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Comprehensive Instructional Review
Terms in this set (215)
A life insurance arrangement which circumvents insurable interest statuses is called
Investor originated life insurance
The circulation of written literature that is maliciously critical of an insurers financial condition is called
And insured pays premiums on an annual basis for an individual health insurance policy. What is the minimum number of days for the grace period provision?
Which of these statements about a guaranteed insurability option rider is not true
Evidence of insurability is required when the option is exercised
If an individual has an accidental death and dismemberment policy and dies, and autopsy can be performed in all these situations, except
When the state prohibits this by law
Major medical policy typically
Contain a deductible and coinsurance
What is the underlying concept regarding level premiums?
The early years are charged more than what is needed
K is looking to purchase Renewable Term insurance. Which of these types of Term insurance may be renewable?
An accident/health policyholder has ___ days to return the policy and receive a full refund on premiums
ABC insurance company fails to pay death proceeds after satisfactory proof of loss was submitted. ABC must then begin paying interest on the death proceeds after _____ days of receiving proof of loss.
What type of life insurance incorporates flexible premiums and adjustable death benefit?
Which of the following must be included with the continuation of coverage of the group hospital, surgical, and major medical policy?
For an individual health policy that is paid for on a monthly basis, the grace period provision is a minimum of how many days?
Under the North Carolina insurance code, the insurance company must pay death benefits for suicide if the policy has been enforced for a minimum of
From what authority derives the requirement that an insurance application contains a disclosure stating that an investigative consumer report may be obtained on the applicant
Fair credit reporting
Which of these is not a type of agent authority
What type of life insurance product covers children under their parents policy
S is a life Insurance policy owner and enters into a written agreement to receive immediate cash in exchange for the sale and transfer of her life insurance policy. This agreement is referred to as a(n)
With disability income insurance, and insurance company may limit the monthly benefit amount a perspective policy holder may obtain because of the insureds
Gross income at the time of purchase
When can a policy owner change a revocable beneficiary?
D is an architect receiving Disability Income benefits who is not able to return to work full time, but can work on a part-time basis. Which of these features would allow D to continue receiving benefits?
Residual Benefit clause
Which type of provider is known for stressing preventative medical care?
Health Maintenance Organizations (HMO's)
Which of the following is an effort to influence a person to buy an insurance product from you?
Which of the following provisions specifies how long a policy owner's health coverage will remain in effect if the policy owner does not pay the premium when it's due?
In eligible employee has a maximum of ___ Days after the first day of employment to be added to the group health coverage
V is insured under an individual Disability Income policy with a 30-day Elimination period. On July 1, he is involved in an accident and temporarily disabled. He returns to work on December 1. How many months of benefit are payable?
The amount received for a life insurance policy in a viatical settlement is
Less than the death benefit
A life insurance policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached?
Waiver of Premium
A statement made by an insured in an insurance application that must be true to the best of one's knowledge and which becomes a part of the contract is known as
If a life insurance company becomes insolvent, the fun that guarantees policy owners payment of death benefit is known as
Life and health insurance guaranty Association
C is a key employee at ABC Incorporated. If a Key Employee life policy is purchased on her life, which of these statements would be true?
ABC is the policyowner, C is the insured, and ABC is the beneficiary
The universal life policy is called an unknown bundled life policy because the policyholder can see the expense charges, the interest earned, and the
Cost of insurance
Z owns a Disability Income policy with a 30-day Elimination period. Z contracts pneumonia that leaves him unable to work from January 1 until January 15. Z then becomes disabled from an accident on February 1 and the disability lasts until July 1 the same year. Z will become eligible to receive benefits starting on
Under the Affordable Care Act (ACA), Health coverage is provided for dependence up to the age of
Which of the following is not an unfair method of competition or deceptive practice?
Demonstrating that a policy has higher benefits by using a comparison
Which is these is considered a true statement regarding Medicaid?
