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health ins > chap. 9 > Flashcards

chap. 9 Flashcards

1
Q

Q: What type of licensee represents the insured?

A

A: Broker

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2
Q

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

A

A: Only producers properly licensed for the type of insurance transaction

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3
Q

Q: What are producers required to do in order to renew their license?

A

A: Complete continuing education hours and pay a renewal fee

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4
Q

Q: What is the purpose of a cease and desist order?

A

A: To prevent a producer or insurer from further violating laws for transacting insurance

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5
Q

Q: If a producer makes maliciously critical statements about another insurer, what is this illegal practice called?

A

A: Defamation

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6
Q

Q: Who is responsible for the costs associated with the examination of insurers?

A

A: The insurer who is being examined

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7
Q

Q: Who is considered a nonresident agent?

A

A: An agent who resides and is licensed in another state, but who is authorized to transact insurance in this state

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8
Q

Q: In general, who can be excluded from producer licensing and examination requirements?

A

A: Insurance company officers, directors, or any other employees who do not transact insurance and who do not receive commissions for their services (usually, their responsibilities include administrative, executive or clerical).

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9
Q

Q: When can the Commissioner or Director examine insurers?

A

A: Whenever deemed necessary, but at least once every few years (please check your state regulations for specific time requirement)

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10
Q

Q: If an insurer holds a Certificate of Authority, it is known as what type of insurer?

A

A: Authorized or admitted

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11
Q

Q: What are the most common penalties for violations of insurance statutes?

A

A: A cease and desist order, a fine, and license suspension or revocation

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12
Q

Q: On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. What is the company guilty of?

A

A: Misrepresentation

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13
Q

Q: What type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?

A

A: Twisting

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14
Q

Q: For what reason can a temporary license be issued?

A

A: For continuation of business in case the licensed producer dies or becomes disabled

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15
Q

Q: An agent offers a client free tickets to a sporting event in exchange for the purchase of an insurance policy. What is the agent guilty of?

A

Rebating

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16
Q

Q: Who is an insurance agent?

A

A: A person authorized to sell, solicit and negotiate insurance contracts

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17
Q

Q: Who can usually be granted a temporary license?

A

A: Producer’s spouse or designee in case the licensed producer dies or becomes disabled

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18
Q

Q: Two individuals who are in the same risk and age class are charged different rates for their insurance policies due to an insignificant factor. What is this called?

A

Discrimination

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19
Q

Q: Who must be notified of a producer’s change of address?

A

A: The Department of Insurance (Commissioner/Director/Superintendent)

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20
Q

Q: What type of licensee represents the insurance company?

A

A: The agent

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21
Q

Q: What illegal act does a producer commit when the producer represents a policy in a more favorable light than the policy really is?

A

A: Misrepresentation

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22
Q

Q: To whom may a certificate of authority be issued?

A

A: To an insurer authorized to transact business in this state

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23
Q

Q: If an insurer meets the state’s financial requirements and is approved to transact business in the state, it is considered what type of insurer?

A

A: Authorized or admitted

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24
Q

Q: If the Commissioner/Superintendent finds a licensee engaging in an unfair method of competition or an unfair practice, what order will be issued?

A

A: Cease and desist order

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25
Q

Premium payments for personally-owned disability income policies are

A

Not tax deductible.

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26
Q

To be eligible for a Health Savings Account, an individual must be covered by a

A

High-deductible health plan.

27
Q

Which of the following individuals is eligible for a Health Savings Account?

A

Allison is insured by a High Deductible Health Plan (HDHP)

28
Q

An insured is covered by a partially contributory group disability income plan that pays benefits of $4,000 a month. If the insured pays 25% of the monthly premium, how much of the monthly benefit would be taxable?

A

$3,000

29
Q

Individuals who itemize deductions can claim deductions for medical expenses not covered by health insurance that exceed what percent of their adjusted gross income?

A

10%

30
Q

Which of the following is INCORRECT concerning taxation of disability income benefits?

A

If paid by the individual, the premiums are tax deductible.

31
Q

Which of the following statements is correct concerning taxation of long-term care insurance?

A

Excessive benefits may be taxable.

32
Q

Which of the following is not true of Disability Buy-Sell coverage?

A

Benefits are considered taxable income to the business.

33
Q

The benefits received by the business in a Disability Buy-Sell policy are

A

Income tax free.

34
Q

Under which of the following employer-provided plans are the benefits taxable to an employee in proportion to the amount of premium paid by the employer?

