Practice Exam Part 3

Oral Surgery

Operative treatment of the mouth such as extractions of teeth and related surgical treatment.

Prohibit payment for regularly covered services if provided by non-network providers. (A Medicare SELECT policy issued in this state must not restrict payment for covered services provided by non-network providers if the services are for symptoms requiring emergency care and it is not reasonable to obtain such services through a network provider.)

A Medicare SELECT policy does all of the following EXCEPT

The Guaranty Association (Variable life insurance is regulated by both the state and federal government, as well as the Insurance Department, and the SEC.)

All of the following entities regulate variable life policies EXCEPT

Skilled care (Custodial care, respite care, home health care, and adult day care are all coverages used to reduce the necessity of admission into a care facility. Skilled care is almost always provided in an institutional setting.)

All of the following long-term care coverages would allow an insured to receive care at home EXCEPT

1 (The additional monthly benefit rider stipulates that the insurer will pay benefits comparable to what Social Security would pay. After a year, the insurer ends the benefit and assumes that Social Security will begin benefit payment.)

An insured's disability income policy includes an additional monthly benefit rider. For how many years can the insured expect to receive payment from the insurer before Social Security benefits begin?

10 days (In this case, only 10 days are provided.)

An insurer has just asked an applicant to take an HIV test. How long does the applicant have to decide whether or not to sign a consent form?

Present the insured with a Disclosure Authorization Notice (Before an insurer can obtain information from investigators regarding an applicant, it must first present the insured with a Disclosure Authorization Notice. This notice states the insurer's information collection practices and how the information will be used.)

An insurer wants to obtain information from investigators regarding an applicant for insurance. What must the insurer do in order to legally acquire this information?

Term (Children's term riders provide term insurance with coverage expiring when the minor reaches a certain age.)

Children's riders attached to whole life policies are usually issued as what type of insurance?

Totally tax deductible (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.)

Premiums paid by self-employed sole proprietors or partners for medical expense insurance are

Prosthodontics

The replacement of missing teeth with artificial devices like bridgework or dentures.

Periodontics

The treatment of the surrounding and supporting tissue of the teeth such as treatment for gum disease.

Joint life (Joint life annuity settlement option pays benefits to two or more annuitants, but stops upon the death of the first.)

A couple receives a set amount of income from their annuity. When the wife dies, the husband no longer receives annuity payments. What type of annuity did the couple buy?

Critical illness (A critical illness policy covers multiple illnesses, such as heart attack, stroke, renal failure, and pays a lump-sum benefit to the insured upon the diagnosis (and survival) of any of the illnesses covered by the policy.)

A health insurance policy that pays a lump sum if the insured suffers a heart attack or stroke is known as

Consideration Clause (The consideration clause specifies that both parties to the contract must give some valuable consideration. The payment of the premium is the consideration given by the applicant. Because the applicant had not paid an initial premium, she is not covered by insurance.)

An applicant for an individual health policy failed to complete the application properly. Before being able to complete the application and pay the initial premium, she is confined to a hospital. This will not be covered by insurance because she has not met the conditions specified in the

Until the beneficiary's death (The Single Life Option can provide a single beneficiary income for the rest of his/her life. Upon the death of the beneficiary, the payments stop.)

How long will the beneficiary receive payments under the single life settlement option?

Erase the incorrect answer and record the correct answer. (An agent should not use white-out, erase or obliterate any answers given to a question on an application. It could prevent an insurer from contesting the application, should it be necessary.)

If a change needs to be made to the application for insurance, the agent may do all of the following EXCEPT

Suitability (Insurance producers must adhere to the concept of suitability by ensuring that, to the best of their belief, the purchase, sale or exchange of a policy is in the best interest of the insured.)

Insurance producers must ensure that contracts they recommend are in the best interest of the insured. This is called

Major service (There are two types of services under nonscheduled plans: basic and major. Basic services include treatments such as fillings, oral surgery, periodontics, and endodontics, while major services include treatments such as inlays, crowns, dentures and orthodontics.)

Julie must have orthodontic work performed on her incisors. Which type of service would this be called, under a nonscheduled plan?

Fixed amount (Under the installments for a fixed amount option, the annuitant selects the amount of each payment, and the insurer determines how long they will pay benefits. This option pays a specific amount until the funds are exhausted. There are no life contingencies.)

Under which installments option does the annuitant select the amount of each payment, and the insurer determines how long they will pay benefits?

Agent's contract with the principal (The principal grants authority to an agent through the agent's contract.)

What documentation grants express authority to an agent?

As long as the policy is in force (An insurer can contest a fraudulent misstatement as long as the policy is in force. No other statement or misstatement made in the application at the time of issue will be used to deny a claim after the policy has been in force for 2 years.)

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

Variable (Variable life policies vary in value, as the name suggests, because the value is based on the stocks that support the policy. If a policyholder wants a more stable, reliable value, he/she should invest in a fixed policy.)

An insured receives a monthly summary for his life insurance policy. He notices that the cash value of the policy is significantly lower this month than it was last month. What type of policy does the insured have?

Age 65 who are not retired. (The Omnibus Budget Reconciliation Act of 1990 requires that large group health plans (100 employees or more) must provide primary coverage for disabled individuals under age 65 who are not retired.)

The Omnibus Budget Reconciliation Act of 1990 requires that large group health plans must provide primary coverage for disabled individuals under

Interest only option (With the interest-only option, the insurance company retains the policy proceeds and pays interest on the proceeds to the recipient (beneficiary) at regular intervals.)

The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose?

Insuring clause (The insuring clause is a provision on the first page of the policy that states the coverage and when it applies.)