Funded by both state and federal governments
The Consideration clause in a life insurance contract contains what pertinent information?
Amount of premium payments and when they are due
The commissioner of insurance has notified and ensure that an individual health policy form does not comply with North Carolina laws. The insurer may
Not use the form in connection with any new application
Under what system do a group of doctors and hospitals in a designated area contract with an insurer to provide services at a prearranged cost to the insured?
N is covered under an individual Disability policy with a 30-day Elimination period and a monthly benefit of $500. N is totally disabled for 3 1/2 months. N's total benefit received on this claim is
Which of the following best describes a short term medical expense policy?
The annuity that represents the largest possible monthly payment to an individual annuitant is a(n)
Straight Life annuity
P died five years after purchasing a life policy. While investigating the claim, the insurer discovered material misrepresentations made by P during the application process. Which of these actions will the insurer take?
Beneficiary will be paid the Death Benefit
Accidental death coverage is provided to commercial airline passengers in which of the following types of policies
Blanket Accident policy
A prospective insured completes and signs an application for health insurance but intentionally conceals information about a pre-existing heart condition. The company issues the policy. Two months later, the insured suffers a heart attack and submits a claim. While processing the claim, the company discovers the pre-existing condition. In this situation, the company will
continue coverage but exclude the heart condition
All of these are considered sources of underwriting information about an application except
Consumer reports requested by an underwriter during an application process of life insurance policy can be used to determine
Probability of making timely premium payments
When an insured has the same disability within a specified time period and the insurance company provides the same benefits without a new waiting period, the second disability is covered under which of the following benefits?
Which type of policy pays benefits to a policyholder covered under a Hospital Expense policy?
G is an accountant who has ten employees and is concerned about how the business would survive financially if G became disabled. The type of policy which BEST addresses this concern is
Business Overhead Expense
The incontestable clause allows an insurer to
contest a claim during the contestable period
Before an insurer can increase the rates for an individual accident and health policy owners, the insurer must provide written notice at least___ days before the effective rate increase.
G purchased a Family Income policy at age 40, The policy has a 20-year rider period. If G were to die at age 50, how long would G's family receive an income?
What does Medicare parts A and B cover?
Part A covers hospitalization; Part B covers doctor's services
Stranger Originated Life Insurance (STOLI) has been found to be in violation of which of the following contractual elements?
Legal Purpose (Insurable Interest)
Which policy requires an agent to register with the National Association of Securities Dealers (NASD) before selling?
Quarterly premium payments increase the annual cost of insurance because
interest to the insurer is decreased while the administrative costs are increased
All of these statements concerning Settlement Options are true, EXCEPT:
Only the beneficiary may select
An insurance applicant was recently denied insurance coverage. The applicant is requesting access from the insured to record personal information regarding this decision. Under the information and Privacy protection act, the insurer must make the information available within ____ business days.
Proceeds of the viatical settlement contract could be subject to the claims of
What type of policy would only provide coverage for specific types of illnesses (cancer, stroke, etc)?
Dread disease insurance
What type of insurance offers permanent life coverage with premiums that are payable for life?
According to North Carolina's rules on disclosure, a life insurance applicant is expected to be provided with
A buyers guide and policy summary
P completes an application for a $10,000 life policy, but does not give the producer the initial premium. P's coverage becomes effective when
P receives the policy and pays the premium
R had received full disability income benefits for 6 months. When he returns to work, he is only able to resume half his normal daily workload. Which provision pays reduced benefits to R while he is not working at full capacity?
The percentage of an individuals primary insurance amount (PIA) determines the benefits paid in which of the following programs?
Social Security Disability Income
T is covered by two health insurance plans: a group plan through his employer and his spouse's plan as a dependent. When T submits a claim, his employer's plan is considered what type of carrier under the Model Group Coordination of Benefits provision?
Agent J takes an application and initial premium from an applicant and sends the application and premium check to the insurance company. The insurance company returns the check back to J because the check is made out to J instead of the insurance company. What action should J take?
