Insurance Policies Overview

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Questions and Answers

What will the insurer pay?

$10,000 minus any applicable deductibles and coinsurance

All of the following are qualifying events required to access an Accelerated Death Benefit EXCEPT:

The insured has received long-term care

The insured has undergone a critical illness

The insured's home is facing foreclosure (correct)

The insured has a terminal illness

What do insureds covered under a group policy receive as proof of coverage?

A certificate of insurance

Which of the following must be covered at no cost to the patient under the Affordable Care Act?

Preventive services Signup and view all the answers

Any discrimination in rates or availability of insurance must be based on:

Sound actuarial principles and data Signup and view all the answers

Does the Waiver of Premium rider have a waiting period that must elapse before benefits are paid due to a disability?

True Signup and view all the answers

Which of these statements would best define suitability?

Recommendation of the right product, at the right time, to the right consumer, for the right premium Signup and view all the answers

What is the shortest benefit period a long-term care insurer is allowed to sell?

12 months Signup and view all the answers

According to the Uniform Simultaneous Death Act, who died first in the case of Bob and Fred?

Fred died first Signup and view all the answers

Which trust takes effect after the death of the insured?

Testamentary trust Signup and view all the answers

What indicates the percentage of gain paid on cash value in an equity indexed annuity policy?

A participation rate Signup and view all the answers

How long does the Medicaid look back period extend once a person has applied for Medicaid benefits?

5 years in most states Signup and view all the answers

How will claims be paid if an insured has coverage through two different insurance companies?

The insurers will prorate coverage based on the total amount of insurance in force through both carriers Signup and view all the answers

What does Medicaid's right of recovery provide for?

If the state has paid out Medicaid LTC benefits on behalf of a Medicaid insured, it can seek reimbursement from the estate of the decedent Signup and view all the answers

Which term policy has coverage that lessens during the term?

A decreasing term insurance policy Signup and view all the answers

What does an assignment form allow an insured to do?

The provider to be paid directly by the insurance company Signup and view all the answers

It is ethical and legal for a physician to overlook medical problems in life insurance exams out of compassion.

False Signup and view all the answers

What type of licenses are required to sell a variable annuity?

A life insurance and securities license Signup and view all the answers

How frequently must disability income benefit payments be made by the insurer?

Not less frequently than monthly Signup and view all the answers

What is the maximum benefit period for short-term disability (STD) policies?

1 Year Signup and view all the answers

Which of the following would be inappropriate for a licensed agent to receive?

Any of these Signup and view all the answers

Who is designated to receive policy proceeds if the annuitant dies?

The beneficiary Signup and view all the answers

What is a benefit period in a long-term care policy?

The period of time for which benefits are paid, for example, a 3 year benefit period Signup and view all the answers

What does an 'any-occupation' disability income policy mean for Bill?

That Bill will not receive benefits if, due to training, education, or experience, he can find substantial work in any occupation Signup and view all the answers

Disability insurance policies can contain a preexisting conditions exclusion.

True Signup and view all the answers

On which tax basis do funds placed into an annuity grow?

Tax deferred Signup and view all the answers

It is legal and ethical for three insurance agents to merge but pretend to be separate agencies.

False Signup and view all the answers

What is a Social Insurance Supplement (SIS)?

It is a rider that will pay an additional amount during the waiting period for Social Security Disability Income (SSDI) Signup and view all the answers

Which type of group insurance premium rating takes claims into account?

Experience rating Signup and view all the answers

When replacing a long-term care policy, what notices must be provided?

A notice to the insured no later than the time of application, and also to the insurance company, which has 5 business days to notify the replaced insurer of the replacement Signup and view all the answers

What do customers generally do when they purchase insurance coverage?

Trust in the person making the sale and the product being sold Signup and view all the answers

Which statement would be accurate regarding morals versus ethics?

Morals are individually defined, whereas ethics are defined by society Signup and view all the answers

How long can Karen stay on COBRA after getting divorced?

