Nevada Life and Health License Exam Prep Questions

In Group Medical and Dental Expense Insurance, what percentage of premium paid by the employer is deductible as a business expense?

100% is deductible.

What is the minimum interest rate on an equity indexed annuity often based?

An index like Standard & Poor's 500

Who would be considered a third

An individual or an entity who is not the insured

Group life insurance policies are written as what type of life insurance?

Annually Renewable Term

How does an employee qualify for COBRA?

Any termination of employment for reasons other than misconduct

Who is eligible for Medicare Part B?

Anyone who has enrolled in Medicare Part A.

What does liquidity mean in a life insurance policy?

Availability of cash value

What type of beneficiary is next in line after the primary beneficiary?

Contingent beneficiary

What is the general taxation rule for death benefits payable to the beneficiary of a life insurance policy?

Death benefits are generally not subject to income taxes

Insurance is a contract by which one seeks to protect another from

Loss

How will changing one's occupation to be more hazardous affect the health insurance policy in force?

The claim benefits will be reduced to what the premium would have bought.

What is the birthday rule in a Coordination of Benefits Provision?

The coverage of the parent whose birthday is earliest in the year is considered primary.

What is not covered under Plan A in Medigap Health Insurance?

The deductible.

With the reduction of premium dividend option, how is the dividend used?

The dividend is applied to the next year's premium; it reduces the next year's premium

How do employer contributions to a Health Savings Account affect the insured's taxes?

The employer contributions are not included in the individual insured's taxable income.

If an individual is covered by Medicare and is also covered by their employer's health plan, which plan would be considered primary?

The employer plan.

In group life insurance, who receives the master contract?

The employer receives the master contract in group life insurance.

What constitutes the entire contract?

The entire contract constitutes the policy, a copy of application, and any riders or amendments.

What insurance arrangements will be appropriate for a parent buying a life insurance policy on a child where the parent is the policyowner?

Third-party ownership

When would a whole life insurance policy mature?

The whole life insurance policy matures when the insured dies or turns 100.

To whom may a certificate of authority be issued?

To an insurer authorized to transact business in this state.

What policy loans are not available on term insurance?

There is no cash value to borrow against

Why are dividends in life insurance policies not taxable?

They are a return of unused premiums and are not considered income for tax purposes

How are contributions to a tax-sheltered annuity treated with regards to taxation?

They are not included as income for the employee, but are taxable upon distribution

An insured makes regular contributions to his Health Savings Account. How are those contributions treated in regards to taxation?

They are tax deductible

How does someone qualify for Social Security Disability Income benefits?

They must have fully insured status, meet the definition of disability, and satisfy the waiting period.

What is the purpose of Managed Care Health Insurance plans?

To control health insurance claims expenses

What is the main purpose of the 7-Pay Test?

To determine if a life insurance policy a Modified Endowment Contract (MEC)

What is the purpose of Medicare Supplement plans?

To fill in the gaps in Medicare coverage.

What is the purpose of the Automatic Premium Loan provision?

To prevent the unintentional lapse of a policy because of nonpayment of the premium

What are some examples of qualified retirement plans?

Traditional IRA, Roth IRA, SIMPLE, SEP, and 401(k)

Agents who persuade insureds to cancel a policy in favor of another one when it might not be in the insured's best interest are guilty of...

Twisting

What type of misrepresentation persuades an insured to cancel, lapse, or switch policies from one to another?

Twisting

What is the name of the process that insurance companies use to determine whether or not an applicant is insurable?

Underwriting

What policies would have an IRS required corridor or gap between the cash value and the death benefit?

Universal Life, Option A

In a survivorship life policy, when does the insurer pay the death benefit?

Upon the last death

What type of annuity requires an agent to have a securities license?

Variable annuity

Who is a person, other than a viator, that enters into a viatical settlement?

Viatical Settlement Provider

What statement would best describe the difference between viatical settlement and accelerated death benefits?

Viaticals are funded by a third party; accelerated death benefits are provided by the insurer that issued the original policy.