Return to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company
An insurance company would MOST likely pay benefits under and Accidental Death and Dismemberment policy for which of the following losses?
Loss of eyesight due to an accidental injury
If an insurance company issues a Disability Income policy that it cannot cancel or for which it cannot increase premiums, the type of renewability that best desribes this policy is called
Which statement about a whole life policy is correct?
Cash value may be borrowed against
An immediate annuity consists of a
An annuity promises that, if the annuitant dies before receiving payments equal to the correct value, the payments will be continued to a beneficiary until an amount equal to the contract value has been paid. This type of annuity is called
An installment Refund annuity
K sent a renewal premium payment to her insurer that would extend her coverage beyond the policy's maximum age limit. If the insurer accepts this premium payment, it
Must continue the coverage to the end of the period of time for which the premium was accepted.
In life insurance, the needs approach is used mostly to establish:
how much life insurance a client should apply for
The clause in an Accident and Health policy which defines the benefit amounts the insurer will pay is called the
An insurance agent is guilty of twisting if the agent
Misrepresent a policy to induce a policy owner to surrender an existing policy
P, age 50, purchased an annuity that P will fund with $500/ month for 15 years. The annuity will then pay P retirement payments after the 15 years. Which type of annuity did P purchase?
The reason for a business having a Business Overhead Expense Disability Plan is to cover
fixed business expenses
This type of deductible provision waves the deductible for all family members after some of them have satisfied individual deductibles within the same year
Family maximum deductible
All of these insurance products require an agent to have proper FINRA securities registration in order to sell them EXCEPT for
Modified Whole Life
Variable Whole Life Insurance can be described as
both an insurance and securities product
The amount of coverage on a group credit life policy is limited to
the insured's total loan value
What type of rider would be added to an Accident and Health policy if the policyowner wants to ensure the policy will continue if he/she ever becomes totally disabled?
Waiver of premium rider
Which of the following claims are typically excluded from medical expense policies?
Intentionally self-inflicted injuries
Which statement is true regarding a minor beneficiary?
Normally, a guardian is required to be appointed in the Beneficiary clause of the contract
D needs life insurance that provides coverage for only a limited amount of time while also paying the lowest possible premium. What kind of policy is needed?
An agent takes an individual Disability Income application, collects the appropriate premium, and issues the prospective insured a conditional receipt. The next step the insurance company will take is to
determine if the applicant is an acceptable risk by completing standard underwriting procedures
Which of the following is not included in the policy face?
Tom has a qualified retirement plan with his employer that is currently considered to be 80% "vested". How can this be interpreted?
If Tom's employment is terminated, 20% of the funds would be forfeited
A disability elimination period is best described as a
Which of the following does Social Security not provide benefits for?
T and S are named co-primary beneficiaries on a $500,000 Accidental Death and Dismemberment policy insuring their father. Their mother was named contingent beneficiary. Five years later, S dies of natural causes and the father is killed in a scuba accident shortly afterwards. How much of the death benefit will the mother receive?
Which of these statements describe a Modified Endowment Contract (MEC)?
Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract
K has a health policy that must be renewed by the insurer and the premiums can only be increased if applied to the entire class of insureds. This type of policy is considered
Which plan is intended to be used by a sole proprietor and the employees of that business?
Which of the following statements regarding a tax sheltered annuity (TSA) is incorrect?
The income from the TSA is received income tax-free
The sections of an insurance contract which limit coverage are called
Which of the following types of policies pays a benefit if the insured goes blind?
T owns an Accident & Health policy and notifies her insurance company that she has chosen a less hazardous occupation. Under the Change of Occupation provision, which of the following actions may her insurance company take?
Increase her policy's coverage amount
A business overhead expense policy would cover which of the following is a business owner becomes disabled?
Utilities in office rent
A health reimbursement arrangement must be established:
by the employer
Which of the following statements is correct about the period in which a term policy can be converted?
