Insurance Final Exam Flashcards

Questions and Answers

Under the Common Disaster clause, if K and her husband are both killed in an automobile accident, where would the death proceeds be directed?

Daughter (correct)

Insurance Company

Husband

Contingent Beneficiary

When is a Group Health policy required to provide coverage for a newborn child?

At the moment of birth

What is the required renewability status of all Medicare supplement policies?

Guaranteed renewable

Who issues Medicare Supplement policies?

Insurance companies Signup and view all the answers

Which statement is true if P's premiums are waived due to disability on a participating life policy?

P will still receive declared dividends Signup and view all the answers

What type of policy would offer a 40-year-old the quickest accumulation of cash value?

20-pay life Signup and view all the answers

The Nevada Insurance Guaranty Association protects what?

Nevada insurance policy owners Signup and view all the answers

The most important factor to consider when determining whether to convert term insurance at the insured's attained age or to the insured's original age is?

The cost Signup and view all the answers

A Medicare Supplement policy may be cancelled for which reason?

The premiums have not been paid by the insured Signup and view all the answers

A noncontributory group term life plan is characterized by?

The entire cost of the plan is paid for by the employer Signup and view all the answers

Variable annuities may invest premiums in each of the following, EXCEPT?

Insurer's corporate business account Signup and view all the answers

Which of the following costs would a Basic Hospital/Surgical policy likely cover?

Surgically removing a facial birthmark Signup and view all the answers

Information obtained from a phone conversation to the proposed insured can be found in which report?

Inspection report Signup and view all the answers

How are the $3,000 benefit payments taxable for T, receiving from a Disability Income policy?

Benefits are taxable to T Signup and view all the answers

What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?

Family Maintenance Policy Signup and view all the answers

Basic Medical Expense insurance has what compared to Major Medical Insurance?

Lower benefit limits Signup and view all the answers

What is the requirement for maintaining an individual Nevada producer license?

Completing 30 hours of continuing education every 3 years Signup and view all the answers

What is the definition of twisting in insurance?

Inducing an insured through misrepresentation to surrender an existing insurance policy Signup and view all the answers

Which of these is considered a mandatory provision?

Payment of claims Signup and view all the answers

Which life insurance rider typically appears on a Juvenile life insurance policy?

Payor benefit rider Signup and view all the answers

What is the excise tax rate the IRS imposes on individuals aged 70 1/2 or older who do not take the required minimum distributions from their retirement plan?

50% Signup and view all the answers

If a person with a Major Medical policy incurs $15,000 in medical expenses with a $5,000 deductible and an 80/20 Coinsurance clause, how much will the insured have to pay?

$7,000 Signup and view all the answers

How many days after policy delivery can a Long-term Care policy be returned for a 100% premium refund?

30 Signup and view all the answers

Which of the following is an example of defamation?

Circulating brochures that falsely denounce the financial condition of an insurer Signup and view all the answers

If T has a Disability Income policy that pays a monthly benefit of $5,000 and becomes partially disabled, what can he likely expect?

Less than $5,000 per month benefit regardless of the cause Signup and view all the answers

A Medicare Supplement policyholder has ___ days to return the policy and receive a full premium refund.

30 Signup and view all the answers

The health insurance program which is administered by each state and funded by both the federal and state governments is called?

Medicaid Signup and view all the answers

Which of these is NOT considered to be a cost connected with an individual's death?

Business expenses Signup and view all the answers

Group life insurance policies are generally written as?

Annually renewable term Signup and view all the answers

What happens to the proceeds under the misstatement of age provision if W's age was misstated?

The proceeds would be reduced based on the premium if purchased at age 59 Signup and view all the answers

According to the Affordable Care Act (ACA), a dependent child's eligibility status is determined by?

Age Signup and view all the answers

A Long-Term Care policy sold in Nevada MUST be?

Guaranteed renewable Signup and view all the answers

A health insurance policyholder has ___ days to return the policy and receive a full refund.

10 Signup and view all the answers

What type of beneficiary designation does M’s son have in the AD&D policy?

Revocable Signup and view all the answers

On a life insurance policy, who is qualified to change the beneficiary designation?

Policyowner Signup and view all the answers

Which is true concerning a Variable Universal Life policy?

