Life & Health Insurance Terms Quiz

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Questions and Answers

How soon is the insured required to give notice of claim?

20 days

If forms are not furnished, what should the insured do?

Submit written proof of the occurrence, nature of the loss, and extent of loss to the insurer.

Premium payments for personally-owned disability income policies are tax deductible.

False

How long after a policy's effective date may an insurer cancel the policy?

90 days Signup and view all the answers

Under an individual disability policy, what is the minimum schedule of time in which claim payments must be made to an insured?

Monthly Signup and view all the answers

What is the name of the statement that indicates a policy is limited?

Limited Policy Notice Signup and view all the answers

Which health insurance provision describes the insured's right to cancel coverage?

Renewal Provision Signup and view all the answers

Which groups may be eligible for benefits under the Healthy New York Program?

Employees not covered by health coverage through their employer Signup and view all the answers

How soon following a covered loss must an insured submit written proof to the insurance company?

Within 90 days or as soon as reasonably possible but not to exceed 1 year. Signup and view all the answers

In a life settlement transaction, how many days does the owner have to rescind the contract after receipt of the proceeds?

15 days Signup and view all the answers

Which of the following is not covered under Basic Hospital Expense coverage?

Surgeons' fees Signup and view all the answers

Optional policy provisions can be changed by an insurer, as long as the changes do not adversely affect the policyholder.

True Signup and view all the answers

Benefits from Business Overhead Expense (BOE) policies are usually limited to 6 months.

False Signup and view all the answers

What is the difference between the Medicare approved amount for a service or supply and the actual charge?

Excess Charge Signup and view all the answers

What is the amount a physician or supplier bills for a particular service or supply?

Actual Charge Signup and view all the answers

What types of services may NOT be provided under long-term care's assisted living care?

Visits by a registered nurse Signup and view all the answers

A policy that covers medical costs related to a specific condition is called what?

Dread Disease Policy Signup and view all the answers

In a replacement situation, what must be considered?

Everything except Assets Signup and view all the answers

The Patient Protection and Affordable Care Act mandates that insurers provide coverage for adult children up to the age of?

26 years old Signup and view all the answers

Every authorized domestic insurer will be examined at least how often?

Once every 5 years Signup and view all the answers

What type of medical expense policy establishes benefits based on prevailing charges?

Usual, Customary and Reasonable Signup and view all the answers

If Cassie accumulates medical bills from a burn but is not classified as 'disabled', which coverage would help?

Medical Reimbursement Benefit Signup and view all the answers

How are the three basic charges for medical expense insurance grouped?

Hospital, Surgical and Medical Signup and view all the answers

Which provision concerns the insured's duty to provide the insurer with notice of a loss?

The Notice of Claim Provision Signup and view all the answers

Health insurance could provide payments for loss of income.

True Signup and view all the answers

Will a group health plan pay for an employee injured in a car wreck while working?

No Signup and view all the answers

A reinstated policy provides immediate coverage for illness.

False Signup and view all the answers

Are premium payments for personally-owned disability income policies tax deductible?

Not tax deductible Signup and view all the answers

What is the maximum amount of co-insurance in New York's major medical plans?

25% Signup and view all the answers

Which employment would be covered under the NYS Disability Benefit Law?

An advertising executive Signup and view all the answers

Medicare Advantage is known as?

Medicare Part C Signup and view all the answers

Every insurer must file a fraud prevention plan within how many days?

120 days Signup and view all the answers

Who is entitled to mental health benefits through Timothy's Law?

New York residents covered by group health insurance Signup and view all the answers

Which of the following does NOT describe a principal goal of a Preferred Provider Organization?

Provide medical benefits only from physicians in the network. Signup and view all the answers

Regarding long-term care coverage, as the elimination period gets shorter, what happens to the premium?

Gets higher Signup and view all the answers

How much of a given employee's income would be covered under a short-term disability plan?

70% Signup and view all the answers

Do benefits stop at the annuitant's death with an annuity certain?

False Signup and view all the answers

What is a Payor Benefit Rider?

Premium is paid if payor becomes disabled or dies. DB does not increase. Signup and view all the answers

What does a Guaranteed Insurability Rider allow the policyowner to do?

Increase the DB for specific ages or events. Signup and view all the answers

What is the purpose of a Cost of Living Rider?

Increases DB to keep pace with inflation. Signup and view all the answers

What does an Accidental Death Rider provide?

