Insurance Policies and Provisions Quiz

Questions and Answers

What amount will be paid under a policy where the insured misstated his/her age?

An amount the premium would have purchased at the correct age

The acceptance of a credit life application requires the submission of a certificate of insurance to the insured within _____ days.

Which of these is considered to be a Living benefit option in a life insurance policy?

Accelerated death benefit

Loans obtained by a policy owner against the cash value of a life insurance policy would be treated as taxable income.

False Signup and view all the answers

A long term care policy typically provides all of the following levels of care EXCEPT:

Acute care Signup and view all the answers

What is the elimination period under a hospital indemnity plan?

The specific number of days an insured must wait before becoming eligible to receive benefits for each hospitalization Signup and view all the answers

What is an insurance policy's grace period?

Period of time after the premium is due but the policy remains in force Signup and view all the answers

How do interest earnings accumulate in a deferred annuity?

On a tax-deferred basis Signup and view all the answers

How many hours of ethics coursework must a licensee take for continuing education?

3 Signup and view all the answers

The automatic premium loan provision authorizes an insurer to withdraw from a policy's cash value the amount of:

Past due premiums that have not been paid by the end of the grace period Signup and view all the answers

Health insurance involves two perils, accident and ______.

sickness Signup and view all the answers

Who is responsible for assembling the policy forms for insureds?

Insurance carriers Signup and view all the answers

A securities license is required for a life insurance producer to sell:

Variable life insurance Signup and view all the answers

Which of the following is NOT an illegal inducement?

Giving the insured an article of merchandise printed with the producer's name costing $5 Signup and view all the answers

Which of the following is NOT a federal requirement of a qualified plan?

Employee must be able to make unlimited contributions Signup and view all the answers

Which dividend option would an insurer invest the policy owner's money and add any interest earnings as the dividends accrue?

Accumulation at interest option Signup and view all the answers

A health insurance policy will typically cover:

Preventative health services Signup and view all the answers

What rider would pay a monthly amount because of total and permanent disability?

Disability income rider Signup and view all the answers

In addition to the actual policy, an entire contract includes which of the following?

The application Signup and view all the answers

Field underwriting performed by the producer involves:

Completing the application and collecting initial premium Signup and view all the answers

How long is Kathy's grace period if she pays a monthly premium on her health insurance policy?

10 days Signup and view all the answers

Under employer's group major medical plan, how much would a $10,000 benefit be taxable as income if Pierre pays 25% of the premium?

$0 Signup and view all the answers

After an insured gives notice of loss, what must he/she do if the insurer does not furnish forms?

File a written proof of loss Signup and view all the answers

What must an insurer offer to each policy owner at the time of purchase under long term care insurance?

An inflation protection feature Signup and view all the answers

What is the primary factor that determines the benefits paid under a disability income policy?

Wages Signup and view all the answers

What is the tax liability for employer contributions in Health Savings Accounts (HSAs)?

No tax payment needed Signup and view all the answers

In the state of MI, properly filed health claims not timely paid require the insurer to pay simple interest from a date 60 days from satisfactory proof of loss at the rate of:

12% annum Signup and view all the answers

In MI, legal action can be taken against an insurer for failure to pay health insurance claims for a period not to exceed:

3 years Signup and view all the answers

What is the advantage of adding a children's term rider?

Can be converted to permanent coverage without evidence of insurability Signup and view all the answers

When an insured changes to a more hazardous occupation, which disability policy provision allows an insurer to adjust policy benefits and rates?

Change of occupation provision Signup and view all the answers

What is the unfair trade practice of replacing an insurance policy from one insurer to another based on misrepresentation called?

Twisting Signup and view all the answers

Which type of coverage pays an amount per day for hospitalization directly to the insured, regardless of the insured's other health insurance?

Hospital Indemnity Signup and view all the answers

What kind of life insurance policy covers two or more people with the death benefit payable upon the last person's death?

Last Survivor Life Insurance Signup and view all the answers

Which of these premium payment frequencies is not typically available to a policyowner?

Bi-weekly Signup and view all the answers

Which features are held exclusively by variable universal life insurance?

Policyowner has the right to select the investment which will provide the greatest return Signup and view all the answers

Consumer privacy regulations permit the release of an insured's financial information when?

An authorized agency makes a written request to the insurer during an insurance fraud investigation Signup and view all the answers

Which type of life insurance policy pays the face amount at the end of the specified period if the insured is still alive?

Endowment Policy Signup and view all the answers

According to the Michigan Insurance Code, what must a producer do when replacing a Life Insurance Policy?

