Insurance Underwriting Process Quiz

<p>To regulate the collection and use of credit information. (A)</p> Signup and view all the answers

<p>The applicant presents a higher-than-average risk due to factors like health history or occupation. (C)</p> Signup and view all the answers

<p>Notification of risks (D)</p> Signup and view all the answers

<p>Maintains excellent physical condition and a healthy lifestyle. (B)</p> Signup and view all the answers

<p>Only at the time the policy is applied for. (A)</p> Signup and view all the answers

<p>Five days (D)</p> Signup and view all the answers

<p>A business partner insures the life of another partner, as their death would cause financial hardship to the business. (D)</p> Signup and view all the answers

<p>Declined (A)</p> Signup and view all the answers

<p>Confidential aversive information about an applicant for insurability purposes and underwriting information for life and health insurers. (B)</p> Signup and view all the answers

<p>Only if needed for additional investigation. (C)</p> Signup and view all the answers

<p>No, insurers cannot refuse to issue policies solely on information supplied by the MIB. (C)</p> Signup and view all the answers

<p>To determine a consumer's eligibility for credit, insurance, employment, or other authorized purposes. (C)</p> Signup and view all the answers

<p>They must have a valid business need for the information. (A)</p> Signup and view all the answers

<p>To generate profit by betting on the early demise of insured individuals, with investors collecting the death benefit. (C)</p> Signup and view all the answers

<p>The agent/broker loans the insured money to pay the premiums for a period, after which the investors take over the policy. (A)</p> Signup and view all the answers

<p>The policy is sold to investors for an amount greater than its cash value but less than its death benefit. (A)</p> Signup and view all the answers

<p>Dollar limits on specific types of medical services covered by the policy. (C)</p> Signup and view all the answers

<p>The maximum lifetime benefit is returned to its original amount after a significant portion has been used for claims. (C)</p> Signup and view all the answers

<p>The arrangements exploit vulnerable individuals for financial gain by those without insurable interest. (C)</p> Signup and view all the answers

<p>STOLI and IOLI involve third-party investors who profit from the insured's death, unlike standard policies. (A)</p> Signup and view all the answers

<p>Insureds must first be referred to a specialist by their primary care physician (PCP). (D)</p> Signup and view all the answers

<p>To loan the insured funds to pay the premiums for a set period. (C)</p> Signup and view all the answers

<p>Capitation, a fixed payment per member per month. (B)</p> Signup and view all the answers

<p>Their impending mortality makes them a more profitable investment for those gambling on life expectancy. (C)</p> Signup and view all the answers

<p>PPOs allow insureds to seek care from any provider, but offer reduced benefits for non-preferred providers. (C)</p> Signup and view all the answers

<p>The investors or strangers who initiated the arrangement. (B)</p> Signup and view all the answers

<p>The contributions are tax-deductible for the employer. (B)</p> Signup and view all the answers

<p>Withdrawals are treated as taxable income and assessed an additional 10% penalty tax. (C)</p> Signup and view all the answers

<p>If the employee becomes disabled. (A)</p> Signup and view all the answers

<p>A 50% tax is assessed on the amount that should have been withdrawn. (A)</p> Signup and view all the answers

<p>Qualified plans must be approved by the IRS, while nonqualified plans do not. (D)</p> Signup and view all the answers

<p>They can discriminate in favor of certain employees. (A)</p> Signup and view all the answers

<p>Financial security for dependents upon the insured's death. (A)</p> Signup and view all the answers

<p>Qualified plan contributions are tax-deductible, while nonqualified plan contributions are not. (A)</p> Signup and view all the answers

<p>FSAs are funded through a combination of employee salary reductions and potential employer contributions. (D)</p> Signup and view all the answers

<p>The ACA introduced annual contribution limits for qualified medical expense accounts, indexed annually. (D)</p> Signup and view all the answers

<p>Contributions are made pre-tax, lowering taxable income, and withdrawals are tax-free for qualified medical expenses. (C)</p> Signup and view all the answers

<p>HRAs are funded exclusively by the employer. (A)</p> Signup and view all the answers

<p>Employer contributions are tax-deductible as a business expense, and employee benefits are not taxable. (C)</p> Signup and view all the answers

<p>FSAs have contribution limits, while HRAs do not. (C)</p> Signup and view all the answers

<p>Whether the employer or employee funds the account. (B)</p> Signup and view all the answers

<p>Paying for over-the-counter medications. (D)</p> Signup and view all the answers

The procedure used by insurance companies to evaluate risk and determine premium rates.

A situation where high-risk individuals are more likely to seek insurance, potentially leading to insurer losses.

A financial stake in the continued life of an insured person, required when applying for life insurance.

Three types of people or relationships for life insurance: self, relatives, business partnerships.

A nonprofit organization that collects medical data for insurers to assess risk.

Insurers access MIB data for insurability assessments but cannot solely deny policies based on it.

Documents assessing a consumer's credit worthiness or character, used for insurance eligibility.

A valid reason required to obtain a consumer report, ensuring privacy and relevance.

A life insurance policy purchased by a consumer, with a stranger as the beneficiary, aiming to profit upon the insured’s death.

Strangers or investors who purchase STOLI policies to benefit from the death of the insured.

Strangers make money by betting the insured will die soon, minimizing premium costs.

A variation of STOLI where investors fund policies for elderly individuals and gain ownership after two years.

Investors often loan money to insureds to cover their premiums in IOLI arrangements.

In IOLI, this is the time frame before investors gain ownership of the policy.

Concerns arise as investors have no insurable interest in the insured's life, complicating ethical considerations.

Reports containing information on a consumer's character and reputation from personal interviews.

A law regulating the collection and use of credit information, enacted in 1970.

Organizations that collect and provide information about consumers' credit history.

Consumers can request details about their consumer report within five days.

A system to categorize applicants based on their risk to insurers: preferred, standard, substandard, declined.

Individuals who are above average in physical condition and present low risk to insurers.

Applicants deemed high risk due to health issues or hazardous activities.

Dollar limits set within a policy for medical services.

The total amount a policy will pay for an individual, usually $1 million.

Feature allowing maximum lifetime benefit to be reset after use.

Prepaid plan focusing on preventive care with in-network providers.

Network of providers offering services at reduced costs with more freedom.

A flexible spending account for medical expenses offered by employers.

Annual limits are set for how much can be contributed to FSAs.

Health Reimbursement Accounts funded by employers, covering employee medical expenses.

Employees contribute via salary reductions to their FSA plans.

Employers may also contribute funds to employees' FSA accounts.

FSA contributions reduce taxable income and withdrawals for qualified expenses are tax-free.

There are no contribution limits for Health Reimbursement Accounts.

Employer contributions to HRAs are tax-deductible; benefits are not taxed for employees.

Interest earned on contributions isn't taxed until withdrawal.

Employer's contributions are tax-deductible and not taxable to employees.

Employees contribute with pre-tax dollars, lowering taxable income.

Withdrawals are taxed as income when taken.

Withdrawals before age 59 ½ incur a 10% penalty tax.

Withdrawals must begin at age 70 ½, or face a 50% tax.

Retirement plans without IRS approval or tax advantages.

Life insurance provides financial support for dependents if you die.