Policyowner controls where the investment will go and selects the amount of the premium payment Signup and view all the answers

N has a Major Medical policy that only pays a portion of N's medical expenses. What is this provision called?

Coinsurance Signup and view all the answers

Which health policy clause specifies the amount of benefits to be paid?

Insuring Signup and view all the answers

According to Nevada law, when must an agent deliver the Outline of Coverage to a Medicare Supplement applicant?

At the time of application Signup and view all the answers

Which of the following is considered to be misrepresentation?

A producer guaranteeing a policy's dividends Signup and view all the answers

If T is covered by an AD&D policy that has an irrevocable beneficiary, what happens if T requests a change of beneficiary?

Request of the change will be refused Signup and view all the answers

What would the insurance company NOT do if it receives the MIB report showing the applicant had a stroke not disclosed?

Send a notice to the MIB that the applicant was declined Signup and view all the answers

A person insured within a group contract will be given a?

Certificate Signup and view all the answers

Which of thee contracts are affected by replacement regulations?

Ordinary Life insurance Signup and view all the answers

Which of the following actions is NOT required when a producer is replacing a Medicare Supplement policy?

Producer must notify the Commissioner of replacement Signup and view all the answers

Which statement regarding the Change of Beneficiary provision is true?

The policyowner can change the beneficiary Signup and view all the answers

A group life insurance policy can be converted to an individual whole life policy under which circumstance?

Employment termination Signup and view all the answers

How long may pre-existing conditions be excluded on a Medicare Supplement policy?

6 months Signup and view all the answers

What is owed to M’s estate if M dies soon after becoming disabled and has a Disability Income policy that pays $2,000 a month?

Earned, but unpaid benefits Signup and view all the answers

What could an insurance producer be found guilty of if they share commissions with a client who purchased insurance?

Rebating Signup and view all the answers

What factor would affect C's decision whether to convert her convertible term life policy?

The cost Signup and view all the answers

Which of these actions is taken when a policy owner uses a Life Insurance policy as collateral for a bank loan?

Collateral assignment Signup and view all the answers

Group Life policies in Nevada are required to contain a conversion privilege that allows for conversion to what?

An individual policy for a stated period of time Signup and view all the answers

What is NOT a prerequisite for becoming a licensed resident producer in Nevada?

Graduate from high school Signup and view all the answers

What type of insurance supplies an income stream over a set period of time starting when the insured dies?

Family Maintenance policy Signup and view all the answers

What is the requirement for maintaining an individual Nevada producer license?

Completing 30 hours of continuing education every 3 years Signup and view all the answers

What will the beneficiary receive if an insured is past due on a life insurance premium but is still within the Grace Period?

Full face amount minus any past due premiums Signup and view all the answers

Pre-hospitalization authorization is considered an example of?

Managed care Signup and view all the answers

The first portion of a covered Major Medical Insurance expense that the insured is required to pay is called?

Initial deductible Signup and view all the answers

What does a Medicare Supplement policy cover?

Allowable amounts under Medicare Part B Signup and view all the answers

What might happen to an employee with $25,000 group life coverage who was recently fired?

May be converted to a $25,000 individual whole life policy Signup and view all the answers

How much of T's disability income benefits is subject to federal income tax?

$0 Signup and view all the answers

The investment gains from a Universal Life Policy usually go toward?

The cash value Signup and view all the answers

A domestic insurance company in Nevada MUST?

Be incorporated and formed in Nevada Signup and view all the answers

Which of these is considered a true statement regarding Medicaid?

Funded by both state and federal governments Signup and view all the answers

What is termed transacting insurance?

B, the producer sold an insurance contract to a client. Signup and view all the answers

What happens on D's $100,000 Whole life policy containing a War Exclusion clause if D is killed in an automobile accident while on leave?

The beneficiary receives the full face amount Signup and view all the answers

What must be signed by both the producer and applicant when an existing life insurance policy is reissued with a reduction in cash value?

Notice regarding replacement Signup and view all the answers

XYZ Company pays the entire premium for its group health plan. What is the MINIMUM percentage of eligible employees that must be covered?

100% Signup and view all the answers

When does Nevada's 10-day free-look period for life insurance policies begin?

Date of delivery Signup and view all the answers

What is an example of an unfair claims practice?