Submit to the replacing insurer a list of all Life Insurance policies or annuity contracts proposed to be replaced Signup and view all the answers

Which provision would make a policyholder eligible for benefits if a decrease in income results from an injury?

Partial Disability Signup and view all the answers

A pharmacy benefit covers prescription drugs derived from list called a(n):

Drug Formulary Signup and view all the answers

All of the following are examples of a Business Continuation Plan except:

Deferred Compensation Signup and view all the answers

Which actions must be taken by producers?

Pay premiums due to insurers on a timely basis Signup and view all the answers

What is Rob's benefit at work that allows him to defer income for later payment?

Deferred Compensation Option Signup and view all the answers

What does the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 allow an employee to do?

In the event of employment termination, group health insurance can be kept if the employee pays the premiums Signup and view all the answers

Distributions from a Health Savings Account (HSA) for qualified medical expenses are:

Tax Free Signup and view all the answers

An indemnity plan limitation that will pay the dental bills after a small amount is paid by the insured is called:

Coinsurance Signup and view all the answers

A notice of cash surrender value must be sent to a Universal Life policy owner:

At least annually Signup and view all the answers

The term which describes the fact that both parties of a contract may NOT receive the same value is referred to as:

Aleatory Signup and view all the answers

Which of the following gifts from a producer would NOT be considered rebating?

$5 pen Signup and view all the answers

Which of these riders will pay a death benefit if the insured's spouse dies?

Family Term Insurance Rider Signup and view all the answers

Which form of insurer has shareholders?

Stock Company Signup and view all the answers

A plan in which an employer pays insurance benefits from a fund derived from the employer's current revenues is called:

A self-funded plan Signup and view all the answers

If Ron has a life insurance policy with a face value of $100,000 and a cost of living rider, how much may he increase the face value if the consumer price index has gone up 4%?

$4,000 Signup and view all the answers

A change in an insurance application requires:

An initial made by the applicant Signup and view all the answers

An applicant intentionally lying to an insurance company on an application in order to obtain a cheaper premium is an example of:

Fraud Signup and view all the answers

The period in which there are no social security benefits for the surviving spouse is called the:

Blackout period Signup and view all the answers

In the state of MI, a licensed producer:

Represents the insurer Signup and view all the answers

When an insurance licensee changes his or her address under the Michigan insurance code, who must be notified?

The commissioner of the department of insurance Signup and view all the answers

The legal action provision in a health contract is limited to no more than __ years.

5 Signup and view all the answers

Upon receiving a producer complaint, what may the commissioner immediately issue?

A cease and desist order Signup and view all the answers

Which of the following services must be provided by HMO plans?

Home health care Signup and view all the answers

Under which circumstances can a mentally handicapped son remain on his father's coverage after the age of 26?

With written proof of disability and dependency Signup and view all the answers

How long must an individual be unable to engage in any gainful activity due to physical or mental disability in order to qualify for Social Security Total Disability?

12 months Signup and view all the answers

Health insurance will typically cover which of the following perils?

Injury due to accident Signup and view all the answers

A person who is a nonsmoker, of average weight, and excellent health would most likely be in which risk classification?

Preferred Signup and view all the answers

What can a disability income policy utilize to prevent an insured from earning a higher income than if he/she were working?

Benefit limits Signup and view all the answers

Which method is used to determine the level of funds required for ongoing support in the event of the breadwinner's death?

Human Life Value Signup and view all the answers

To receive proceeds from a death benefit, a minor must have:

An appointed guardian Signup and view all the answers

A partial surrender is allowed in which of the following policies?

Universal life Signup and view all the answers

What is the automatic continuance of insurance coverage referred to as?

Renewal Signup and view all the answers

Major Medical insurance will typically cover medical expenses that result from:

A negative reaction to prescribed medication Signup and view all the answers

What is considered to be the primary reason for buying life insurance?

Provide death benefits Signup and view all the answers

To qualify for a resident producer license in the state of MI, an individual must:

Complete the required pre-licensing education within 12 months of licensing application Signup and view all the answers

What is issued to each employer health plan?

Certificate Signup and view all the answers

Which of the following decisions would a Health Savings Account owner NOT be able to make?

The amount contributed by the employee Signup and view all the answers

Group health plans may deny participation based upon the:

Member's part-time employment status Signup and view all the answers

If Matt requests a double indemnity rider, what benefit will be payable to his beneficiary if he:

Dies instantly from a car accident Signup and view all the answers

ABC Insurance Agency is entering each applicant who purchases insurance through their agency into a drawing to win a free trip. This is an unlawful insurance practice known as:

Illegal inducement Signup and view all the answers

For what purpose is a life insurance application backdated?