36 months Signup and view all the answers

What rule requires that the state in which a policy is delivered has regulatory jurisdiction?

The Doctrine of Comity Signup and view all the answers

What type of insurance is contained within the risk corridor of a Universal Life policy?

One year term insurance Signup and view all the answers

What unfair practice occurs if an insurance company demands multiple copies of a claimant's cost estimate for surgery?

An unfair claims practice Signup and view all the answers

Where are premiums placed when paid into a variable annuity?

In the insurer's separate account Signup and view all the answers

If an employer installs a SIMPLE plan, how many employees can they have?

100 Signup and view all the answers

Who administers Medicaid?

The individual states; it is a state-run program with joint funding from the federal government Signup and view all the answers

What is a prepaid medical expense plan?

The payment of monthly premiums 'pre-pays' for services, regardless of how often or little they are actually used Signup and view all the answers

What type of policies might pay policy dividends?

Participating policies Signup and view all the answers

Which of the following would be considered an accidental injury?

An illness that occurs after the policy is issued Signup and view all the answers

What is TRICARE best defined as?

Tricare is a health care program that provides civilian health benefits for military personnel, military retirees, and their dependents Signup and view all the answers

Which policy provision states that the application, policy, and any attached papers make up the entire policy?

The Entire Contract provision Signup and view all the answers

Which characteristics are associated with basic medical plans?

They cover a far-reaching, wide-ranging list of medical, surgical and hospital needs Signup and view all the answers

What are the reasons to purchase individual life insurance?

The inexpensive cost of the policy Signup and view all the answers

When must an insured provide notice of a medical expense claim to the insurer?

20 days from the loss date, or as soon as reasonably possible given the insured's condition Signup and view all the answers

It is ethical for an insurer or insurance producer to make a fair profit.

True Signup and view all the answers

What is the death benefit amount for a Universal Life policy Option B with a face amount of $500,000 and cash value of $100,000?

$600,000 Signup and view all the answers

What must a producer complete if a policy is issued for a nonstandard risk applicant?

A statement of good health attesting that the health of the insured has not changed since the application date Signup and view all the answers

What benefits and facilities are covered in a comprehensive LTC contract?

Nursing homes, assisted living facilities, home health care, respite and hospice care Signup and view all the answers

What is equity as a legal term often described as?

Balancing the scales Signup and view all the answers

What details a person's medical history, treatments, attending physicians, etc.?

Individually Identifiable Health Information or Protected Health Information Signup and view all the answers

What is a disability policy benefit period?

The period of time for which benefits will be paid, for example, a '2-year benefit period' Signup and view all the answers

In addition to a life insurance license, what must a producer take to sell any type of annuity?

A one-time 4-hour Annuity Suitability course Signup and view all the answers

What is a deductible best described as?

The amount of money that the insured must pay before benefits are paid by the insurer Signup and view all the answers

How will taxation apply upon surrender of an annuity?

The owner is allowed to recover an amount equal to his premiums without a taxable event but will be taxed on any gain received Signup and view all the answers

What are the three nonforfeiture options available in a permanent life insurance policy?

Cash Surrender, Reduced Paid Up and Extended Term Insurance Signup and view all the answers

What is a cross purchase plan in the context of business owners purchasing life insurance policies?

A plan where each owner purchases policies on the other owners Signup and view all the answers

What percentage of benefits would be taxable if an employee paid 100% of his group disability premiums on an after-tax basis?

None, as the policy was paid for with after-tax dollars Signup and view all the answers

If a person wants to pay premiums for only a short period of time, which option should they select?

A limited payment premium option Signup and view all the answers

What do insurers refer to those covered through an HMO or PPO as?

Subscribers Signup and view all the answers

Which life insurance cost comparison method will show the cost of the policy if it is surrendered?

Surrender cost index Signup and view all the answers

Tax qualified annuities are purchased primarily by?

