nonforfeiture value of the annuity?
The surrender value should be equal to 100% of the premium paid, minus any prior withdrawals and surrender charges.
Uninsured makes regular contributions to his health savings account. How are those contributions treated in regards to taxation?
They are tax deductible
Which of the following is true regarding limited health insurance policies?
They only cover specific accidents or diseases. (Limited health insurance policies only cover specific accidents or diseases. A comprehensive plan would cover all sickness or accidents that are not specifically excluded.)
Which of the following employees insured under a group life plan would be allowed to convert to an individual insurance of the same coverage once the plan is terminated?
Those who have been insured under the plan for at least five years
Which statement best defines a Multiple Employer Welfare Arrangement (MEWA)?
A joining together by employers to provide health benefits for employee. (A MEWA provides benefits for a number of member groups.)
Under Hyppa, which of the following is incorrect regarding eligibility requirements for conversion to an individual policy?
An individual who was previously covered by a group health insurance for six months is eligible
Your clients employer does not offer a companywide annuity contract. Contract could your client obtain?
Individual
What is the benefit of choosing extended term as a nonforfeiture option?
It has the highest amount of insurance protection
How is the amount of Social Security disability benefits calculated?
It is based upon the workers Primary Insurance Amount (PIA), which is calculated from their Average Indexed Monthly Earnings over their highest 35 years. (The amount of Social Security disability benefits is based upon the worker's Primary Insurance Amount (PIA), which is calculated from their Average Indexed Monthly Earnings over their highest 35 years. The lowest 5 years of income may be deleted from calculation.)
For what reason may a life insurance producer backdate a life insurance policy?
To avoid an increase in premium rate for the insured. (Agents may backdate policies up to 6 months in order to obtain a better premium rate for the insured.)
Which of the following products requires a securities license?
Variable annuity. (A variable;e annuity is considered to be a security and is regulated by the Securities Exchange Commission (SEC) in addition to state insurance regulations. For that reason a person must hold a securities license in addition to a life agent's license in order to sell variable annuities.)
All of the following cases show when the small employer medical plan cannot be renewed except
When a employer chooses to renew the plan
All of the following are characteristics of a Major Medical Expense EXCEPT...
.
S is a sole business proprietor who owns a medical expense plan. What percentage of the cost of the plan may he deduct?
100% (Sole proprietors and partners may deduct 100% of the cost of a medical expense plan provided to them and their families because they are considered self-employed individuals, not employees.)
A policy owner cancels his life policy but instructs the insurance company to transfer the cash value of his policy to an annuity. This non-taxable transaction is called...
1035 exchange. (In accordance with Section 1035 of the Internal Revenue Code, certain exchanges of life insurance policies and annuities may occur as nontaxable changes.)
What is the minimum number of employees that an employer must have in order to be classified as a "small employer"?
2. ("Small employer" means any person, political subdivision, firm, corporation, limited liability company, partnership, or association that is actively engaged in business that , on at least 50% of its working days during the preceding calendar quarter, employed at least 2 and no more than 50 eligible employees, the majority of whom were employed within Nebraska.)
The person buys an individual long-term care policy and it's not satisfied with the provisioning's? Within how many days will the insured be able to return the policy for a full premium refund?
30 days
The Director denies an application, and the applicant requests a hearing to contest the decision 25 days later. Within how many days must that hearing occur?
30. ( If the Director denies an application for a license, the Director must notify the applicant in writing of the reason for denial. Within 30 days of the applicant's receipt of this notice, the applicant may make written demand to the Director for a hearing on the matter of denial. The hearing must occur within 30 days of the Director's receipt of the demand.)
What is the maximum age for qualifying for a catastrophic plan?
30. (Youngs adults under 30 and individuals who cannot obtain affordable coverage (have a hardship exemption) may be able to purchase individual catastrophic plans the cover essential benefits.)
what is the period of coverage for events such as death or divorce under COBRA?
36 months
To attain currently insured status under so security, it worker must have earned at least how many credit hours during the last 13 quarters?
6 credits
How long is open enrollment period for Medicare supplement policies?
6 months. (An open enrollment period is a 6-month period that guarantees the applicants the right to buy Medigap one they first sign up for Medicare Part B.)
What documentation grants express authority to an agent?
Agents contract with the principal. (The principal grants authority to an agent through the agent's contract.)
What is the time. Call during which the surviving spouse of the insured does not receive Social Security income benefits?
Blackout period
What does "liquidity" refer to in a life insurance policy
Cash values can be borrowed at any time. (Liquidity in life insurance refers to availability of cash to the insured through cash values.)
Which of the following types of insurance provides coverage on human lives, including benefits of endowment and annuities?
Life
Which of the following provisions is mandatory for health insurance policies?
Physical examination and autopsy. (Physical examination and autopsy is a mandatory provision required by law.)
The act that sets the standards for advice given by insurance producers regarding annuities is known as the Nebraska
Protection in annuity transaction act
Which of the following statements concerning a Simplified Employee Pension plan (SEP) is INCORRECT?
SEPs are suitable for large companies. (A SEP is a benefit plan that is designed to be provided by a small employer for the benefit of the employees.)
After three years of making payments to a flexible premium to for annuity, the owner decides to surrender the annuity. The insurer returns all the premium payments to the owner, except the predetermined percentage. What is this percentage called?