It varies according to the contracts
P is a producer who notices 5 questions on a life application were not answered. What actions should P take?
Set up a meeting with the applicant to answer the remaining questions
How are policyowner dividends treated in regards to income tax?
Interest on accumulations is taxed
Which provision prevents and ensure from changing the terms of the contract with the policy owner by referring to documents not found within the policy itself?
Entire contract provision
North Carolina requires that an insurance agent must complete____ hours of continuing education on the subject of law and ethics every two years.
P purchases a $50,000 whole life insurance policy in 2005. One of the questions on the application asks if P engages in scuba diving, to which P answers "No". The policy is then issued with no scuba exclusions. In 2010, P takes up scuba diving and dies in a scuba-related accident in 2011. What will the insurer pay to P's beneficiary?
$50,000 minus any outstanding policy loans
If a licensee or person willingly misstates information on any financial document or statements, the entity in which they represent is subject to a fine between:
Which of these types of life insurance allows the policy owner to have level premiums and to also choose from a selection of investment options?
Ems insurance company denied a reinstatement application for her laptop insurance policy. The company did not notify him of this denial. How many days from reinstatement application date does the insurance company have to notify M of the denial before the policy will be automatically placed back in force?
What should an insured do if the insurer does not send claims forms within the time period set forth in a health policy's Claims Forms provision?
Submit the claim in any form
What does a Guaranteed Insurability rider provide a Disability Income policyowner?
The ability to periodically increase the amount of coverage without evidence of insurability
A clause that allows an insurer the right to terminate coverage at any anniversary date is called a(n)
optional renewability clause
Distributions from a Health Savings Account (HSA) for qualified medical expenses are
A renewable term life insurance policy allows the policyowner the right to renew the policy
Without producing proof of insurability
Without producing proof of insurability
A provision that allows the policy owner to temporarily give up ownership rights to secure a loan is called a(n)
When a decreasing term policy is purchased, it contains a decreasing death benefit and
Which of these describes the result of a modified endowment contract that failed to meet the seven pay test?
Pre-death distributions are typically taxable
all of the following statements correctly describe the purpose of Social Security except
It provides a source of income for a meaningful standard of living during retirement
A whole life insurance policy accumulate cash value that becomes
The policy loan value that may be borrowed against
The policy loan value that may be borrowed against
A life insurance rider that allows an individual to purchase insurance as they grow older, regardless or insurability, is called a(n)
Guaranteed insurability rider
An insurer has a stop-loss limit of $5,000, a deductible of $500, and an 80/20 coinsurance. The insured incurs $25,000 of coverage losses. How much will the insured have to pay?
Under a non-qualified annuity, interest is taxed after the
exclusion ratio has been calculated
Which of the following would be a valid reason why a policy premium would be higher than the standard premium?
The insured does not meet established underwriting requirements
What type of injury would not be covered under a health insurance policy?
What does the word "level" in level term describe?
The cash value?
Amy has a group medical policy through her employer with a $500 deductible and a 90% coinsurance provision. She incurs $1,500 in covered health care services. How much will her group insurance carrier pay?
Medicare Part A does not pay for medical benefits provided for treatment in a skilled nursing facility beyond
The commissioner of insurance is responsible for
administering insurance laws
When a qualified plan starts making payments to its recipient, which portion of the distributions is taxable?
Bryce purchased a disability income policy with a rider that guarantees him the option of purchasing additional amounts of coverage at predetermined times without requiring to provide evidence of insurability. What kind of rider is this?
Guaranteed insurability rider
Under a disability income policy, which provision would be payable if the cause of an injury is unexpected and accidental?
Accidental bodily injury provision
An individual can enroll in a part C Medicare advantage plan at what time?
When becoming eligible for Medicare
A partial surrender is allowed in which of the following life policies?
Which of the following is In eligible to participate in the section 125 plan?
AnS Corp. owner with a greater than 2% share.