If insured dies from an accident, DB is a multiple of the face amount. Signup and view all the answers

When does the insurer pay the death benefit in a survivorship life policy?

Upon the last death. Signup and view all the answers

What type of annuity does K have if he begins receiving payments 2 months after purchasing a $90,000 annuity?

Immediate. Signup and view all the answers

After how many days can a ruling from a civil penalty hearing be enforced as a judgment without court proceedings?

120 days. Signup and view all the answers

What is a Fixed Settlement Option?

Both the principal and interest will be liquidated over a selected period of time. Signup and view all the answers

What is true regarding the cash value in a Universal life policy?

The insurer credits the cash value with a current interest rate. Signup and view all the answers

When is a certificate of appointment valid until?

The agent's license is suspended or revoked, or the appointment is terminated under the insurer's terms. Signup and view all the answers

What settlement option should a policy owner choose if they want to pay a portion of the proceeds annually to their spouse upon their death?

Interest-only option. Signup and view all the answers

What is the penalty tax for nonqualified distributions to a health savings account?

20%. Signup and view all the answers

What can contribute proof of death for insurance benefits payment?

A death certificate and a form provided by the insurance company. Signup and view all the answers

Under the uniform required provisions, proof of loss under a health insurance policy should normally be filed within how many days?

90 days of a loss. Signup and view all the answers

Which provision must be included on the first page of a Medicare supplement policy that states the insurer's right to change premium amounts?

Continuation Provision also known as the 'Renewal Provision'. Signup and view all the answers

If an insured has a $500 deductible and coinsurance of 80/20, how much would the insurer pay for $4,000 in medical expenses?

$2,800. Signup and view all the answers

To sign up for a Medicare prescription drug plan, individuals must first be enrolled in which part?

Medicare Part A. Signup and view all the answers

What is the dividend option where the policy-owner uses dividends to purchase a term policy for one year called?

One Year Term Option. Signup and view all the answers

What is it called when insurers negotiate contracts with providers to provide services at a favorable cost?

Preferred Provider Organization (PPO). Signup and view all the answers

What best describes the 'first-dollar coverage' principle in basic medical insurance?

The insured is not required to pay a deductible. Signup and view all the answers

What are the three basic types of coverage?

Hospital, surgical and medical. Signup and view all the answers

What happens if a policy provision conflicts with state statutes?

The provision may be altered to conform to the state statutes. Signup and view all the answers

What is a feature of a variable annuity?

Benefit payment amounts are not guaranteed. Signup and view all the answers

What is true regarding installments for a fixed period annuity settlement option?

It is a life contingency option. Signup and view all the answers

What settlement option should a client consider if they plan to retire at age 50 and want income until social security and other funds become available?

Annuity Certain. Signup and view all the answers

What would be true if John receives benefits from his disability income policy after suffering an accident on the job?

Benefits received attributable to employer contributions are fully taxable to the employee as income. Signup and view all the answers

Do benefits stop at the annuitant's death with an annuity certain?

No. Signup and view all the answers

What does 'life contingency' mean?

It is something that can happen but is generally not anticipated. Signup and view all the answers

How would a Cross Purchase plan work between two equal partners worth $150,000?

Partner A would buy a policy on Partner B in the amount of $75,000. Signup and view all the answers

Is there a limit on when benefits are paid in a Business Overhead Expense (BOE) plan?

No. Signup and view all the answers

What decreases in a decreasing term policy?

The face amount decreases... the premium remains level. Signup and view all the answers

What limits health insurance coverage even though sickness is a peril covered?

Exemption periods. Signup and view all the answers

How long does an insurer have to comply with a consumer's request for information on an Investigative Consumer Report?

5 days. Signup and view all the answers

Which insurance principle states that an insured may only receive benefits for the amount lost?

Indemnity. Signup and view all the answers

How many years must life settlement brokers keep records of commission and compensation disclosures?

3 years. Signup and view all the answers

Which benefit would cover at least a portion of Cassie's medical expenses after she burns her hand?

Medical Reimbursement Benefit. Signup and view all the answers

Which of the following is not covered under Basic Hospital Expense coverage?

Surgeon's fees. Signup and view all the answers

Which document helps ensure that full and fair disclosure is provided to the recipient of a policy?

Outline of Coverage. Signup and view all the answers

How many days of inpatient care for treatment of mental disorders must be provided under Timothy's Law?