Surrender charge
Which of the following is not the activity of daily living ADL?
Talking
Which of the following is an example of a parent authority of an agent appointed by an insurer?
The agent except the premium payment after the end of the grace period
A husband and wife are insured under group health insurance plans at their own places of employment, and as dependents under their spouses coverage. If one of them incurs hospital expenses, how will those expenses likely be paid?
The benefits will be coordinated. (Benefits will be coordinated when individuals are covered under two or more health plans.)
Which of the following is a feature of variable annuity?
Benefit payment amounts are not guaranteed. (Under a variable annuity, the issuing insurance company does not guarantee a minimum interest rate or the benefit payment amounts. The annuitants payments into the annuity are invested in the insurer's separate acct. Agents selling variable annuities are required to have a securities license in addition to their life agent's license.)
All of the following are true of the Key Person disability income policy EXCEPT...
Benefits are considered taxable income to the business. (Key person disability benefits are not considered taxable income to the business.)
An insured is admitted to the hospital for surgery on a herniated disk. The insurance company monitors the treatment and progress in order to make sure everything proceeds according to the insurer's schedule. This is called...
Concurrent review. (Under the concurrent review process, the insurance company will monitor the insured's hospital stay to make sure that everything is proceeding according to schedule and that the insured will be released from the hospital as planned.)
An applicant for an individual health policy failed complete the application properly. Before being able to complete the application and pay the initial premium, she is confined to the hospital. This Will not be covered by the insurance because she has not met the condition specified in the...
Consideration clause. (The consideration clause specifies that parties to the contract must give some valuable consideration. The payment of the premium is the consideration given by the applicant had not paid an initial premium, she is not covered by insurance.)
Which of the following includes information regarding a persons credit, character, reputation, and habits?
Consumer report
Which of the following is not typically excluded from life policies?
Death due to plane crash for a fair paying passenger
A 70-year-old individual who bought a part B Medicare policy two months ago just begin kidney dialysis treatments this week. The individual is now apply for Medicare supplement policy, which would begin in eight months. Which of the following could be insured do to avoid paying for the dialysis?
Declare a pre-existing condition. (If an applicant is aged 65 or greater and applies for Medicare supplement coverage while covered under Part B Medicare insurance, an insurer cannot alter the price of coverage based on prior claims experience or health status, provided that the applications was made during the first 6 months of Part B coverage. The insurer may, however, exclude benefits during the first 6 months based upon a pre-existing condition for which the policyholder received treatment during the 6 months before it became effective.)
Which of the following is NOT a cost-saving service in a medical plan?
Denial of coverage. (Cost-saving services, also known as case management provisions, include the following: controlled access of providers, large claim management, preventive care, hospitalization alternatives, second surgical opinions, readmission testing, catastrophic case management, risk sharing, and providing high quality care.)
Which agreement specifies how a business will transfer hands when one of the owners dies or becomes disabled?
Disability buy/sell. (The Disability Buy-Sell agreement specifies how a business will pass between business owners if one of the owners dies or becomes disabled.)
An agent selling variable annuities must be registered with?
FINRA
Which of the following is INCORRECT concerning Medicaid?
It is solely a federally administered program. (Medicaid is assistance program for persons with insufficient income and/or resources to pay for health care. States administer the program that is financed by federal and state funds.)
Give an example of group medical expense premiums and benefits.
Premiums are not tax deductible and benefits are taxed.
What is the necessary in order to be eligible to receive benefits from a long-term care policy?
The insured must be unable to perform some activities of daily living
Who may complete paramedical report?
A registered nurse. (Paramedical reports are completed by paramedics or registered nurses. Full medical examinations are reserved for those wanting higher coverage for those who have more complex medical histories.)
The Omnibus budget reconciliate an act of 1990 requires that large group health plans must provide primary coverage for disabled individuals under
Age 65 Who are not retired
Who would be insured under the COLI policy?
All employees. (Corporate owned life insurance (COLI) is life insurance written on employees' lives.)
Employer contributions made to a qualifying plan
Are subject to vesting requirements
When twin brothers apply for life insurance from J, the company found that neither of them smoked and both had very similar lifestyles, one of the twins was in much stronger financial position than the other. Because of this, the company charged him a higher rate for his insurance. This practice is considered
Discrimination
An insured has medical insurance coverage through 2 different providers, Both covering the same expenses on an expense-incurred basis. Neither company knows in advance that the insured has coverage through any other insurers. The insured submits a claim to both insurers. How should the claim be handled?
Each insurer should pay a proportionate share of the claim. (In the event that an insured is covered on an expense-incurred basis for the same expenses under multiple insurers and the insurers are not informed about the other sources of coverage before the loss, proportionate shares of the claims should be paid.)
Which of the following is an eligibility requirement for all Sosa security disability income benefits?
Has attained fully insured status
A lucky individual won the state lottery, so the state will be sending him a check each month for the next 25 years. What time of annuity products are likely to use to provide these benefits?
Immediate annuity. (An annuity purchased with a single lump-sum payment, with a 25 year fixed-period distribution will be most suitable for this arrangement.)
Under the street life annuity, if annuitant dies before the principal amount is paid out, the beneficiary will receive
Nothing the payments will cease