How is Medicare part B funded
General tax revenue and user premiums
Which of the following types of deductibles would apply a single deductible to both medical and dental insurance coverage?
Jonas is a whole life insurance policyowner and would like to add coverage for his two children. Which of the following products would allow him to accomplish this?
Child term rider
What does the group life underwriting risk selection process help protect insurance companies from?
Which of the following is not an unfair claim settlement practice?
Needing written documentation of claim details
A person insured under a health policy is required to give the insurance company a Notice of Claim within how many days after a covered loss?
The two major actions required for a policyholder to comply with the Reinstatement Clause are
provide evidence of insurability, pay past due premiums
As of January 1, 2014, an employer with up to 25 full time equivalent (FTE's) with average annual wages of less than $50,000 may be eligible for a tax credit of ___ of the premiums paid by the employer.
How is the cost of a policy affected when a policyowner pays premiums more frequently?
What happens when an insurance policy is backdated?
The policy's effective date is earlier than the present
Which type of life insurance offers flexible premiums, a flexible death benefit, and choice of how the cash value will be invested?
Variable universal policy
Which type of life insurance policy pays the face amount at the end of the specified period if the insured is still alive?
Which of these characteristics of an applicant is not taken into consideration when assessing risk for disability coverage?
number of children
Donna and Mary were racing bicycles in a store parking lot while being cheered on by fellow employees. Mary ran into John, another employee, who happened to be taking out the garbage. Both Mary and John are injured. Who would most likely be covered under Workers' Compensation?
Which of these will have the highest monthly payout upon annuitization?
Which of the following is not a federal requirement of a qualified plan?
Employee must be able to make unlimited contributions
Which of these is not a characteristic of the accelerated death benefit option?
The benefit can be offered as a rider at a specific extra cost or may be at no cost
Tom has a rider on his disability income policy that guarantees the right to increase his benefits without a medical exam. What kind of rider is this?
Guaranteed insurability rider
Which of the following statements regarding group disability income insurance is true?
It provides benefits for nonoccupational illnesses and injuries
A policy owner may change to policy features on what type of life insurance?
In North Carolina, a domestic insurance company is defined as a company that
Which of the following would be considered an underwriting duty of an agent?
Completing all applications and collecting initial premiums
A temporary license maybe use for a maximum period of how many days?
What is the non-forfeiture value of an annuity before and annuitization?
How is the life and health insurance guaranty Association funded?
From member companies
The waiver of premium does not include which provision?
All future premiums are waived if the insured recovers from the disability
In North Carolina, a health policy that is paid on a quarterly basis requires a grace period of
Which contract element is insurable interest a component of?
All of the following statements about health coverage for newborns are you are correct except
Coverage during the first year is limited to congenital defects
An insurance application was recently denied insurance coverage. The applicant is requesting access from the insured to recorded personal information regarding this decision. Under the information and privacy protection act, the insurer must make that information available within ___ business days.
Which of the following is considered to be an alternative to a life settlement?
Accelerated death benefit rider
An example of naming a beneficiary by class would be
"To the children born of my union with Ned Jackson"
Simon has purchased a fixed immediate annuity. His payment amount will be dependent upon principal, interest, and the contract's
What happens to the coverage under a children's term rider when that child reaches a certain specified age?
Coverage is eliminated
Kim has health insurance with a deductible of $500 and an 80/20 coinsurance. How much will she pay if she incurs a loss of $1,500?
In this situation, the insured will pay $500 deductible plus $200 coinsurance = $700.
A health insurance policy where the insured has the right to terminate the policy for reasons other than the insured's health is called
An insurer must furnish to a claimant forms for filing proof of loss within ___ days upon receiving a notice of claim.
Each agent who initiates an application for life insurance or annuity for replacement of an existing policy shall submit which of the following is a part of the application?
And insured has a health plan that pays establish amount in accordance with a list of injuries, surgical procedures, or other losses. This list is called a
Variable life insurance in universal life insurance are very similar. Which of these features are held exclusively by variable universal life insurance?