What life insurance policy rider allows the company to forgo collecting the premium if the insured becomes disabled?

Waiver of Premium

What is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?

Warranty

In forming an insurance contract, when does acceptance occur?

When an insurer's underwriter approves coverage

When would a misrepresentation on an insurance application be considered fraud?

When it is intentional and material

When is controlled business legal?

When the commissions from controlled business do not exceed the aggregate commissions on all the other business

What is the main difference between immediate and deferred annuities?

When the income payments begin

When would a 20-pay whole life policy endow?

When the insured reaches age 100

When should an agent obtain a Statement of Good Health from the insured?

When the premium was paid upon policy delivery and not at the time application

When does an adjustable life policy accumulate cash value?

When the premiums paid are more than the cost of the policy

When will a contingent beneficiary receive death benefit from a life insurance policy?

When the primary beneficiary dies before the insured

When would life insurance policy proceeds be included in the insured's taxable estate?

When there is an incident of ownership at the time of death

When can the Commissioner or Director examine insurers?

Whenever deemed necessary but at least once every few years.

What type of insurance policies would perform the function of cash accumulation?

Whole Life Insurance

What type of insurance would perform the function of cash accumulation?

Whole Life Insurance

What type of insurance covers an employee who is hurt on the job?

Workers Compensation

Can an individual who belongs to a POS plan use an out-of-network physician?

Yes, they can use any physician even if not part of the HMO

If the annuitant dies during the accumulation period, who will receive the annuity benefits?

The beneficiary

What is policy replacement?

A new policy is issued while an existing policy is terminated or reissued with a reduction in cash value

How soon can income payments begin in an immediate annuity?

No later than 1 year from the time of annuity purchase

SIMPLE plans are available to groups of how many employees?

No more than 100

Who issues Medigap policies?

Private insurers

What is the typical deductible for basic surgical expense insurance?

$0. There is no deductible but coverage is limited

What is the penalty for transacting insurance without a proper license?

$1,000 for each violation

What section of a Health Insurance policy lists the services for which the insurer will not provide coverage?

The Exclusions Section.

What law protects consumers from the circulation of inaccurate or obsolete information

The Fair Credit Reporting Act

What type of policy allows the insurance company to cancel a policy at any time?

Cancellable

What are the two components of a universal policy?

Insurance and cash account

What Part of Medicare is known as medical insurance?

Medicare Part B

What risk classification would typically qualify for lower premiums?

Preferred Risk

How is the information obtained for an investigative consumer report?

Through interviews with the applicant's associates, friends, and neighbors

What provision states that the insurance company must pay Medical Expense claims immediately?

Time of Payment of Claims

What does the free-look period allow the insured to do?

To return the policy for a full refund.

How soon following the occurrence of a covered loss must an insured submit written proof of such loss to the insurance company?

Within 90 days to 1 year

What part of Medicare covers physician's and surgeon's services?

Medicare Part B

What part of Medicare will cover lab services and diagnostic tests?

Medicare Part B

What is another name for Medicare Supplement plans?

Medigap

What is the clause that is included in a life policy that limits or eliminates the death benefit if the insured dies as a result of war or while serving in the military?

Military Service or War

What illegal act does a producer commit when the producer represents a policy in a more favorable light than the policy really is?

Misrepresentation

On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. What is the company guilty of?

Misrepresentation.

What are the benefits available under Social Security?

Disability benefits, death benefits, survivor's benefits, and old-age and retirement benefits

What is not true about dividends?

Dividend amounts are guaranteed in the policy

If a health care plan has characteristics of an HMO and PPO, what type of plan is it?

POS or Point-of Service

What part of Medicare is known as hospital insurance?

Part A

What is another name for Medicare Advantage plans?

Part C

What is not provided by an HMO?

Reimbursement

What Health Insurance policy provision states to whom the claim benefits must be paid?

The Payment of Claims Provision.

Insurers are classified according to their domicile. What are the three types of insurers?

Domestic, foreign, and alien.

