Podcast
Questions and Answers
What is the name given to causes or conditions listed in the policy that are not covered and for which no benefits are payable?
What is the name given to causes or conditions listed in the policy that are not covered and for which no benefits are payable?
Exclusions
Which of the following types of limited policies would a common carrier purchase to provide medical and surgical benefits in excess of any primary coverage?
Which of the following types of limited policies would a common carrier purchase to provide medical and surgical benefits in excess of any primary coverage?
- Blanket Plan (correct)
- Health Savings Account
- Major Medical Plan
- Indemnity Plan
The insured has a financial incentive to use providers who have agreed to predetermined reimbursements for medical services rendered.
The insured has a financial incentive to use providers who have agreed to predetermined reimbursements for medical services rendered.
True (A)
When payment under a Medical Expense policy is based on the average fee charged by all doctors in a given geographical area, what is this payment known as?
When payment under a Medical Expense policy is based on the average fee charged by all doctors in a given geographical area, what is this payment known as?
Which is not a classification of a healthcare plan?
Which is not a classification of a healthcare plan?
What is needed to qualify for a Social Security Disability Benefit?
What is needed to qualify for a Social Security Disability Benefit?
To reduce its exposure to claims from a substandard disability risk, an insurer may take all of the following actions, except:
To reduce its exposure to claims from a substandard disability risk, an insurer may take all of the following actions, except:
A Short-Term Disability Policy generally is for a disability lasting for?
A Short-Term Disability Policy generally is for a disability lasting for?
What type of disability income insurance provides funds to cover business expenses when the business owner becomes disabled?
What type of disability income insurance provides funds to cover business expenses when the business owner becomes disabled?
What is the term for a period of deductibility immediately following a disability during which time benefits are not payable?
What is the term for a period of deductibility immediately following a disability during which time benefits are not payable?
Which rider would eliminate coverage for a preexisting condition?
Which rider would eliminate coverage for a preexisting condition?
What provision allows Penelope to start receiving her disability payments immediately after returning to work but finding she cannot continue?
What provision allows Penelope to start receiving her disability payments immediately after returning to work but finding she cannot continue?
Residual Disability Income pays funds to the insured, to make up for what the insured would have earned after returning to work, and while recovering from ___________.
Residual Disability Income pays funds to the insured, to make up for what the insured would have earned after returning to work, and while recovering from ___________.
Why is the insurance contract said to be a contract of Utmost Good Faith?
Why is the insurance contract said to be a contract of Utmost Good Faith?
What is a good example of Risk Reduction?
What is a good example of Risk Reduction?
What may result from a breach under the Doctrine of Warranty?
What may result from a breach under the Doctrine of Warranty?
Why will courts usually interpret an unclear insurance policy in favor of the insured?
Why will courts usually interpret an unclear insurance policy in favor of the insured?
How can insurance be placed with an authorized/non-admitted insurer?
How can insurance be placed with an authorized/non-admitted insurer?
___________ insurance is used to provide coverage when insurance is not available from an admitted carrier.
___________ insurance is used to provide coverage when insurance is not available from an admitted carrier.
Which might be considered a physical hazard?
Which might be considered a physical hazard?
The prediction of individual losses is based upon past experience according to the Law of Large Numbers.
The prediction of individual losses is based upon past experience according to the Law of Large Numbers.
Who is the principal in the agency relationship between John, the agent for ABC Insurance, and Jane, the insured?
Who is the principal in the agency relationship between John, the agent for ABC Insurance, and Jane, the insured?
Which insurer's owner receives taxable corporate dividends as a return of profit?
Which insurer's owner receives taxable corporate dividends as a return of profit?
What type of producer authority is specified in the agency contract?
What type of producer authority is specified in the agency contract?
In California, who may manufacture and sell insurance coverage by way of insurance policies or contracts?
In California, who may manufacture and sell insurance coverage by way of insurance policies or contracts?
Who is primarily responsible for determining acceptable risks in insurance?
Who is primarily responsible for determining acceptable risks in insurance?
An insurer that is not approved by the state Department of Insurance is called a(n) ___________ insurer.
An insurer that is not approved by the state Department of Insurance is called a(n) ___________ insurer.
What is a group plan designed to insure?
What is a group plan designed to insure?
A personalized computer-generated illustration detailing premiums, cash values, interest rates, and surrender values is called __________.