30 days. Signup and view all the answers

When will Medicare cover nursing home care?

If it is part of the treatment for a covered illness. Signup and view all the answers

What determines the extent of benefits offered under group disability income insurance?

The insured's income. Signup and view all the answers

What are the characteristics of a group long-term disability plan?

The maximum benefit is based upon monthly income. Signup and view all the answers

What is the maximum amount of coinsurance in New York's major medical plans?

25%. Signup and view all the answers

Under SIMPLE plans, the employer makes a matching contribution equal to what percent of the employee's annual wages?

3%. Signup and view all the answers

What type of review process do employers use to evaluate the effectiveness of the utilization review process?

Retrospective review. Signup and view all the answers

What does naming beneficiaries as a class mean?

Naming beneficiaries as a group. Signup and view all the answers

How does the premium change in a decreasing term policy?

It doesn't change. It remains level. Signup and view all the answers

What does the guarantee of insurability option in long-term care policies allow?

Increase benefit levels without providing proof of insurability. Signup and view all the answers

What is a 1035 Exchange?

A nontaxable transaction to transfer cash value from one policy to another. Signup and view all the answers

How long do benefit periods for individual short-term disability policies usually continue?

Six months to two years. Signup and view all the answers

Which nonforfeiture option provides coverage for the longest period of time?

Reduced paid-up. Signup and view all the answers

Who may share in the commission from the sale of a life insurance policy?

A licensed life insurance agent of the same insurer involved with the sale of the transaction. Signup and view all the answers

What types of services may NOT be provided under long-term care's assisted living care?

Visits by a registered nurse. Signup and view all the answers

What is reinsurance?

An agreement between a ceding insurer and assuming insurer. Signup and view all the answers

Which life insurance settlement option guarantees payments for the lifetime of the recipient?

Life income with period certain. Signup and view all the answers

If a court ordered payment for a loss that was not covered in the policy, what legal concept does this exemplify?

Reasonable expectations. Signup and view all the answers

What type of annuity does an individual have if the income payments begin 2 years after purchase?

Deferred. Signup and view all the answers

What is the purpose of the New York State Partnership for LTC?

Combines LTC insurance and Medicaid. Signup and view all the answers

What is an example of a peril?

A tornado that destroys property. Signup and view all the answers

Which Medicare supplement plans would be available to a reasonably healthy 91-year-old female?

A-N. Signup and view all the answers

In which situations can a policy-owner be allowed to sell a life insurance policy for a life settlement contract?

Divorce, terminal or chronic illness, death or retirement. Signup and view all the answers

What does the Life Income Joint and Survivor settlement option guarantee?

Income for 2 or more recipients until they die. Signup and view all the answers

What is true for both equity indexed annuities and fixed annuities?

They have a guaranteed minimum interest rate. Signup and view all the answers

Study Notes

Life Insurance Riders

Payor Benefit Rider: Premiums are covered if the payor becomes disabled or dies; death benefit remains unchanged.
Guaranteed Insurability Rider: Allows the policyowner to increase the death benefit at certain ages or significant life events.
Cost of Living Rider: Adjusts the death benefit in line with inflation to maintain purchasing power.
Accidental Death Rider: If the insured dies in an accident, the death benefit is increased, typically as a multiple of the face amount.

Policy Mechanics

Survivorship Life Policy: Death benefit is paid out only upon the death of the last insured.
Immediate Annuity: Payments begin within 2 months of purchase.
Fixed Settlement Option: Principal and interest are liquidated over a predetermined period; payments made in equal installments.
Universal Life Policy Cash Value: Cash value is credited with a current interest rate and backed by a lower guaranteed rate.

Legal and Regulatory Aspects

Civil Penalty Judgement: A ruling can be enforced as a judgement after 120 days without court action.
Certificate of Appointment Validity: Valid until license suspension, expiration without renewal, or termination by the insurer.
Medicare Supplement Policy Requirement: Continuation Provision must be included on the first page to outline premium change rights.

Tax and Financial Considerations

Health Savings Account Penalty: Nonqualified distributions incur a 20% penalty in addition to tax.
Group Disability Income Taxation: Employer-funded benefits are fully taxable to the employee as ordinary income.

Coverage and Benefits

Annuity Certain: Provides income for a selected time frame, regardless of the annuitant's death.
First-Dollar Coverage: Basic medical insurance does not require deductibles for hospital, surgical, and medical expenses.
Basic Hospital Expense: Does not cover surgeon's fees.