Employers Signup and view all the answers

What are the three main factors used in determining health insurance premiums?

Morbidity, medical costs, and overhead of the insurer Signup and view all the answers

Which of the following best describes cognitive impairment?

A loss of short or long term memory, difficulty knowing people, places, the time or the season of the year Signup and view all the answers

If an insured has medical bills totaling $45,000 with a $5,000 deductible, 80/20 coinsurance, and no stop loss, how much will the insured pay if nothing has been paid toward the deductible?

$13,000 Signup and view all the answers

What is the penalty tax for failure to take a Required Minimum Distribution?

50 percent of the unrealized portion Signup and view all the answers

All of the following are concerns of LTC underwriters except what?

If the applicant has minor children in the home Signup and view all the answers

What conversion would Sarah choose if she wants the least expensive premium for her term insurance?

An original age conversion Signup and view all the answers

Which type of term insurance policy has the same face amount throughout the contract term?

Level Term Signup and view all the answers

What does a non-contributory plan mean for Bob at work?

Bob's employer pays 100% of the premium Signup and view all the answers

What is the term for a group policy owner?

The sponsor Signup and view all the answers

Which ethical approach states that a person makes ethical decisions based on their own beliefs?

The Rights Approach Signup and view all the answers

Which is included in the NAIFA Code of Ethics?

To cooperate with others whose services are constructively related to meeting the needs of my clients Signup and view all the answers

Sickness in health insurance policies does not include what?

A workers' compensation injury claim due to a fall at work Signup and view all the answers

What would the policy owner pay taxes on upon endowment?

Any amounts received over and above the premium paid into the policy under the Cost Recovery Rule Signup and view all the answers

What are premiums for term insurance based on?

The attained age of the insured Signup and view all the answers

On which basis are gross premiums calculated by the insurer?

Net premium plus insurer expenses equals gross premium Signup and view all the answers

What types of losses are excluded from coverage in a DI policy, except for what?

An illness that occurs after the policy is issued Signup and view all the answers

What does allocation mean in the context of a 401k plan?

It is when the participant chooses to place a percentage of contributions into the available retirement plan funds Signup and view all the answers

How long could a late enrollee into a group plan face preexisting conditions exclusion?

Up to 12 months after enrollment Signup and view all the answers

Which statement would best describe a disability policy elimination period?

It is a period of time following the loss that must be satisfied before any DI payments are made to the insured Signup and view all the answers

When may an insured bring suit against his carrier for failure to pay a claim?

The legal actions provision states that an insured may not sue his insurer for failure to pay a claim until 60 days have elapsed since the insurer received proof of loss, and extends for 3 years after proof of loss is received Signup and view all the answers

What trust rating did insurance producers have compared to insurance companies in a 2019 Gallup survey of honesty and ethics?

A higher rating Signup and view all the answers

When an employee converts group life insurance, what type of plan will they receive?

A permanent insurance policy Signup and view all the answers

Which provisions limit the amount of coinsurance and deductibles an insured has to pay annually?

Maximum out of pocket provisions Signup and view all the answers

What does a major medical insurance plan represent?

Is an any provider plan Signup and view all the answers

What does a policy that contains the carryover provision allow?

Would allow expenses incurred during the last 3 months of the year to be applied to next year's deductible if no claims had been paid the prior year Signup and view all the answers

If a whole life policy has a face amount of $100,000 and there is $20,000 of cash value, what is the amount at risk?

$80,000 Signup and view all the answers

Which rider will pay for the insurance element in a Universal Life policy if the policy owner becomes disabled?

Waiver of the Cost of Insurance Signup and view all the answers

What does the Right to Examine, or free-look, allow?

The consumer to enjoy an introductory offer for insurance in which there is no premium requirement for the first 90 days of the policy Signup and view all the answers

When an annuitant starts receiving payments from the annuity, what phase is the annuitant in?

The annuitization phase or period Signup and view all the answers

What must a producer provide to the applicant showing how the insurer will protect the client's information?