What does the Insuring Clause of a disability policy not include?

The method of premium payment

What type of hospital policy pays a fixed amount each day that the insured is in the hospital?

Indemnity

The patient protection and affordable care act includes what except?

Individual tax deduction for premiums paid

What is the maximum amount that the Nevada Life & Health Insurance Guaranty Association be obligated to pay with respect to life insurance death benefits for one life?

$300,000

How long will benefit periods for individual short-term disability policies continue for?

6 months to 2 years

How long is the grace period for weekly premium policies or industrial policies?

7 days for weekly premium policies

How long is the grace period for monthly premium policies?

10 days for monthly premium policies

A producer who has allowed their license to lapse may reinstate the examination within what maximum time period?

12 months

A producer who has allowed their license to lapse may reinstate the license without retaking the examination within what maximum time period?

12 months or 1 year

The Commissioner must give reasonable notice to all interested parties as to the time, place, and purpose of a hearing within the minimum of how many days of the hearing?

20 days

What is a penalty tax for nonqualified distributions from a health savings account?

20%

Producers must complete how many hours of continuing education on the subject of ethics every licensing period?

3 hours

When is the initial enrollment period for Medicare Part A?

3 months before turning 65 and 3 months after

How many days does a nonresident procedure have to file a change of address when the agent moves to Nevada from another state?

30 days

What is the required grace period in group life policies in Nevada?

31 days

When an employee terminates coverage under a group insurance policy, how long does the coverage stay in force?

31 days

How long is the grace period for annual or other modes of premium policies?

31 days for any other premium policies

Each domestic insurer of Nevada must be examined by the Commissioner every...

5 years.

How many days after cancellation of a license in another state does a new resident agent have to apply for Nevada producer license without having to fulfill licensing examination and education requirements?

90 days

A Waiver of Premium Provision may be included with which kind of health insurance policy?

A Disability Income policy.

What are the most common penalties for violations of insurance statutes?

A Cease and Desist order, a fine, and license suspension or revocation.

In the Commissioner finds a licensee engaging in an unfair method of competition, what order will be issued?

A Cease and Desist order.

If the insured's share in the cost of health insurance premiums with the employer, this would be known as what type of Group Health Insurance plan?

A Contributory Plan.

What must Medicare Supplement policies and Long-Term Care policies be written as?

A guaranteed renewable contract.

What type of premium is charged on a straight life policy?

A level premium for the life of the insured

What definition does not fit the definition of an administrator?

A life and health producer who only sells insurance

What premium mode would result in the highest annual cost for an insurance policy>

A monthly premium.

Who is an insurance agent?

A person authorized to sell, solicit, and negotiate insurance contracts.

Who may contribute to an HR-10 plan?

A self-employed individual

What type of worker would not qualify for Keogh Plan?

A worker who works less than 1,000 hours per year

Which of the two types of policy assignments requires transfer of all ownership rights in the policy to a third party>

Absolute Assignment

In health insurance, when would excess plans pay benefits?

After the primary plans has paid its full promised benefits, the excess plan will pay the remaining balance.

How can a new physician be added to the PPO's approved list?

Agree to follow the PPO standards and charge the appropriate fees

What are the four required elements of an insurance contract?

Agreement, consideration, competent parties, and legal purpose.

What best describes the concept that the insured pays a small amount of premium for a large amount of risk on the part of the insurance company?

Aleatory Contract

Who must be a member of insurance guaranty associations?

All insurers authorized to write insurance in Nevada.

What must Long-Term care policies include?

Alzheimer's disease

Who is considered a nonresident agent?

An agent who resides and is licensed in another state, but who is authorized to transact insurance in this state.

What actions by an insurance company will cause an examination by the Commissioner?

An application for an initial Certificate of Authority

Under the Physical Exam and Autopsy Provision, how many times can an insurer have the insured examined, at its own expense, while a claim is pending?

An unlimited amount of times.

Who receives income payments from an annuity?

Annuitant

In an annuity, the accumulated money is converted into a stream of income during which phase?