The section of a health policy that states the causes of eligible loss under which an insured is assumed to be disabled is the

Endodontics

Treatment of diseases of the dental pulp within natural teeth, such as a root canal.

Orthodontics

Treatment of natural teeth to prevent and/or correct dental anomalies with braces or appliances.

Restorative care

Treatments which restore functional use to natural teeth such as fillings or crowns

60 days (Unless specifically stated otherwise, individuals or enrollees have 60 days from the date of a triggering event to select a qualified health plan.)

Under the Affordable Care Act, a special enrollment period allows an individual to enroll in a qualified health plan within how many days of a qualifying event?

Creditor is the policyowner (In credit life insurance, the creditor is the policyowner and the beneficiary; the debtor is the insured.)

Which of the following is TRUE about credit life insurance?

Benefits are considered taxable income to the business. (The buy-sell coverage benefits are tax free.)

Which of the following is not true of Disability Buy-Sell coverage?

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 is true regarding limited health insurance policies?

Bail-out (Some annuity contracts contain a bail-out provision. This provision allows the owner to surrender the annuity without charge if interest rates drop a specified amount within a certain timeframe.)

Which of the following provisions in annuity contracts allow the owner to surrender the annuity if interest rates drop to a specified level?

MEWAs are groups of at least 3 employers. (MEWAs are groups of at least 2 employers who pool their risks to self-insure. MEWAs can be sponsored by an insurance company, an independent administrator, or another group established to provide group benefits for participants.)

All of the following statements describe a MEWA EXCEPT

Permanent (Unlike term insurance, permanent insurance provides lifetime death protection and a savings or cash value option.)

An applicant wants to buy a policy that has a cash value element. Which type should she buy?

Industrial life (Industrial life insurance is written on an individual basis in small amounts, usually with a face amount of less than $1,000, with premium payable weekly or monthly. As a general rule, these policies are written nonmedically.)

An insured has a life insurance policy with a face amount of $500. He pays a premium each week to the agent who sold him the policy. What kind of policy does the insured have?

The capital amount in a lump sum (Accidental Death and Dismemberment policies pay a capital amount (a percentage of the principal amount) for the loss of one limb or loss of sight in one eye. The principal amount is paid for death or often for the loss of 2 limbs or loss of sight in both eyes. Benefits are paid in a lump sum.)

An insured who has an Accidental Death and Dismemberment policy loses her left arm in an accident. What type of benefit will she most likely receive from this policy?

Level fixed (Variable Whole Life insurance is a level fixed premium investment-based product.)

Variable Whole Life insurance is based on what type of premium?

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 expectancy, and before the total benefit has been paid out, payments cease and there is no refund of payments to survivors.)

What form of the annuity settlement options provides payments to an annuitant for the rest of the annuitant's life and ceases at the annuitant's death?

The insured may have to pay slightly higher premiums (The "standard" rating indicates that an individual represents a similar level of health and lifestyle quality as other members of the same age cohort. These individuals do not need special policy restrictions or are not required to pay higher premiums.)

Which is NOT true regarding an insured who is considered to be a standard risk?

The rider is usually level term insurance. (The spouse term rider allows a spouse to be added for coverage. It is available for a limited amount of time, typically expiring at age 65. A spouse term rider (just like any other insured rider) is usually level term insurance.)

Which is true about a spouse term rider?

Those who have been insured under the plan for at least 5 years (If the master contract is terminated, every individual who has been on the plan for at least 5 years will be allowed to convert to individual insurance of the same coverage.)

Which of the following employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated?

Group insurance account (The Fund maintains the following 3 accounts: the disability insurance account, the life insurance account, and the annuity account.)

Which of the following is NOT among the accounts that the Life and Disability Insurance Guaranty Fund maintains?

A whole life insurance policy is exchanged for a term insurance policy. (The key is that the exchange may not be from a less tax-advantaged contract to a more tax-advantaged contract. "Same to same" is acceptable.)

Which of the following is NOT an allowable 1035 exchange?

Time of Payment of Claims (The Time Payment of Claims provision requires that claims will be paid immediately upon receipt of proofs of loss except for periodic payments, which are to be paid as specified in the policy.)

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

Indemnity (A Hospital Indemnity policy pays a fixed amount each day the insured is hospitalized, unrelated to medical expenses.)

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

Only the agent (Only the agent is involved in completing the agent's report. It asks questions about the length of time that the applicant has been known to the agent, an estimate of the applicant's income and net worth and whether the agent knows of any reason that the contract should not be issued. The agent's statement does not become part of the "entire contract".)

Who is involved in completing the agent's report?

To help the insured understand all aspects of the contract (It is the producer's responsibility to make sure that the policy is understood by the insured and all of their questions are satisfied, and the delivery receipt is signed.)

Why should the producer personally deliver the policy when the first premium has already been paid?

5 business days (If an annuity is applied for by means other than a face-to-face meeting, the disclosure document and the buyer's guide must be sent to the applicant within 5 business days.)

Within how many days must an applicant for an annuity contract receive the disclosure document and the buyer's guide if the application was not taken in a face-to-face meeting?

Straight life (With the straight life option, the annuity payments cease at death. However, because there are no other guarantees that might incur additional charges, this option provides the highest monthly benefits for an individual annuitant.)

Your client is planning to retire. She has accumulated $100,000 in a retirement annuity, and now wants to select the benefit option that will pay the largest monthly amount for as long as she lives. As her agent, you should recommend

Limited pay whole life (Premium payments will cease at her age 65, but coverage will continue to her death or age 100.)

Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?