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PA LAH Study for exam 3
Terms in this set (113)
specific authority that may be either verbal or written.
that is not specifically defined in the producer's agreement, but is an extension of a producer's standard duties.
the public perceives the producer to have based upon the producer's actions. not given to the producer, but is based upon the insured's reasonable belief that the producer has the authority.
contract. are interpreted against the party that wrote the
contract of adhesion
since it places the respon sibility on the insuren to produce clearly written insurance policies.
doctrine that states insured is entitled to the coverage under a policy that he or she might reasonably expeet it to provide
principle of restoring o r reimbursing one to the extent of his or her loss.
the insurance company's right to subrogate (pursue a claim or bring legal action) against third parties that, because of their negligence, cause the insurance company to pay a claim. homeowner's
Utmost Good Faith
means the dealing in accordance with standards of honesty and sin- cerity
either oral or written statements made by the applicant with the inten- ion of securing insurance coverage
false statements that were relied upon by the insurance company in issuing coverage.
a type of misrepresentation and refers the applicant's failure to divulge facts.
(one that would affect the insurer in writing coverage), the insurer may void coverage.
deliberate deceit with the intent to take of another. In insurance ically occurs when an insured or claimant makes false statements or misrepresents certain facts in an effort to be compensated under an insurance policy
statements or promises contain ed in an insuranc e contract that may void the policy if untrue.
requires certain facts to be affirmed or true at policy inception.
Continuing or Promissory Warranty
requires certain facts to be promised contin- ed during the policy term.
is a type of warranty that is found in most sales contracts. That is, product is legal, merchantable, and fit for public use.
the voluntary relinquishment of a known right.
prohibits or stops an insurer from citing its standard policy defenses.
What happens with the lifetime maximum benefit limit has been reached?
forceing medical costs for as long as the policy is in insured will pay all of the
How does the per capita rule apply to proceeds from a life insurance policy?
proceeds are divided equally among living primary beneficiaries.
How does a noncancelable policy differ from a guaranteed renewable policy?
With the noncancelable policy the insurer may increase premiums only based on the
When the courts look at a contract to determine the intent of the parties which of the following is considered?
the entire contract
Which of the following is exempted from the incontestability provision in insurance policies?
Which one of the following represents an advantage of obtaining a policy loan vesus a withdrawal?
the loan is not taxed while a withdrawal is taxed for amounts above the contract cost basis
Which is a disadvantage to a flexible premium annuity?
the actual amount of the annuity benefit cannot be determined in advance
Which of the following refers to how often a premium is paid?
Why is the accidental death benefit referred to as double indemnity?
It provides twice the face value in the policy for death due to accident.
All of the following are features of the spendthrift clause EXCEPT
the beneficiary may encumber the
How are term riders used?
to purchase insurance on a family member of the originally insured
When a policy or certificate containing an accelerated benefit provision is applied for or delivered, the producer is responsible for providing the applicant a summary of coverage that includes all of the following EXCEPT
detailed and comprehensive summary of the accelerated benefit
How do warranties differ from representations?
A warranty is guaranteed to be true, a rep is belived to be true best to ones knowledge
When does insurable interest come into play in insurance policy?
when the applicant for the policy not the insured
What the Stranger-originated life insurance (STOLI)?
policy is originated primarily or solely for the purpose of resale
What procedure is used by an insurer to protect itself in the event a dispute arises and the applicant and the agent do not recall the changes that were made in completed application?
the incomplete application can be accepted with the missing information added later
offer by one party and the acceptance by a'sec- ond party.
the price paid or the bargaining elements of the agreement. In an insur- ance contract, the insured's consideration is the representations made at application and premium paid.
refers to legal capacity.
refers to the lawful purpose of the contract; that is, the contract is free from illegality and consistent with public policy
the lawful economic interest one has in his or her own life or another person's life. It is a basic requirement of an insurance contract.
Liquidation of capital approach
enough insurance coverage is purchased to pay the costs associated with death and provides income during the dependency period
retention of capital approach
enough insurance is purchased, and when added to other liquid assets, is enough to pay income benefits without invading the principal.
traditional fixed type policies
are conservative insurance contracts that are categor- ized as either permanent or temporary insurance policies.
provide protection for the life of the insured with level premiums and include nonforfeiture values
Temporary insurance or term insurance
has fixed or guaranteed premiums, and provides coverage for a specific term period.