Annuitization period

An individual has a contract that will provide them with a certain amount of income for the rest of their life, however, this is not a life insurance policy. What type of contract does this person have?

Annuity

What does the Social Security Disability definition not include?

Any disability expected to last for at least 6 months

What type of services will Medicare Part A pay for?

Any hospital care, skilled nursing facility care, home health care, and hospice care.

Who can qualify for Medicaid?

Any person with insufficient income.

According to the Rights of Renewability Rider for cancellable policies what is untrue about the cancellation of an individual insurance policy?

Any unearned premiums are retained by the insurance company.

Who is able to qualify for Medicare Part A?

Anyone who is over 65.

Where can HMO members receive inpatient hospital care?

Anywhere, even if outside the service area

What is the term used for a written request to issue an insurance contract based on the provided information?

Application

How are benefits received by the business from a Key Person Disability Income?

As Tax-free Income

Under a fully contributory health plan, how are benefits received by the employee?

As tax-free income.

An agent is ready to deliver a policy to an applicant but has not yet received payment. Upon delivery, the agent collects the applicant's premium check, answers any questions the applicant may have, and then leaves. What did he forget to do?

Ask them to sign a statement of good health

In a replacement situation, what is not considered?

Assets

At what age do individuals qualify for Medicare?

At age 65.

At what age may an individual make withdrawals from an HSA for nonhealth purposes without being penalized?

At age 65.

What is the maximum period of time during which an insurer may contest fraudulent misstatements made in a health insurance application?

At any time while the policy is in force.

To comply with Fair Credit Reporting Act, when must a producer notify an applicant that a credit report may be requested?

At the time of application

When must insurable interest exist in life insurance?

At the time of application.

When does coverage begin, if the premium was submitted with the application, and the policy was issued two weeks later?

At the time of the application.

If an underwriter requires extensive information about the applicant's medical history, what report will best serve this purpose?

Attending Physician's Statement

What document describes an insured's medical history, including diagnosis and treatments?

Attending Physician's Statement

Occasional visits by what medical professionals will not be covered under Long-Term Care's home health care?

Attending physicians

If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered what type of insurer?

Authorized or admitted insurer

What protects the insured from unintentional policy lapse due to a nonpayment of premium?

Automatic premium loan

Once a person meets the stringent requirements for disability benefits, how long is the waiting period under Social Security before any benefits will be paid?

Benefits will be paid in 5 months.

When does coverage apply for a group disability income insurance?

Both on and off the job

What type of licensee represents the insured?

Broker

What type of health insurance is sold to small business owners to reimburse them for the overhead expenses?

Business Overhead Expense Insurance (BOE)

How is Medicare Part B funded?

By monthly premiums and from the general revenue of the federal governement.

What is an important feature of a dental expense insurance plan that is not found in a medical expense insurance plan?

Diagnostic and preventive care

What is the name of the act by the insured to voluntarily give up insurance?

Cancellation.

An insured receives an annual life insurance dividend check. What term best described this arrangement?

Cash option

In variable universal life insurance, to what policy component does the term "variable" refer?

Cash value and death benefit

What are the dividend options in life insurance policy

Cash, reduced premium, accumulation at interest, paid-up additions, paid-up option, one-year term, and acceleration of endowment

What document is required for an insurance company to transact insurance?

Certificate of Authority

What type of disabilities will be covered by occupational coverage?

Disabilities that result from accident or sickness that occur on or off the job.

What is true regarding a nonqualified retirement plan?

Contributions are not tax deductible, It can discriminate in benefits and selecting participants, earnings grow tax deferred and it does not need IRS approval

What are the five basic characteristics of managed care plans?

Controlled access to providers, comprehensive case management, preventive care, risk sharing, and high quality care.

What type of health insurance covers partners or corporate officers of a closely held business?

Disability Buy-Sell

Under what employer-provided plan are the benefits taxable to an employee in proportion to the amount of premium paid by the employer?

Disability Income

How are individually owned disability income benefits taxed once received by the insured?