A

Disability Income

35
Q

Which type of insurance provides funds for a business organization to purchase the business interest of a disabled partner?

A

Disability Buy-Sell

36
Q

What are the 2 types of Flexible Spending Accounts?

A

Health Care Accounts and Dependent Care Accounts

37
Q

Under what condition are group disability income benefits received by an employee NOT taxable as income?

A

When the benefits received are equal or less than the employee’s percentage of the contribution.

38
Q

Which of the following describes taxation of individual disability income insurance premiums and benefits?

A

Premiums are not tax deductible, and benefits are not taxable.

39
Q

When may an insured deduct unreimbursed medical expenses paid under a long-term care policy?

A

When the expenses exceed a certain percentage of the insured’s adjusted gross income

40
Q

S is a sole business proprietor who owns a medical expense plan. What percentage of the cost of the plan may he deduct?

A

100%

41
Q

A noncontributory group disability income plan has a 30-day waiting period and offers benefits of $2,000 a month. If an employee is unable to work for 7 months due to a covered disability, the employee will receive

A

$12,000, all of which is taxable.

42
Q

An individual is insured under his employer’s group Disability Income policy. The insured suffered an accident while on vacation that left him unable to work for 4 months. If the disability income policy pays the benefit, which of the following would be true?

A

Benefits that are attributable to employer contributions are fully taxable to the employee as income.

43
Q

The annual contribution limit of a Dependent Care Flexible Spending Account is set by

A

The IRS

44
Q

All of the following are true regarding Key Employee Disability Income insurance EXCEPT

A

Benefits are taxable to the employer.

45
Q

Under which condition would an employee’s group medical benefits be exempt from income taxes?

A

An employee’s group medical benefits are generally exempt from taxation as income.

46
Q

Which of the following is correct regarding the taxation of group medical expense premiums and benefits?

A

Premiums are tax deductible and benefits are not taxed.

47
Q

The sole proprietor of a business makes a total salary of $50,000 a year. This year, his medical expenses have reached a total of $75,000. What amount may the sole proprietor deduct in regards to his medical expenses?

A

$50,000

48
Q

Group disability income insurance premiums paid by the employer are

A

Deductible by the employer as an ordinary business expense.

49
Q

Health Savings Accounts (HSAs) are designed to

A

Help individuals save for qualified health expenses.

50
Q

All of the following would be qualified as a dependent under a Dependent Care Flexible Spending Account, EXCEPT

A

Jeremy had to have both legs amputated, but has learned how to take care of himself and to get around in a wheelchair

51
Q

Which of the following is true regarding benefits paid to disabled employees?

A

They may be subject to taxation if the premium was paid by the employer.

52
Q

What is a penalty tax for non-qualified distributions from a health savings account?

A

20%

53
Q

What percentage of individually-owned disability income benefits is taxable?

A

0%

54
Q

Under a Key Person disability income policy, premium payments

A

Are made by the business and are not tax-deductible.

55
Q

Which of the following determines whether disability insurance benefits are taxed?

A

Whether the premiums were tax deductible

56
Q

Your client wants to know what the tax implications are for contributions to a Health Savings Account. You should advise her that the contributions are

A

Tax deductible.

57
Q

An insured makes regular contributions to his Health Savings Account. How are those contributions treated in regards to taxation?

A

They are tax deductible.

58
Q

Assuming that all of the following people are covered by a High Deductible Health Plan and are not claimed as dependents on anyone’s tax returns, which would NOT be eligible for a Health Savings Account?

A

Amanda is 67 and is covered by a basic medical expense policy

59
Q

In an individual long-term care insurance plan, the insured is able to deduct the premiums from taxes. What income taxation will be imposed on the benefits received?

A

No tax

60
Q

Other than for a qualified life event, when can a change be made in benefits for a Flexible Spending Account (FSA)?

A

During the open enrollment period

61
Q

Concerning group Medical and Dental insurance, which of the following statements is INCORRECT?

A

Employee benefits are tax deductible the year in which they were received.

62
Q

At what age may an individual make withdrawals from an HSA for nonhealth purposes without being penalized?

A

65

63
Q

An insured is the recipient of an Accidental Death and Dismemberment (AD&D) policy purchased by his employer. The policy pays triple indemnity in case of accidental death. If the insured died as a result of an accident stipulated in the policy, how will the benefits paid be taxed?

A

Benefits received are considered income tax free.

health ins (10 decks)

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