Misrepresenting insurance policy provisions affecting a loss Signup and view all the answers

Any criminal charges taken against a producer must be reported to the Commissioner of Insurance within how many days of the final disposition?

30 Signup and view all the answers

Which statement does NOT accurately describe the tax treatment of premiums and benefits of individual Accident and Health insurance?

Disability income policy premiums are tax-deductible Signup and view all the answers

If M has a Major Medical insurance policy with a $200 flat deductible and 80% Coinsurance, how much will M receive in payment for a $2,200 claim?

$1,600 Signup and view all the answers

Life insurance replacement regulation protects the interest of?

The policyowner Signup and view all the answers

What type of renewability guarantees premium rates and renewability?

Guaranteed renewable Signup and view all the answers

Study Notes

Life Insurance and Beneficiary Designation

Under the Common Disaster clause, death proceeds of a life insurance policy go to the contingent beneficiary (daughter) if both the insured and primary beneficiary (husband) die simultaneously.
A Family Maintenance policy provides an income stream to beneficiaries starting upon the insured's death, for a specified period.

Health Insurance Policies

Group Health policies must cover newborns immediately at birth.
Medicare Supplement policies are guaranteed renewable.
Basic Medical Expense insurance has lower benefit limits compared to Major Medical Insurance.
A 30-day free-look period is mandated for Medicare Supplement policies and Long-term Care policies, allowing for full premium refunds upon cancellation.

Disability Income and Coverage

The monthly disability income benefits are taxable if the premiums were paid by the employer.
Non-occupational disability coverage protects against non-work-related disabilities.
Benefits under a Disability Income policy are based on insured wages, further influenced by features like the Residual Benefit clause that allows partial benefits for part-time work.

Insurance Regulations and Compliance

Nevada Insurance Guaranty Association secures policyholders if an insurer becomes insolvent.
Producers must fulfill continuing education requirements (30 hours every three years) to maintain their producer license in Nevada.
Misrepresentation, such as guaranteeing dividends on a policy, is a violation of insurance regulations.

Policy Conversions and Provisions

Eligibility for converting group life insurance to an individual policy occurs upon termination of employment.
The Notice of Claims provision necessitates prompt reporting of claims by the policyholder.
The payable amount under a Major Medical policy can involve deductibles and coinsurance, influencing net benefits.

Taxation and Retirement Considerations

Individuals aged 70½ face a 50% excise tax for failing to take required minimum distributions from retirement plans.
Disability income policies usually do not tax benefits paid from premiums wholly covered by the insured.

Annuities and Investment Options

Annuities provide different investment options, with variable annuities allowing premium investment in various accounts, but not in the insurer's corporate business account.
Universal Life policies typically allocate investment gains to the cash value.

Miscellaneous Insurance Facts

The definition and nature of replacement refer to exchanging an existing policy for a new one, subject to regulations.
Injuries or deaths related to military service may be exempt from certain clauses, such as a War Exclusion clause in a life insurance policy.
A Child Term rider can be attached to a whole life policy to provide coverage for children.

Group and Medicare Policies

Group life insurance policies are typically structured as annually renewable term plans.
Medicaid is supported by both state and federal funding, focusing on low-income individuals.

Essential Guidelines for Producers

Producers must provide policy summaries and buyer guides following the sale of life insurance.
Immediate notification to a client following criminal charges is mandatory, within 30 days of resolution.

Claims and Coverage Regulations

Under unfair claims practices, misrepresenting policy terms affecting loss recovery is prohibited.
Employers paying for group term life insurance can deduct part of premium costs from taxable income, supporting employers' contributions.

Age and Coverage Factors

An individual's eligibility for Medicare Supplement insurance begins at age 65.
The misstatement of age provision adjusts the death benefit based on what premiums would have been if issued at the correct age.

Final Notes

All insurance policies require compliance with state-specific regulations, which vary by jurisdiction, particularly regarding lapses and reinstatements of policies.
Codifying key aspects of policies like taxes, payments, and regulations helps better prepare policyholders and producers for appropriate transactions and client advisement.

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Description

Test your knowledge on insurance policies with these flashcards. This quiz covers key concepts including beneficiary designations, coverage for newborns, and common disaster clauses. Perfect for those preparing for an insurance final exam.