Disability benefits are not taxed

What is not true about Accidental Death and Dismemberment?

Death benefits are paid only if death occurs within 24 hours of an accident

What type of life insurance is best suited to cover a mortgage?

Decreasing term

If a producer makes maliciously critical statements about another insurer, what is this illegal practice called?

Defamation.

What is not a duty of the Commissioner?

Developing insurance rates.

What is required to qualify an individual to contribute to a traditional IRA?

Earned income

If the annuitant dies before the annuitization period starts, what will beneficiary receive?

Either the amount paid into the annuity or cash value, whichever is greater

Who qualifies for tax-sheltered annuities, or 403(b) plans?

Employees of nonprofit organizations under Section 501(c)(3) and employees of public school systems

In health insurance, the policy itself and the insurance application form what?

Entire Contract

What life insurance policy provision prevents an insurer from disputing or denying a claim due to misstatements on the application after a certain period of time?

Incontestability

How often are producers required to complete continuing education requirements to keep the license in force?

Every 3 years

What is the main advantage of converting from group life insurance to individual coverage?

Evidence of insurability is not required

What nonforfeiture option has the highest amount of insurance protection?

Extended Term

What nonforfeiture option is automatically selected by the company if not chosen by the policyowner?

Extended Term

What does the term "level" refer to in level term insurance?

Face amount

If an insured is not required to pay a deductible, what kind of coverage do they have?

First-dollar Coverage

How long do Short-Term Disability Group Health Insurance plans pay benefits?

For any period less than 2 years.

For what reason can a temporary license be issued?

For continuation of business in case the licensed producer dies or becomes disabled.

How long will a life annuity with a 15-year period certain pay?

For the life of the annuitant unless they die within the first 15 years of the annuitization period; then the payments will last 15 years

What two parts make up a life insurance application?

General Information and the Medical Information. An agent's report can go in a life insurance application but is not included in the life insurance policy.

What must the insurer do before giving the applicant an HIV exams?

Get the applicants informed written consent prior to the exam. Results will be disclosed to underwriters but not agents

What provision in a life insurance policy extends coverage beyond the premium due date?

Grace period

What required provision protects against unintentional lapse of the policy?

Grace period

What type of policy is typically issued without proof of insurability from the insured?

Group policy

What are the characteristics of the group that underwriters will consider before issuing a group life policy?

Group's purpose, size, financial strength, and turnover

Most Long-Term Care plans have...

Guaranteed renewability

What is an eligibility requirement for all Social Security Disability Income benefits?

Have attained fully insured status

Under the Privacy Rule for HIPAA, protected information includes all individually identifiable health information...

Held in or transmitted in any form

What are Health Savings Accounts designed to do?

Help individuals save for qualified health expenses

To be eligible for a Health Savings Account, an individual must be covered by what plan?

High-Deductible Health Plan

What are the three basic coverages for medical expense insurance?

Hospital, Surgical, Medical

When would life insurance death benefits be tax free?

If paid as a lump sum to the beneficiary

In which Medicare Supplement policies are the core benefits found?

In all Medicare plans.

What type of report provides information about the applicant's hobbies, habits, and financial status?

Inspection Report

What two elements are necessary for a life insurance contract to have a legal purpose?

Insurable interest and consent

What do individuals use to transfer their risk of loss to a larger group?

Insurance

In general, who can be excluded from producer licensing and examination requirements?

Insurance company officers, directors, or others who do not transact insurance and who do not receive commissions for their services.

What is controlled business?

Insurance on the producer's own life or property, or the lives, or or property of the producer's family or business associates.

What entities make up the Medical Information Bureau?

Insurers

What section of a health policy that states the causes of eligible loss under which an insurance is assumed to be disabled?

Insuring Clause

What type of dental plan is incorporated into a major medical expense plan?

Integrated dental plan

What is the purpose of a free-look period in insurance policies?

It allows the insured to reject the policy with a full refund

According to the Time Limit on Certain Defenses Provision in a Health Insurance policy, when can an insurer contest fraudulent misstatements on an application?