A personalized computer-generated illustration detailing premiums, cash values, interest rates, and surrender values is called __________.
What is the insurer's responsibility if a producer submits a completed application and the applicant dies before a policy is issued?
What is the insurer's responsibility if a producer submits a completed application and the applicant dies before a policy is issued?
When does coverage start if a life insurance application is completed but not paid for?
When does coverage start if a life insurance application is completed but not paid for?
What is the primary reason for outlawing Stranger/Investor Originated Life Insurance (STOLI) transactions?
What is the primary reason for outlawing Stranger/Investor Originated Life Insurance (STOLI) transactions?
What happens to the total premium due if an insured changes from annual to monthly payments?
What happens to the total premium due if an insured changes from annual to monthly payments?
Whose signature is not required on a life insurance application?
Whose signature is not required on a life insurance application?
What happens if an applicant for life insurance dies before a substandard policy is issued?
What happens if an applicant for life insurance dies before a substandard policy is issued?
Where does the initial benefit money come from if a participating life insurance policy has a long-term care rider?
Where does the initial benefit money come from if a participating life insurance policy has a long-term care rider?
All policies end when an insured dies, except a Joint Survivorship policy.
All policies end when an insured dies, except a Joint Survivorship policy.
Which statement is TRUE of a term rider when attached to a permanent life policy?
Which statement is TRUE of a term rider when attached to a permanent life policy?
What best describes a Straight Whole Life Policy?
What best describes a Straight Whole Life Policy?
Whole Life is also known as ________ protection.
Whole Life is also known as ________ protection.
What is the amount payable to the survivor under a $250,000 Joint Life Policy?
What is the amount payable to the survivor under a $250,000 Joint Life Policy?
What does the Cash Value in a permanent policy refer to?
What does the Cash Value in a permanent policy refer to?
What premium paying method is used if the first few years of premiums are lower than an ordinary whole life policy?
What premium paying method is used if the first few years of premiums are lower than an ordinary whole life policy?
Which Whole Life policy is designed to provide substantial immediate cash value?
Which Whole Life policy is designed to provide substantial immediate cash value?
Term Life insurance is designed to provide coverage for ___________.
Term Life insurance is designed to provide coverage for ___________.
Equity Universal, Variable, and Variable Universal all have which characteristic in common?
Equity Universal, Variable, and Variable Universal all have which characteristic in common?
What happens to the overall policy premium when most riders on a life insurance policy expire?
What happens to the overall policy premium when most riders on a life insurance policy expire?
Why did the overall premium increase for Sara's life insurance policy?
Why did the overall premium increase for Sara's life insurance policy?
How can Bert obtain necessary funds while maintaining coverage on his life insurance policy?
How can Bert obtain necessary funds while maintaining coverage on his life insurance policy?
The insurer is obligated to pay out death benefits if the premiums have not been paid and have been overdue for 3 years.
The insurer is obligated to pay out death benefits if the premiums have not been paid and have been overdue for 3 years.
What will happen to a universal life policy if there is a $5,000 partial withdrawal?
What will happen to a universal life policy if there is a $5,000 partial withdrawal?
How much will the beneficiary receive from a life insurance policy used as collateral for a bank loan?
How much will the beneficiary receive from a life insurance policy used as collateral for a bank loan?
Which Dividend Option is Lucy exercising by using her dividends to purchase additional permanent benefits?
Which Dividend Option is Lucy exercising by using her dividends to purchase additional permanent benefits?
What rider must a policy have if it pays double or triple benefits upon accidental death?
What rider must a policy have if it pays double or triple benefits upon accidental death?
Who has the authority to drop a rider from a policy?
Who has the authority to drop a rider from a policy?
Who has the right to change beneficiaries and access the cash value of a life insurance policy?
Who has the right to change beneficiaries and access the cash value of a life insurance policy?
Which beneficiary designations is a class designation?
Which beneficiary designations is a class designation?
What is the best way to ensure life insurance proceeds do not end up in probate court?
What is the best way to ensure life insurance proceeds do not end up in probate court?
Which beneficiary designation prevents a policyowner from taking a policy loan or assigning the policy without consent?
Which beneficiary designation prevents a policyowner from taking a policy loan or assigning the policy without consent?