Nontraditional type policies
are flexible and may change in premium payment or cov late 1970's erage amount.
provides distribution by famity line or branck in the event a beneficiary predeceases the insured. If an insured designates his three children beneficiaries. each receives the life insurance proceeds in thirds.
provides distrubution to beneficaries that are living at the time of in- sured's death. If an insured designates his three children as beneficiaries. each will receive the life insurance proceeds in thirds. If, however, one of the bene ficiaries dies before the insured, the will be split 50-50 between the twe surviving beneficiaries. "by head
Protects the beneficiary in 2 ways. Benefitaries can not assign or use as colleteral. Profeeds due under a settlement option acctuallu received. Creditors are prohohited from attaching life insurance proceesxs to extenet permitted by law.
the seven-pay test.
ums. Insurance companies calculate this net level premium for all policies. if the contract provided for paid up benefits after the payment of seven level annual premi- exceeds the sum of net level premiums which would have been paid accumulated amount paid under the policy at any time during the first seven years on or before such time,
premiums are hot tax deductible, interest credited to the cash value accumulates on a tar-deferred basis. value, and policy loans
report is usually part of the application. It requires the producer the applicant. answer several questions attesting to his or her personal knowledge and familiarity with
provision requires the policy be renewed to at least age 60, to the timely payment of premiums, and provides that the insurer cannot cancel the policy or increase the premium rate.
an essential element of contract. The clause establishes that application and the premium payment are the basis of the insurance contract. The consideration clause may be a separate clause or part the insuring agreement
This prov vision requires that the policy be renewed to age 65 , and provides the insurer cannot cancel the policy, except for nonpayment of premium. insurer right change the premiums, but only on a class basis. A provision may be included in disability income policies for termination prior to age 65,
means the insured has a limited right to renew the policy until age 65, or some later age, based upon a condition such as continued employment.
Renewable at the option of the company
the company Under this provision, the insurance com- pany reserves the right not to renew coverage.
means the company may nonrenew or cancel the policy giving advance notice to the insured.
the type of disability that is permanent in nature, and as such, given permanent disability status.
Temporary Disability temporary
the type of disability individual's ability to work for time period.
DISABILITY INCOME Noncancellable
policy must be renewed to at least age 60. Coverage may not be can- celed, and premiums cannot be increased.
DISABILITY INCOME POLICY Guaranteed Renewable
policy must be renewed to age 65. Coverage cannot be can- celed; however, the company reserves the right to increase premiums, but only on a class basis.
DISABILITY INCOME POLICY Elimination Periods
An elimination period is the specified time period indicated in the policy that must elapse from the time of an accident or sickness to the start of benefit payments.
Cost of Living Adjustment (COLA) Rider
provides an automatic increase in the monthly benefit based upon either the Consumer Price Index (CPI) or some fixed percent- tage increase
The Future Increase Option (FIO) Rider
guarantees that the insured may, in the future, purchase additional benefit amounts at specified ages, such as the age of 45, 50, or 55 with- out insurability
to a comprehensive preventive care; routine physicals; immunizations approach of providing package of health care services that typically include: hospitalization; and outpatient services. Health Maintenance Organization ( HMO fee-for-service
Preferred Provider Organizations (PPOs)
Preferred Provider services to members at a set Organizations make ar- rangements with various rate based upon the anticipated volume by its members. physicians and hospitals to provide
combines the managed care elements of an HMO with the optional benefit of a traditional fee- (also known as an open-ended HMO plan) for-service indemnity plan.
Newborn Child Coverage
Newborn Child Coverage provided for covered services to newborn children from the moment of birth. These benefits continue for a maximum of 31 days from the date birth
Welfare Arrangements (MEWA's)
legal entities sponsored by insurance company or association and organized for the benefit of its members.
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)
employer is permitted to collect a premium from the terminated employee at a rate of no more than 102 % of the individual 's group premium rate The 2 % charge is to cover the enmployer 's administrative costs.
treatment that restores functional use to natural turap teeth
is treatment ofthe dental pulp of the natural teeth.