To reduce the premium Signup and view all the answers

An error was made on Mary's life insurance application. Which areas are errors commonly made on applications for which the incontestable clause does NOT apply?

Age Signup and view all the answers

What happens to Dorian's protection when he uses his life policy's cash value to purchase an extended term insurance option?

The protection ends Signup and view all the answers

Which activity does NOT require an insurance producer's license?

Underwriting Signup and view all the answers

Making a statement that is false or maliciously critical of the financial conditions of an insurer is known as:

Defamation Signup and view all the answers

If Phil is shopping for an annuity that guarantees he CANNOT outlive the benefits, he would choose which benefit option?

Guaranteed lifetime withdrawal benefit Signup and view all the answers

How many employees must an employer have for a terminated employee to be eligible for COBRA?

20 Signup and view all the answers

A hospital or medical expense policy will typically cover dental treatment expenses under which circumstance?

Dental treatment is needed to repair an injury Signup and view all the answers

HIPAA considers which of the following as 'individually identifiable health information'?

A person's health claim information Signup and view all the answers

Who assumes the investment risk with a fixed annuity contract?

The insurer Signup and view all the answers

Medical Expense insurance would cover:

An injury occurring at the insured's residence Signup and view all the answers

When an insured has a major medical plan with first-dollar coverage, how does this impact the benefits paid?

No deductible payment is required Signup and view all the answers

Who does Key Person Disability insurance pay benefits to?

The employer Signup and view all the answers

To activate the reinstatement clause of a lapsed life insurance policy, what must the insured provide?

Evidence of insurability to the insurer Signup and view all the answers

If Bob and Tom have life insurance policies on each other and Bob dies, who will receive the policy proceeds?

Tom Signup and view all the answers

If an employee contributes 50% toward the disability plan premium provided by an employer, what would be considered the taxable income of a $1,000 monthly disability benefit?

$500 Signup and view all the answers

A rider that assures premiums will be paid on a juvenile policy until the child reaches a specific age is called:

Payout rider Signup and view all the answers

Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary?

Life Income Only Option Signup and view all the answers

Study Notes

Insurance Policies and Provisions

Misstated age on a policy results in payout adjusted to what the premium would have provided at the correct age.
Acceptance of a credit life application requires a certificate of insurance to be delivered within 30 days.
Living benefit option in life insurance includes an accelerated death benefit.
Loans against the cash value of a life policy are not considered taxable income.

Long Term Care and Health Insurance

Long term care policies do not typically cover acute care.
The elimination period in hospital indemnity plans is how long one must wait before benefits are available.
Health insurance primarily covers accidents and sickness.
Preventative health services are typically covered by health insurance policies.

Premiums, Claims, and Riders

Grace period allows continuation of coverage after premium due date.
After a loss notice, written proof of loss must be submitted if forms are not provided.
Disability income rider pays benefits for total and permanent disability.
A children’s term rider can be converted to permanent insurance without proof of insurability.

Laws and Regulations

Ethics coursework requirement for continuing education is 3 hours.
Michigan health claims not processed in a timely manner require 12% interest after 60 days.
Insurers must provide inflation protection in long term care policies.
COBRA allows employees to retain group health insurance post-employment if premiums are covered by them.

Tax Implications

Employer contributions to Health Savings Accounts (HSAs) are tax-free for employees.
Disability income benefit taxation depends on premium contributions; employee-contributed amounts are taxable.
Death benefits from life insurance are generally not taxable when paid out.

Types of Coverage

Major Medical plans cover a wide range of medical expenses, including reactions to medications and dental repairs necessitated by injuries.
Hospital indemnity coverage pays set amounts per day during hospitalization, irrespective of other insurances.
Variable life insurance allows policyholders to determine investment allocations for policy performance.
Endowment policies pay out face amounts at the end of the term if the insured survives.

Policyholder Rights and Responsibilities

A notice of cash surrender value must be sent to Universal Life policy owners annually.
Insurers must submit a list of replaced life policies when a new policy is issued.
A Change of Occupation provision allows benefits to be adjusted for more hazardous jobs.
The reinstatement clause of a lapsed life policy requires evidence of insurability for activation.

Miscellaneous Information

Family Term Insurance Rider pays a death benefit for the spouse’s death.
Preferred risk classification typically applies to nonsmokers in good health.
Indemnity plans with coinsurance require insured contributions to be covered by the insurer.
Misrepresentation on insurance applications can have legal penalties and implications.

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Description

Test your knowledge on insurance policies, long-term care, and health insurance provisions. This quiz covers important topics such as premium adjustments, health coverage details, and the handling of claims and riders. Perfect for those studying or working in the insurance industry.