How many days does a client have to review and return a disability income policy to receive a full refund?
How many days does a client have to review and return a disability income policy to receive a full refund?
Once issued, if the application is attached to the policy, it becomes part of the __________.
Once issued, if the application is attached to the policy, it becomes part of the __________.
What is one option for an annual dividend received by a life insurance policyowner?
What is one option for an annual dividend received by a life insurance policyowner?
What option has the insured chosen if she uses her dividends to enhance her insurance amount?
What option has the insured chosen if she uses her dividends to enhance her insurance amount?
What does the Fixed Amount Settlement Option specify?
What does the Fixed Amount Settlement Option specify?
When Harry's annuity pays $1,000 each month and he dies, how much will Lucille receive?
When Harry's annuity pays $1,000 each month and he dies, how much will Lucille receive?
What is the difference between cash value and cash surrender values in a variable universal life policy?
What is the difference between cash value and cash surrender values in a variable universal life policy?
What does a Joint Life Payment Option provide upon the first annuitant's death?
What does a Joint Life Payment Option provide upon the first annuitant's death?
What disclosure must a life agent provide when selling financial products based on Medi-Cal treatment?
What disclosure must a life agent provide when selling financial products based on Medi-Cal treatment?
Which product is designed to distribute an individual's savings over their entire life?
Which product is designed to distribute an individual's savings over their entire life?
Which type of annuity is not generally backed by the insurer's general account assets?
Which type of annuity is not generally backed by the insurer's general account assets?
What is the waiting period to apply for social security disability?
What is the waiting period to apply for social security disability?
What happens to policy values if a policyowner stops funding their annuity?
What happens to policy values if a policyowner stops funding their annuity?
What is used to compute the Social Security Survivor Benefit?
What is used to compute the Social Security Survivor Benefit?
What could happen if a buy-sell agreement is not in place when a partner dies?
What could happen if a buy-sell agreement is not in place when a partner dies?
What is an agreement among business owners that provides continuation upon certain events called?
What is an agreement among business owners that provides continuation upon certain events called?
Buy-Sell agreements are used for all business entities.
Buy-Sell agreements are used for all business entities.
What must an insurer do if a life insurance policy premium exceeds MEC guidelines?
What must an insurer do if a life insurance policy premium exceeds MEC guidelines?
ERISA sets minimum standards for pension plans primarily in which industry?
ERISA sets minimum standards for pension plans primarily in which industry?
Life insurance proceeds are income taxable when ownership is transferred while the insured is alive.
Life insurance proceeds are income taxable when ownership is transferred while the insured is alive.
What are the tax ramifications if a corporation owns an annuity?
What are the tax ramifications if a corporation owns an annuity?
When are earnings on the cash value increase in a permanent policy taxable?
When are earnings on the cash value increase in a permanent policy taxable?
What penalty applies to premature withdrawals from a Modified Endowment Contract (MEC)?
What penalty applies to premature withdrawals from a Modified Endowment Contract (MEC)?
All statements about Group Life Insurance are true.
All statements about Group Life Insurance are true.
All transactions qualify for IRC Section 1035 exchange tax treatment.
All transactions qualify for IRC Section 1035 exchange tax treatment.
What information must an insurer provide if an insured receives a periodic benefit as a result of the Accelerated Death Benefit Rider?
What information must an insurer provide if an insured receives a periodic benefit as a result of the Accelerated Death Benefit Rider?
What type of definition is needed if Tim must prove his injury was unforeseen?
What type of definition is needed if Tim must prove his injury was unforeseen?
What can be used to reflect higher risk exposure in insurance policies?
What can be used to reflect higher risk exposure in insurance policies?
What is included in Part II of a Health Insurance Application?
What is included in Part II of a Health Insurance Application?
What is it considered when a policy is mailed to an insured by an insurer?
What is it considered when a policy is mailed to an insured by an insurer?
What are statements made on the application considered if they are true to the best of the applicant's knowledge?
What are statements made on the application considered if they are true to the best of the applicant's knowledge?
How can the insurer's underwriter find information about an applicant's moral character, hobbies, and reputation?
How can the insurer's underwriter find information about an applicant's moral character, hobbies, and reputation?
What is the waiting age for tax penalties on withdrawals from a Modified Endowment Contract (MEC)?
What is the waiting age for tax penalties on withdrawals from a Modified Endowment Contract (MEC)?