Medicare and Long-Term Care

Long-Term Care Insurance Partnership: Combines private LTC insurance with Medicaid coverage for nursing home care preparedness.
Timothy's Law: Mandates a minimum of 30 days of inpatient care for mental health disorders under insurance policies.

Annuity Features

Variable Annuities: Benefit payment amounts are not guaranteed; no minimum interest rate assurance.
Decreasing Term Policy: Face amount decreases while premiums remain level.

Claims and Proofs

Proof of Loss Deadline: Claims should be filed within 90 days after a loss occurs.
Claim Notice Requirement: Insured is expected to notify the insurer of a claim within 20 days.

Disability Insurance

Individual Policy Payment Schedule: Claims must be paid monthly under individual disability policies.
Nonforfeiture Options: Reduced paid-up option provides coverage until age 100 but reduces face value based on cash value.

Additional Key Terms

Cross Purchase Plan: Partners purchase insurance on each other’s lives for business protection.
Investigative Consumer Report Disclosure: Insurers must comply with requests for information within 5 days.
Outline of Coverage: Ensures full and fair policy disclosure to consumers.

Miscellaneous

Life Income Joint and Survivor Option: Provides lifetime income for multiple recipients, with continued payments to a designated beneficiary after the death of one.
Reinsurance Definition: An agreement between the ceding insurer (originating company) and the assuming insurer (purchasing additional coverage).### Life Settlements and Insurance Rights
Life settlement contract allows the owner to rescind within 15 days after receiving settlement proceeds.
Surgeons' fees are not covered under Basic Hospital Expense coverage.

Policy Provisions and Benefits

Optional policy provisions may be modified by insurers if changes are not detrimental to policyholders.
Business Overhead Expense (BOE) policies typically offer benefits for up to 6 months for business expenses during total disability.
BOE premiums are tax-deductible for businesses but benefits received are taxable as income.

Medicare and Charges

The difference between Medicare's approved amount and actual charge is termed Excess Charge.
Actual Charge refers to what a physician bills for services rendered.

Long-Term Care and Insurance Policies

Long-term care's assisted living options generally do not include registered nurse visits.
A policy covering specific medical costs for a condition is called a Dread Disease Policy.

Replacement Situations and Child Coverage

In replacement situations, all factors must be assessed except for Assets.
The Patient Protection and Affordable Care Act mandates coverage for adult children up to the age of 26.

Insurer Examination and Charge Classification

Insurers and rate organizations are examined at least once every 5 years.
Medical expense insurance charges are categorized into Hospital, Surgical, and Medical.

Claims and Health Insurance

Notice of Claim Provision mandates insured to provide timely notification to the insurer of any loss.
Health insurance can cover loss of income due to disability.

Group Health Policies and Reinstatement

Group health plans do not cover work-related injuries; workers must rely on worker’s compensation.
Reinstated policies provide immediate coverage for accidental injury but require a 10-day waiting period for illness coverage.

Disability Income and Co-Insurance

Premiums for personal disability income policies are not tax-deductible.
The maximum co-insurance percentage in New York's major medical plans is 25%.

Employment Types and Medicare Advantage

Employment types covered under NYS Disability Benefit Law include jobs like advertising executive.
Medicare Advantage is also known as Medicare Part C.

Fraud Prevention and Mental Health Benefits

Insurers must file a fraud prevention plan within 120 days of requirement.
Timothy's Law provides mental health benefits to New York residents under group health or school health policies.

Preferred Provider Organization Goals

A principal goal of a Preferred Provider Organization is not to limit benefits strictly to in-network physicians.

Long-Term Care Policies and Employer Disability Plans

Shorter elimination periods for long-term care result in higher premiums.
Short-term disability plans typically cover about 70% of an employee's income.

Annuities and Proof of Loss

Benefits from annuities certain do not terminate at the annuitant's death; these are fixed-term annuities lacking life contingencies.
Insureds must submit proof of loss within 90 days or as soon as reasonable, not exceeding 1 year.

Disability Benefits Taxation

Disability income benefits received from employer-funded plans are taxable income to the employee.

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Test your knowledge of essential life and health insurance riders. This quiz covers terminology such as payor benefit rider, guaranteed insurability rider, and more. Perfect for students or professionals looking to refresh their understanding of insurance concepts.