It can be any time while the policy is in force.

How many parts does Medicare have?

It has 4 parts, A through D.

What benefits are provided by Medicare Part C?

It has expanded benefits through private insurance programs such as HMOs or PPOs.

What is does the Insuring Clause do?

It identifies the agreement between the insured and the insurance company and the loss covered.

What is the required free-look period for Medicare Supplement policies?

It is 30 days.

How long is an open enrollment period for Medicare Supplement policies?

It is a 6-month period.

According to the Reinstatement Provision, once a lapsed policy is reinstated, how soon will coverage be available for accidents?

It is available immediately.

What best describes annually renewable term insurance?

It is level term insurance

What is the purpose of the Coinsurance Provision in Health Insurance policies?

It prevents overutilization of the policy benefits.

How many pints of blood will be paid for by Medicare Supplement core benefits?

It will only pay for the first 3 pints.

If the insured pays a monthly premium for a Health Insurance policy, how long would the grace period be on the policy?

It would last for 10 days.

What part of Medicare pays for inpatient hospital care, skilled nursing facility, home health care, and hospice care?

Medicare Part A

Mortality tables are used by insurance companies to predict what?

Life expectancy and the death rates for specific groups of individuals

What annuity settlement option provides income payments to the annuitant for the duration of their life and also guarantees payment for a specified number of years?

Life income with period certain

A whole policy that requires that the policyowner only pays premiums for a specified number of years is known as what kind of policy?

Limited-Pay Whole Life

If a settlement option is not chosen by the policy owner or the beneficiary, what option will be used by the insurer?

Lump-sum payment

What is not considered a misrepresentation?

Making comparisons between different policies

What program expands individual public assistance programs for people with insufficient income and resources?

Medicaid

What information are the members of the Medical Information Bureau required to report?

Medical information about the applicants or insured

What are the four types of workers compensation benefits?

Medical, income, rehabilitation, and death benefits

What best describes gross annual premium?

Net premium plus expenses

Does a reinstated policy provide immediate coverage for an illness?

No

Does the policyowner have the right to change beneficiaries in any case?

No, a policyowner can only change the beneficiary if it is a revocable beneficiary.

Is the death benefit of a life insurance policy taxed to the beneficiary if it's received as a lump sum?

No, lump-sum benefits are received tax free

What is not a required provision in group life insurance policies issued in Nevada?

Nonforfeiture benefits

During replacement of life insurance, a replacing insurer must do which of the following?

Obtain a list of all life insurance policies that will be replaced

In Long-Term Care insurance, what type of care is provided with intermediate care?

Occasional nursing or rehabilitative care

Under an Individual Disability Income policy, the benefits must be paid on at least what schedule?

On a monthly basis.

What does it mean when health insurance contracts are unilateral?

Only one party makes a legally enforceable promise

Who may share in the commission from the sale of a life insurance policy?

Only producers properly licensed for the type of insurance transaction

Upon surrender of a life insurance policy, what portion of the cash value will be taxed?

Only the portion in excess of the premium paid

When can an irrevocable beneficiary be changed?

Only with the written consent of the beneficiary.

Which Universal Life option has a gradually increasing cash value and a level death benefit?

Option A

What is the life insurance policy rider that provides coverage on the insured's family members?

Other-Insured Rider

What provision would prevent an insurance company from paying a reimbursement claim to someone other than the policyowner?

Payment of Claims

What best describes an annuity period?

Period of time during which accumulated money is converted into income payments

What type of life insurance offers an applicant a cash value element?

Permanent Insurance

What is the advantage of reinstating a life insurance policy as opposed to applying for a new one?

Policy premium in a reinstated policy will be set according to the insured's original age

When health care insurers negotiate contracts with health care providers or physicians to provide health care services for subscribers at a favorable cost, it is referred to as...

Preferred Provider Organization

What term describes the fee a person pays an insurance company to receive coverage?

Premium

What is the tax advantage of the employer paying premiums for its employees for disability income insurance?

