Questions to Study Fl insurance
Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy?
Premiums are not tax deductible as a business expense. - The business cannot take a tax deduction for the expense of the premium. However, if the key employee dies, the benefits paid to the business are usually received tax free.
An employee will be taxed on the cost of group life insurance paid by the employer if the amount of coverage exceeds
$50,000
All of the following are examples of third-party ownership of a life insurance policy
- A company purchases a life insurance policy on their manager, who is an important part of the operation. - When an insured purchased a new home, the insured made an absolute assignment of a life insurance policy to the mortgage company. - An insured couple purchases a life insurance policy insuring the life of their grandson.
The following are features of a guaranteed renewable provision
- The insured has a unilateral right to renew the policy for the life of the contract. - Coverage is not renewable beyond the insured's age 65. - The insured's benefits cannot be reduced.
When an employee is insured under her employer's group life plan. If she terminates her group coverage the following statements are correct
- The insured would not need to prove insurability for a conversion policy. - The insured may convert coverage to an individual policy within 31 days. - The premium for individual coverage will be based upon the insured's attained age.
An agent delivers a life insurance policy to the proposed insured. The insured makes a decision not to accept the policy. The insured may return the policy for a full refund of premium within how many days?
14 - The free-look provision in Florida allows the insured to return a life policy or annuity after 14 days if dissatisfied for any reason.
What is the maximum elimination period in long-term care policies issued in Florida?
180 Days - Long-term care policies issued in Florida cannot contain an elimination period in excess of 180 days.
COBRA applies to employers with at least
20 employees - Under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), any employer with 20 or more employees must extend group health coverage to terminated employees and their families.
What is the waiting period on a Waiver of Premium rider in life insurance policies?
6 Months
The term "illustration" in a life insurance policy refers to
A presentation of nonguaranteed elements of a policy. - The term "illustration" means a presentation or depiction that includes nonguaranteed elements of a policy of individual or group life insurance over a period of years.
All of the following are examples of third-party ownership of a life insurance policy EXCEPT
An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan.
The LEAST expensive first-year premium is found in which of the following policies?
Annually Renewable Term - Annually renewable term is the purest form of term insurance. The death benefit remains level, but the premium increases each year with the insured's attained age. In decreasing policies, while the face amount decreases, the premium remains constant throughout the life of the contracts. In level term and increasing term policies, the premium also remains level for the term of the policy. Therefore, in the other types of level policies, the first-year premium would not be different from any other year.
An agent makes a mistake on the application and then corrects his mistake by physically entering the necessary information. Who must then initial that change?
Applicant
When an insurer begins underwriting procedures for an applicant, what will be the main source for its underwriting information?
Application - The application contains most of the information used for underwriting purposes. This is why its completeness and accuracy are so crucial.
Under a Key Person disability income policy, premium payments
Are made by the business and are not tax-deductible. - Premiums are nondeductible to the business; however, benefits are received tax-free by the business.
If more than one family member covered under the same major medical policy is injured in the same accident, the family only has to pay one deductible. This is due to the
Common Accident Provision - Under the common accident provision, only one deductible applies for all family members involved in the same accident.
What happens when a policy is surrendered for its cash value?
Coverage ends and the policy cannot be reinstated. - Once the cash surrender value option is selected, the coverage is terminated and the policy cannot be reinstated.
A health insurance policy that pays a lump sum if the insured suffers a heart attack or stroke is known as
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 70-year-old individual who bought a Part B Medicare policy 2 months ago just began kidney dialysis treatments this week. The individual is now applying for a Medicare supplement policy, which would begin in 8 months. Which of the following could the insurer 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 application 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.
You did not enroll in Medicare Part B when you first became eligible. Which of the following would allow you another opportunity to enroll?
General Enrollment Period
The agent in charge of an agency must hold which of the following licenses?
General Lines - The agent in charge of an agency requires a general lines, life or health license.
Difference between Guaranteed Renewable Provision and Non-Cancelable Provision
Guaranteed renewable provision has all the same features that the noncancellable provision does, with the exception that the insurer can increase the policy premium on the policy anniversary date. However, the premiums can only be increased on a class basis, not on an individual policy.
All of the following are basic types of health insurance plans
HMO's Basic Medical Expense Major Medical ^ These are only some
In which of the following locations would skilled care most likely be provided?
In an institutional setting - Skilled nursing care is performed under the direction of a physician, usually in an institutional setting.
The type of dental plan which is incorporated into a major medical expense plan is a/an
Integrated dental plan - When dental coverage is covered under the benefits of a major medical plan, the dental coverage and medical coverage would be an integrated plan. Any deductible amount can be met by either dental or medical expenses.