Is the replacment of missinf teeth with artifieial devices.
treatment of natrual teeth to prevent or correxf anomalities
Is operatice treatment of the mouth
Diagnostic Preventive Care
Teeth cleaning and fluride treatments
Dental Schedules plans
No deductable but scheduled amount per produdure. Employees pay more out of pocket
Dental nonscheduled insurance
Comprehensive plan. Flat deductible
Medicare A Home Health
100% home visits 80% eqitment custodial/ private care are not covered
maximum benefit under Medicare A
150 days for single continuous period.
is care that is primarily for the purpose of helping in one's daily living and meeting personal needs without professional skills or training. This type of care not covered under Medicare.
Skilled Nursing Care
Nursing is care at a specially qualified nursing facility that specializes in skilled care, such physical therapy rehabilitation care.
Home Health Care
care provided at an individual's home for services such as inter mittent nursing care, physical care, and speech therapy. This is covered under Medicare - Part A and Medicare Part B
Skilled Care LTC
the care given by registered nurses or professional therapists under the direct supervision of a physician.
Intermediate Care LTC
the care given by registered This type of care is intermittent and not continuous. nurses or therapists under the supervison of a doctor
Activities of Daily Living (ADL).
Bathing, continence, dressing, toileting, feeding, and transferring.
means the insured is unableto perform at least two ADLs for at least 90 days or requires substantial supervision due to cognitive impairment.
Which type of receipt risk from the date of application, makes the insurer liable for the regardless of the applicant's insurability?
Why is relying solely on employer group life insurance generally individual's needs? considered inadequate for most
It is financially insufficient to cover end of life expenses
For an individual long-term care policy there is an annual dollar limit for tax deductions that is based on which the following?
The group conversion option is allowed for all of the following EXCEPT
during the annual benefits enrollment period.
When can the premiums of an individually owned health insurance policy be deducted from the individual's income tax?
when the taxpayer's medical expenses exceed 7.5 % of adjusted gross income during a taxable year
In a case where an individual's health is insured by both their own policy and their spouse's policy, which policy pays in the event of an iliness?
The individual's policy pays first, the spouse's policy pays the remaining up to coverage amount.
Under which between the applicant and insured at the time of situation must insurable interest exist application?
When a third-party applicant names themselves beneficiary.
All of the following are tax qualified retirement plans EXCEPT
Section 529 plan
rehabilitation considered worthy of federal help under workers' compensation?
it reduces insurance losses and helps regain the worker's dignity
All of the following are requirements to qualify for Social Security disability benefits EXCEPT when
unable to work in occupation in which the worker was trained or educated
Current assumption whole life policies are sensitive to which of the following?
annuity covers two or more annuitants and provides monthly income only until the first annuitant dies?
Joint life annuity
Which of the following is TRUE of a point of service plan?
A patient's care is coordinated by an in-network primary care physician.
Which of the following is TRUE of the limited pay whole life policy?
Coverage continues after the policy is paid-up.
Which is the primary purpose of Health Reimbursement Accounts (HRAs)?
To assist covered employees with the payment of medical expenses on a high deductible plan funded through pre-tax contributions.
Which problem was universal life insurance designed to address?
low interest rates during periods of high inflation
Which of the following is defined as the dollar amount beyond which the insured no longer participates in payment of medical expenses?
Stop Loss Limit
In which of the following does a covered employee agree to a reduction in compensation so the amount can be used to cover medical expenses?
Flexible Spending Account (FSA)
Which of the following is a characteristic of Preferred Provider Organizations (PPOs)?
prearranged costs for services rendered
Which of the following is TRUE of an equity-indexed annuity?
It has a guaranteed minimum interest rate
Which of the following is true about a decreasing term life policy?
The face amount reaches zero at policy expiration
examination but rates are dependent on the insured's current age? year without a required medical Which type of life policy can be continued year after
Which of the following is covered by a dread disease policy?
frequently but incur significant costs when they do illnesses that do not occur occur
All of the following are characteristics of variable whole life EXCEPT
there is no guaranteed minimum death benefit.
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