Policyowner has the right to select the investment which will provide the greatest return
Which type of insurance is normally associated with a payor benefit rider?
In which of the following processes will the insurer oversee the insured's hospital stay to confirm everything is going according to schedule and that the insured will be released as planned?
A life insurance policy owner does not have the right to
revoke an absolute assignment
David submits a $500 claim for medical expenses. There is a past-due amount owed for insurance premiums of $200. As a result, the insurer only pays $300 for the claim. This deduction came as a result of which provision?
Which situation accurately describes a reduced paid up nonforfeiture option?
Policy has a decreased face amount
Justin is receiving disability income benefits from a group policy paid for by his employer. How are these benefits treated for tax purposes?
When an insured has a major medical plan with first dollar coverage, how does this impact the benefits paid?
No deductible payment is required
Which of the following typically does not provide a form of managed care?
Major medical indemnity plan
A tax-free Section 1035 Exchange of a life insurance policy to a different policy is permitted if it occurs
from insurer to insurer and no cash is received by the policyowner
Which of the following with evidence ownership in a participating health insurance contract?
A foreign insurance company is one that is Inc.
Under the laws of another state
Before excepting the initial premium for a prearranged funeral contract, the agent must make these disclosures except
The amount of commission that the agent will receive
The commissioner of insurance is empowered to
Enforce state laws relating to insurance
In group health care, what is the purpose of the coordination of benefits provision?
Determines what is paid by the primary and secondary insurers in the event of a claim
An insurer has the right to recover payment made to the insured from the negligent party. These rights are called
Which of the following annuity payout options makes no additional payments regardless of when the annuitant dies?
A disability policy owner is insured and becomes totally disabled. The benefits pay for two years, starting from the date of the injury. What is this time period called?
An indemnity plan
provides the insured a specific dollar amount for services
What is the automatic continuance of insurance coverage referred to as?
Joe has a life insurance policy that has a face amount of $300,000. After a number of years, the policy's cash value accumulates to $50,000 and the face amount becomes $350,000. What kind of policy is this?
Universal Life policy
A health insurance policy will typically cover
preventative health services
Which disability provision would address any concerns of the value of the benefits decreasing overtime?
Cost of living benefit
A professional liability for which producers can be sued for mistakes of putting a policy into affect is called
Errors and omissions
An example of a primary care physician would be a(n)
Which settlement option involves having the proceeds to remain with the insured and the earnings paid on a monthly basis to the beneficiary?
The life and health insurance guaranty Association becomes involved in an insurance companies affairs win the company
A renewable term life insurance policy can be renewed
at a predetermined date or age, regardless of the insured's health
Kate has a Major Medical Plan with a 75/25 coinsurance and a deductible of $25. How much will she have to pay if she, not having met any of her deductible, visits the doctor and receives a bill for $125?
In what form do you disability income policy typically pay benefits?
How does life insurance create an immediate estate?
After first premium is paid, the face amount may be available to the beneficiary
All of these are valid options for an Adjustable Life Policy EXCEPT
The policy's premium can be increased or decreased
The policy's death benefit can be increased or decreased
A nonforfeiture option can be used to increase the death benefit
The policy's protection period can be modified
A nonforfeiture option can be used to increase the death benefit
Which of these is a method of determining the level of funds required for ongoing support in the event of the breadwinner's death?
During the Grace Period, the benefits of an individual health policy will remain in force if
the premium is paid
A securities license is required for life insurance producer to sell
variable life insurance
An accident/health policyholder has ___ days to return the policy and receive a full refund on premiums.
Under the subrogation clause, legal action can be taken by the insurer against the
responsible third party
A life insurance company cannot declare a policy lapse or forfeited within one year after default and premium payment, unless it has mailed a notice indicating the amount of premium due. This requirement only applies to policies with a(n)
Annual premium schedule
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