In health insurance, if a doctor charges $50 more than what the insurance company considers usual, customary and reasonable, the extra cost
Is not covered - An insurance company will pay the usual, reasonable, or customary amount for a given procedure based upon the average charge for that procedure.
An insurance company will pay the usual, reasonable, or customary amount for a given procedure based upon the average charge for that procedure.
Lower - Survivorship Life is much the same as joint life in that it insures two or more lives for a premium that is based on a joint age. The major difference is that survivorship life pays on the last death rather than upon the first death. Since the death benefit is not paid until the last death, the joint life expectancy in a sense is extended, resulting in a lower premium than that which is typically charged for joint life.
In a long-term care policy, pre-existing condition limitations
Must appear as a separate paragraph and be clearly labeled. - If there are any limitations in the policy with respect to pre-existing conditions these limitations must appear in a separate paragraph in the policy labeled "Pre-existing Condition Limitations." A long-term care policy cannot deny a claim for losses incurred more than 6 months from the effective date of coverage because of a pre-existing condition.
An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy?
Mutual - Funds not paid out after paying claims and other operating costs are returned to the policyowners in the form of a dividend. If all funds are paid out, no dividends are paid.
When may an insurer require an insured to provide genetic information?
Never - Insurers are prohibited from requesting a person or relative of a person to supply genetic information.
Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled?
Payor Benefit - If the payor (usually a parent or guardian) becomes disabled for at least 6 months or dies, the insurer will waive the premiums until the minor reaches a certain age, such as 21.
In which of the following situations would Social Security Disability benefits NOT cease?
The individual's son gets a part-time job to help support the family - Benefits cease when the individual reaches age 65, dies, or is no longer disabled. If a person has been receiving Social Security disability benefits at the time that he or she turns age 65, the disability benefits cease, and are replaced by Social Security retirement benefits. At death, family benefits will continue as survivor benefits. Benefits will continue for an adjustment period of three months if an individual no longer satisfies the definition of disability.
Another name for a substandard risk classification is
Rated - Substandard risk classification is also referred to as "rated" since these policies could be issued with the premium rated-up, resulting in a higher premium.
Which two terms are associated directly with the way an annuity is funded?
Single Payment or Periodic Payment - Annuities are characterized by how they can be paid for: either a single payment (lump sum) or through periodic payments in which the premiums are paid in installments over a period of time. Periodic payment annuities can be either level, in which the annuitant/owner pays a fixed installment, or the payments can be flexible, in which the amount and frequency of each installment varies.
A provision found in insurance policies which prevents the insured from collecting twice for the same loss is called
Subrogration - When the insureds accept loss payment from the insurance company, they must transfer their rights to recovery to the insurer. This prevents the insured from collecting twice for the same loss, and allows the insurer to indemnify the insurance company.
All of the following would be different between qualified and nonqualified retirement plans EXCEPT
Taxation on Accumulation - Taxation on accumulation is deferred in both types of plans. The rest of the characteristics would differ.
Which of the following is an agreement between an insured and an insurer, where the insurer agrees to indemnify the insured for specific losses in exchange for a premium?
The insurance contract - Insurance contracts are defined as the agreements made between an insured and an insurer, where the insurer promises to indemnify the insured for covered losses, in exchange for a premium. Both parties are bound by the conditions of the contract.
An employee is insured under her employer's group life plan. If she terminates her group coverage, which of the following statements is INCORRECT?
The insured may choose to convert to term or permanent individual coverage. - When group coverage is converted to an individual policy, the insurer will determine the type of coverage, usually permanent insurance.
A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums?
The insured's premiums will be waived until she is 21. - If the payor (usually a parent or guardian) becomes disabled for at least 6 months or dies, the insurer will waive the premiums until the minor reaches a certain age, such as 21.
Which of the following is NOT a feature of a guaranteed renewable provision?
The insurer can increase the policy premium on an individual basis.
Which of the following definitions would make it easier to qualify for total disability benefits?
The more liberal "own occupation" - Total disability is defined differently under some disability income policies. The more liberal "own occupation" definition of disability makes it easier to qualify for benefits.
When an insurer issues an individual health insurance policy that is guaranteed renewable, the insurer agrees
To renew the policy until the insured has reached age 65.
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 or as soon as reasonably possible, but not to exceed 1 year - The "proof of loss" provision states the claimant must submit a proof of loss within 90 days; however, if it is not possible to comply, the time parameter is extended to 1 year. The one-year limit does not apply if the claimant is not legally competent to comply with this provision.
All of the following are basic types of health insurance plans EXCEPT
Workers Compensation - Workers Compensation coverage is actually considered a liability coverage because it pays those medical expenses of employees that an employer is legally liable to provide.