Texas Health & Life
Tax Considerations for Group Medical
Deductible for Employer, Benefits not Taxable
Tax Considerations for Group Medicare Supplement
Deductible for employer, Not taxable
Tax Considerations for Group LTC
Deductible for employer, benefits not taxable
Tax Considerations for Group Disability Income
Deductible for employer, benefits taxable
Tax Considerations for Business Overhead Expense (BOE)
Deductible for employer, taxable
HSAs
Deductible, Not taxable when used for medical expenses
HRAs
Deductible, not taxable
Tax Considerations for MSAs
Deductible, not taxable when used for medical expenses, taxable when taken out at end of year
What is the purpose of a disclosure statement in life insurance policies?
Explain features and benefits of a proposed policy
Husband and wife incur expenses that are attributed to a single Major Medical Insurance Deductible, what kind of policy do they have?
Family
What factors are taken into account when calculating residual disability benefits?
Present earnings and earning prior to disability
When must an applicant be notified of HIV testing?
Prior to performance of the test
Legal Actions
Provision limits the time in which a claimant may seek recovery from an insurer under a policy, must wait 60 days but not later than 3 years
What is the time of payment of claims?
Provision specifies that claims are to be paid immediately upon written proof of loss
Time Limit on Certain Defenses
Similar to the incontestability provision found in life insurance policies
What does the application of 'Contract of Adhesion' mean?
Since the insured doesn't participate in preparing the contract, any ambiguities would be resolved in favor of the insured
What is the notice of claim?
Spells out the insured's duty to provide the insurer with reasonable notice in event of a loss, notice required within 20 days or asap
What policy would not offer a policy loan option?
Term life, term life policies do not have cash value
Who determines the eligibility and contribution limits in a HRA?
The Employer determines both
Who sets the annual contribution limit of a Dependent Care FSA?
The IRS
Which entity can legally bind coverage?
The Insurer
What constitutes an entire contract?
The health insurance policy, signed application, and attached riders and amendments
With adjustable life, the owner can change all but what?
The insured
If an applicant submits initial premium w/ an app, which constitutes acceptance?
Underwriter approves the application
Waiver of Premium
Usually included with guaranteed renewable and noncancellable disability income policies. Provides that in the event of permanent and total disability, premiums will be waived for the duration of the disability.
What is consideration?
Value offered by the insured to insurer and vice versa
In insurance, an offer is usually made when?
When the application is submitted
When an insured terminates membership in insured group, can convert to:
Whole life without proof of insurability
After a loss occurs, the claimant must submit proof of loss when?
Within 90 days or the loss or asap, but not to exceed one year
Upon receipt of a claim, what must a company supply?
Would provide claim forms to the insured
Within what number of days must a hearing be held for a request for a review of a cease and desist order?
10 days after receiving a request
Who must participate in a noncontributory group policy?
100% of eligible employees must participate
Of the 30 hours of CE, how many must cover ethics and/or consumer protection?
2
What is the purest form of term insurance?
ART, annually renewable term. Death benefit remains level, and the policy may be guaranteed to be renewable each year without proof of insurability
After reinstatement, what is the coverage for accidents and sicknesses?
Accidents will be covered immediately, sickness covered after 10 days
Who is responsible if an applicant does not receive his/her policy?
Agent
How long does an insurer have to contest fraudulent misstatements made in health insurance application?
As long as the policy is in force. No other statement or misstatement made in the app will be used to deny a claim after in force for 2 years.
What are nonforfeiture options?
Cash surrender, extended term, and reduced paid up
What rider allows the couple to insure a child for a limited time?
Children's term rider
What can the agent give an applicant if they are given a complete app and initial premium?
Conditional receipt
What is the contract provision that allows the insurer to nonrenew health coverage if certain events occur?
Conditionally renewable
What is the difference between conditionally and optionally renewable?
Conditionally renewable may be cancelled for specific conditions, but optionally renewable do not specify a condition or reason for cancellation
A new employee who meets HIPAA eligibility requirements must be issued health coverage on what basis?
Guaranteed
Which of the following is NOT correct concerning taxation of disability income benefits?
If paid by individual, premiums are tax deductible
What is a carry-over provision?
If the insured did not incur sufficient medical costs during the year to meet the deductible, any medical expenses incurred during the last 3 months may be carried to the next year, offsetting the total deductible costs for that year.
What rider would not increase the premium for a policy owner?
Impairment rider, since this rider excludes a preexisting condition, it would reduce benefits and would not increase the premium.
What is a Guaranteed Insurability Rider?
Included at the time of application which allows the insured to increase the amount of insurance without proving evidence of insurability.
How are group medical and dental benefits received (taxed) by the employee?
Income tax free
What type of insurance would be used for a Return of Premium Rider?
Increasing term
What will be assumed according to the "Common Disaster Clause"?
It will be assumed that the primary beneficiary died first
What label must be present on an illustration of a life insurance policy?
Life insurance illustration
What is another name for a substandard risk classification?
Rated, premium is 'rated-up'
How are benefits of Medical Expense Insurance received (tax)
Received income tax free
What needs to be found on the first page of a medicare supp policy?
Renewal or Continuation Provision
What portion of the contract explains cancellation rights?
Renewal provision
Texas Dept of Ins complain reports do not have to feature what item
Resident state of claimants
Which provision states the insurer's right to change premium amounts?
Continuation provision
How many does should a Medicare supplement 'free-look' provision be?
30 days
How many hours must an agent complete every renewal period?
30 hours
Within how many days must an insured notify the insurer of a child's birth?
31 days
To qualify for conversion from a group life policy to an individual policy of the same coverage, how many years must a person have been insured?
5 years
What does the policy owner sell during a viatical sale?
A percentage of the policy's face value
What are contracts of adhesion?
Insurance policies written by the insurer and submitted on a 'take it or leave it' basis
What is the insuring clause?
Lists the insured, insurance company, what kind of losses are covered, and how much the losses would be compensated
What is the insuring Clause?
Located on the first page of the policy, simply a general statement that identifies the basic agreement between the insurance company and insured. Identifies the insure and insurance company and what loss is covered
How does a disability income benefit rider pay?
Monthly premium waiver and monthly income
The reduction of premium option uses the dividend to reduce what?
Next year's premium
Are Flexible Spending Accounts eligible for carry over?
No
Tax Considerations for Individual Medical
Not Deductible, Not Taxable
Tax Considerations for Individual Medicare Supplement
Not deductible, Not taxable
Tax Considerations for Individual Disability Income
Not deductible, benefits not taxable
Tax Considerations for Buy-Sell
Not deductible, not taxable
Tax Considerations for FSAs
Not deductible, not taxable
Tax Considerations for Key Person
Not deductible, not taxable
What is the Consideration Clause?
On first page of policy, makes it clear that both parties to the contract must give some valuable consideration
An insurer can decide not to renew an Optionally Renewable policy when?
On premium due dates
Insurance contracts are unilateral in nature, what does that mean?
Only one party makes a promise
An insured has a continuous premium whole life policy. She would like to use the policy dividends to pay off her policy sooner than would have been possible otherwise. What dividend option could she use?
Paid-up option
Regarding Consideration Clause, which would be considered consideration on the part of the applicant for insurance?
Payment of premium. The two types of consideration on the part of an insurance applicant are payment of premiums and representations on the application.
What is a Payor Benefit Rider?
Pays the premium if the payor is diabled or dies
What is the probationary period?
Period of time after a policy is in effect before claims arising out of an illness are covered.
Tax Considerations for Individual Long-Term Care
Premiums not Deductible, benefits not taxable