Premiums are deductible as a business expense.

What is the taxation of Group Medical Expense premiums and benefits?

Premiums are tax deductible and benefits are not taxable.

What is true regarding Business Overhead Expense Insurance?

Premiums are tax deductible.

What beneficiary designation has first claim to the death proceeds of a life insurance policy?

Primary beneficiary

What can a Medicare SELECT policy not do?

Prohibit payment for regularly covered services if provided by non-network providers.

Which provision states how much time must pass between two like illnesses in order for the second one to be covered under a new set of benefits?

Recurrent Disability Provision

What is the primary purpose of a 401(k) plan?

Provide retirement income

An agent offers a client free tickets to a sporting event in exchange for the purchase of an insurance policy. What is the agent guilty of?

Rebating

What provision allows the policyowner to reactivate a lapsed life insurance policy within a specified period of time with proof of insurability?

Reinstatement

What type of care is Respite care?

Relief for a major care giver

Which rule would apply is an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance?

Replacement rule

What is the appropriate action by the insurer if a prospective insured submitted an incomplete application?

Return the application to the applicant for completion

What is insurance the transfer of?

Risk

What type of whole life insurance policies only requires a payment of premium at its inception, and in addition to providing insurance protection for the life of the insured, endows at the insured's age 100?

Single premium whole life

What are the three types of risk rating classifications in life insurance?

Standard, substandard, and preferred

What is the best way to make a change on an application for insurance?

Start over with a fresh application

The Nevada Insurance Guaranty Association has a legal right to seek damages from third parties after having reimbursed the insured for the loss. What is this known as?

Subrogation

What is the provision that prevents the insured from collecting twice for the same loss?

Subrogation

What is not covered under Basic Hospital Expense Coverage?

Surgeon's fees

What would basic medical expense coverage not cover?

Surgeon's services

What are the personal uses of life insurance?

Survivor protection, estate creation and conservation, cash accumulation and liquidity

The premiums paid by the employer in a business life insurance policy are

Tax deductible by the employer

Nonforfeiture values guarantee what for the policyowner?

That the cash value will not be lost

What entity determines if an advertisement is deceptive of confusing?

The Commissioner

Who must be notified of a producer's change of address?

The Department of Insurance.

A Waiver of Premium Provision may be included with what type of Health Insurance policies?

The Disability Income policy.

What Health Insurance policy provision allows the insured a period of time to examine the policy and determine whether to keep it?

The Free-Look Provision.

Which rider allows an insured to purchase additional coverage without evidence of insurability?

The Guaranteed Insurability Rider allows an insured to purchase additional coverage without evidence of insurability.

What health insurance provision prevents the insured from bringing a lawsuit against the insurance company for at least 60 days after proof of loss is provided?

The Legal Actions Provision.

What is another name for Social Security benefits?

The Old Age, Survivors, and Disability Insurance.

What Health Insurance policy provision allows the insured the right to cancel coverage?

The Renewability Provision.

What health insurance provision describes the insured's right to cancel coverage?

The Renewal Provision.

What benefit is based on a Primary Insurance Amount or PIA?

The Social Security Disability benefit.

Whose responsibility is it to inform an applicant for health insurance about the insurer's information gathering practices?

The agent

What is the purpose of the agent's report during the application process?

The agent's report discusses the agent's personal observations about the proposed insured that may help in the underwriting process.

A policyowner borrowed a portion of cash value from his whole life policy. If the loan is not repaid, how will that affect the death benefit to the beneficiary?

The amount of the loan will be subtracted from the death benefit

Whose life expectancy is taken into consideration in an annuity contract?

The annuitant

Who is an annuitant?

The annuitant is the person on whose life expectancy the annuity is written and who receives benefits from the annuity.

If there is no named beneficiary for the annuity benefits, to which entity will the benefits be paid?

The annuitant's estate

If an agent makes a correction on the application for health insurance, who must initial the correct answer?

The applicant

If an insurer decides to obtain medical information from different sources in order to determine the insurability of an applicant, who must be notified of the investigation?