Who has primary responsibility for ensuring applications are filled out completely?
Who has primary responsibility for ensuring applications are filled out completely?
Stating that 'We have been in business for over 50 years' is a prohibited form of advertising.
Stating that 'We have been in business for over 50 years' is a prohibited form of advertising.
Long-term care is one of the basic benefits required of all HMOs.
Long-term care is one of the basic benefits required of all HMOs.
What does Accidental Death and Dismemberment provide?
What does Accidental Death and Dismemberment provide?
How are HMOs established in terms of doctor participation?
How are HMOs established in terms of doctor participation?
What is a facility where outpatient surgery is performed for patients requiring general anesthesia called?
What is a facility where outpatient surgery is performed for patients requiring general anesthesia called?
What major medical plan deductible results in the lowest premium?
What major medical plan deductible results in the lowest premium?
Study Notes
Insurance Contracts and Principles
- Utmost Good Faith: Insurance contracts rely on honesty; both parties must not conceal or misrepresent information.
- Risk Reduction: Actions taken to minimize potential loss severity are examples of risk reduction.
- Doctrine of Warranty Breach: Breaching a warranty can render the insurance contract void.
Policies and Interpretations
- Contract of Adhesion: In ambiguous insurance policies, courts usually favor the insured due to the nature of being a take-it-or-leave-it contract.
- Surplus Lines Insurance: When insurance cannot be secured from licensed insurers, a surplus lines broker can facilitate placement with authorized/non-admitted insurers.
Risks and Hazards
- Physical Hazards: Situations like the storage of flammables near a furnace present physical hazards that can increase risk.
Fundamental Concepts
- Law of Large Numbers: Individual loss predictions are not based on past experience, contradicting some beliefs about insurance pools.
- Underwriter Role: Underwriters are responsible for assessing and determining acceptable risks.
- Irrevocable Beneficiary Designation: This designation prevents the policy owner from making certain decisions without beneficiary consent.
Beneficiary and Policyowner Rights
- Life Insurance Application: Beneficiaries do not need to sign the application for life insurance.
- Policy Loans and Cash Value: The policy owner can borrow against the cash value accumulated in their permanent policy.
- Beneficiary Rights: The policyowner retains rights to change beneficiaries and access cash value unless otherwise stated.
Premiums and Payments
- Premium Adjustments: Changing premium payment frequency from annually to monthly typically leads to an increased total premium.
- Modified Premiums: Policies may offer lower initial premiums to make them more affordable.
- Premium Reduction Option: Policyowners can use dividends to offset annual premium obligations.
Life Insurance Types and Features
- Joint Life Policy: Pays $250,000 upon the death of either insured in a couple.
- Term Life Insurance: Provides coverage for a specified period; riders can offer additional temporary coverage.
- Paid-Up Additions: Lucy's use of dividends to purchase additional insurance benefits reflects this option.
Annuities and Retirement Plans
- Annuities Defined: Specifically designed to provide a lifetime income regardless of lifespan.
- Variable Annuities: Not backed by the insurer's general account assets; their performance is market-dependent.
- Joint Life Payment Option: No payment is made to a survivor upon the first annuitant's death.
Disability Policies
- Business Overhead Expense Policy: Provides benefits for business expenses when an owner is disabled.
- Short-Term Disability: Generally covers disabilities lasting no more than two years.
- Medicare Eligibility: Social Security Disability requires current or fully insured status.
Health Insurance and HMOs
- Basic HMO Benefits: Does not include long-term care as a basic requirement for coverage.
- Usual, Customary, Reasonable Payments: In a medical expense policy, payments are based on average charges in a geographical area, leaving excess costs to the insured.
- Exclusions in Policies: Defined causes or conditions that are not covered and for which no benefits are payable.
Miscellaneous Concepts
- Buy-Sell Agreements: Ensure business continuity upon an owner’s death or disability; not typically used for large public corporations.
- MEC Guidelines: Overpayment beyond these guidelines can be refunded within 60 days after the contract year ends.
- Consumer Investigative Reports: Underwriters use these to gather insights into an applicant's character and background for risk assessment.
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Test your knowledge of important insurance terms and concepts with these flashcards. Each card provides a definition for key vocabulary, ensuring you understand foundational principles in the insurance industry.