Use and Disclosure of insurance information documents Signup and view all the answers

What type of annuity requires the producer to hold only a life insurance license?

A fixed annuity Signup and view all the answers

Who has the authority to modify or change policy language?

Executive officers of the insurance company Signup and view all the answers

Why might an agency or insurer prohibit giving or receiving gifts of inappropriate nature or value?

It could create a conflict of interest, and possibly violate rebating and illegal inducement laws Signup and view all the answers

What is the maximum length of time an employer may require for an employee's employment probation under federal law?

90 days Signup and view all the answers

Being accountable is best defined as?

A measure of how well the statements a person makes can be verified Signup and view all the answers

What is Adverse Selection best defined by?

The tendency of lesser or poorer risks seeking coverage more than healthy persons Signup and view all the answers

Study Notes

Long-Term Care Insurance

Long-term care insurers must sell policies with a minimum benefit period of 12 months.
Medicaid's look-back period is typically 5 years when applying for benefits.

Beneficiaries and Claims

Under the Uniform Simultaneous Death Act, if the insured and primary beneficiary die simultaneously, the beneficiary is deemed to have died first.
Claims from multiple insurance providers will be prorated based on the total amount of coverage.

Trusts and Policies

Testamentary trusts take effect only after the death of the insured.
Equity indexed annuity policies include a participation rate detailing the percentage of gains credited to the cash value.

Disability Income Insurance

Disability benefits must be paid monthly and can include preexisting condition exclusions, not exceeding 12 months post-issue.
Short-term disability policies have a maximum benefit period of one year.

Licensing and Ethical Practices

Selling variable annuities requires both life insurance and securities licenses.
It is unethical and illegal for an agent to facilitate misleading medical evaluations for insurance.

Insurance Agreements

An assignment form enables the direct payment from the insurer to a healthcare provider.
The insured must notify the insurer of a medical claim within 20 days or as soon as possible.

Group Plans and COBRA

Employees covered under a group plan may face exclusions for preexisting conditions for up to 12 months if they enroll late.
Individuals on COBRA can remain covered for up to 36 months after a divorce from a policyholder.

Health Insurance Provisions

Benefit periods in long-term care insurance define the duration benefits are paid, such as a 3-year period.
The Doctrine of Comity establishes jurisdiction for the state where a policy is delivered.

Taxation and Annuities

Proceeds from individual life insurance may be taxed on amounts exceeding premiums when received as endowments.
Annuities are generally tax-deferred, impacting taxation upon withdrawal or surrender.

The term "subscribers" refers to individuals covered under HMOs or PPOs.
The maximum out-of-pocket provision limits annual deductibles and coinsurance costs.

Ethical Considerations in Insurance

The NAIFA Code of Ethics emphasizes collaboration among service providers to better serve clients.
Individuals seeking insurance should understand their moral and ethical obligations in disclosure and business practices.

Health Insurance Trends

The "any-occupation" policy type means benefits are contingent upon the ability to find work in any field.
Cognitive impairment includes significant memory loss and confusion regarding time, place, and people.

State and Federal Regulations

The Affordable Care Act mandates coverage for preventive services at no cost to patients.
Federal law permits a maximum of 90 days for employment probation periods.

Claim Processing

Unfair claims practices include excessive demands for documentation from policyholders.
Upon surrender of an annuity, the owner can recover premiums without a taxable event but will incur taxes on gains.

Continuing Education and Compliance

Insurance producers must complete a one-time 4-hour course on annuity suitability to sell annuities.
Ethical conduct in insurance includes avoiding conflicts of interest and adhering to laws related to inducements and gifts.

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Description

This quiz covers various aspects of insurance policies, including long-term care, disability income, trusts, and claims. It explores important regulations, such as benefit periods and simultaneous death clauses, to enhance understanding of how these policies function. Test your knowledge on ethical practices and licensing in the insurance industry.