The applicant

If an agent makes a mistake on the application and then corrects it, who must initial that change?

The applicant.

What is the entire contract in health insurance underwriting?

The application and the policy issued

When a producer's appointment with the insurer is terminated, who must notify the Commissioner?

The appointing insurer.

The premium charge for exercising the guaranteed insurability rider is based upon the insured's what?

The attained age.

What are usual, reasonable, and customary charges based on?

The average charge for a procedure in a specific geographic region.

If a life insurance policy has an irrevocable beneficiary designation

The beneficiary can old be changed with written permission of the beneficiary

Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean?

The beneficiary will only receive payments of the interest earned on the death benefit

What happens to a policy's cash value under an extended term nonforfeiture option?

The cash value is converted to the same face amount as in the whole life policy

Who decides which optional provisions would be included in a Health Insurance policy?

The insurance company.

What best describes the "first-dollar coverage" principle in basic medical insurance?

The insured is not required to pay a deductible

In annually renewable term policies, what is the annual premium based upon?

The insured's attained age

Who is responsible for paying the cost of a medical examination required in the process of underwriting?

The insurer

Who is responsible for the cost of examinations conducted by the Commissioner?

The insurer being examined

What is not a feature of a guaranteed renewable provision?

The insurer can increase the policy premium on a individual basis.

What feature is not a part of a noncancellable policy?

The insurer can terminate the contract at the renewal for certain conditions.

In respect to the Consideration Clause, which of the following is consideration on the part of the insurer?

The insurer promises to pay in accordance with the contract terms.

According to the Physical Examination and Autopsy Provision, who pays for the expense of an autopsy?

The insurer.

If the beneficiary of a life insurance policy receives death benefit payments that consist of principal and interest, which portion, if any, will be taxed?

The interest payment will be taxed.

When a business receives benefits from its key person disability insurance, how are those benefits taxed?

The key person disability insurance benefits are tax-free.

In the fixed-period settlement option, how will the number of installments for the death benefit proceeds determine the amount of the installments?

The longer the period selected, the smaller each installment will be

The insurance clause of a disability policy usually states what except?

The method of premium payment

An agent is in the process of replacing the insured's current health insurance policy with a new one. What would be the proper action?

The old policy should stay in force until the new policy is issued

According to the Coordination of Benefits Provision, if both parents have coverage for a child from their employer's policies, which policy will pay first?

The order of payment will be determine by the birthday rule.

What is the advantage of reinstating a policy instead of applying for a new one?

The original age is used for premium determination

In a life settlement contract, whom does the life settlement broker represent?

The owner of the policy

What does it mean when a retirement plan is qualified?

The plan has favorable tax treatment

What does it mean if a Health Insurance policy has a 31-day grace period

The policy remains in effect until the period ends if the premium has still not been paid.

Who must sign a health insurance application?

The policyowner, the insured (if different), and the agent

In Long-Term Care coverage, if the elimination period get shorter what does the premium do?

The premium gets higher

How does a member of an HMO see a specialist?

The primary care physician refers the member

What happens to the proceeds of a life insurance policy if there is no named beneficiary?

The proceeds are paid to the insured's estate

Insurers may change what on a guaranteed renewable health insurance polity?

The rates by class.

The insurer can change what on a Guaranteed Renewable Health Insurance policy?

The rates by class.

What is a deductible in a Health Insurance policy?

The specified dollar amount that the insured must pay before the insurer pays the policy benefits.

Workers Compensation benefits are regulated by which entity?

The state government.

What are the three basic types of term life insurance?

The three basic types of term life insurance are level, increasing, and decreasing.

What are the three nonforfeiture options?

The three nonforfeiture options are reduced paid-up, extended term, and cash surrender value.

What is subrogation in health insurance?

gives the insurer the right to seek recovery from a third party that was responsible with the loss after the insurer has paid for the loss

What is the purpose of settlement options in life insurance policies?

to determine how the death benefit will be paid to the beneficiary