Final Exam Prep Flashcards
What four services do HMO and PPO plans cover that are not covered by Medicare or Medicare Supplement policies?
Prescriptions, eye exams, hearing aids or dental care
Under an extended term nonforfeiture option, the policy cash value is converted to a face amount that is what percentage of the whole life policy?
100%
Are there life contingencies with an annuity certain?
No
A life contingency in an annuity is an option that provides a death benefit if the annuitant dies during the accumulation stage
What is the purpose of a conditional receipt?
To provide coverage on a date prior to the policy issue
What does it mean to legally bind coverage?
It means that an insurance company has confirmed that coverage is in place for a policyholder
As a general rule, are premiums for life insurance tax deductible?
No
The exception would be when an employer buys group term life insurance for his employees since it is considered a business expense
What three conditions must be met for a life insurance policy to begin coverage?
- Policy delivery
- Collection of the initial premium
- Applicant completes an acceptable Statement of Good Health
Are physical examination and autopsy mandatory for health insurance policies?
Yes
How soon following the occurrence of a covered loss must the insured submit written proof of the loss to the insurance company?
Within 90 days or as soon as reasonable but not to exceed 1 year
Do HMOs provide financing as well as reimbursement?
They do provide financing, not reimbursement
Do group disability benefits apply to injuries incurred both on and off the job?
No, on the job injuries are covered by Workers Comp
Does coverage for illness start immediately upon the reinstatement of a health insurance policy?
No
Accidental injury is covered immediately but illness is not to protect the insurer against adverse selection. Illness is covered 10 days after reinstatement.
What document describes the insured’s medical history, including diagnoses and treatments?
The APS (Attending Physician’s Statement)
What are the three features of noncancellable policies?
- Insurer cannot cancel the policy
- Premiums cannot be increased for the term of the policy
- Apply only to a certain age, usually 65
If an individual already receives Social Security disability benefits, what do they need to do to qualify for Medicare when they turn 65?
Nothing, they’re already qualified for Medicare Parts A and B once they turn 65
What is the maximum age for qualifying for a catastrophic plan?
30
Which has a higher premium and why: joint life or survivorship life?
Joint because survivorship pays on the last rather than the first death so premiums are spread out over a longer period of time
After the deductible, what percent of covered expenses will Medicare Plan B pay?
80%
In the event a policy lapses due to outstanding premium, within how many days would the policy be automatically reinstated once the outstanding premium is paid?
45
What contract characteristic defines the requirement that both the insured and the insurer must meet certain conditions?
Conditional
Does AD&D insurance cover presumptive disabilities?
Yes
How are accelerated benefits paid to a chronically ill insured taxed?
A portion of the benefit to a certain limit is tax free; the rest is taxable income
What is the waiting period on a Waiver of Premium rider in life insurance policies?
6 months
Who examines the books and records of insurance companies in Florida and how often?
The CFO and the Office of Insurance Regulation every 5 years
What method do insurers use to protect themselves against catastrophic losses?
Reinsurance - a contract between an insurance company, called the cedent, and a reinsurer, where the reinsurer takes on some or all of the risk from the cedent’s insurance policies
Who must sign the Notice Regarding Replacement?
Both the applicant and the agent
Compare the premium of Universal vs Whole or Straight Life
Universal - less expensive and variable premium
Whole/Straight - more expensive and level/fixed premium
Compare the cash value guarantee of Universal vs Whole or Straight Life
Universal - cash value NOT guaranteed because it returns current market rates
Whole/Straight - Guaranteed cash value because it returns a fixed interest rate
Compare the death benefit of Universal vs Whole or Straight Life
Universal - Death benefit amount is not guaranteed because the cash value is not guaranteed
Whole/Straight - Guaranteed death benefit because it’s fixed
Compare the cost of Universal vs Whole or Straight Life
Universal - Less expensive
Whole/Straight - More expensive
What type of death protection does Universal Life offer
Annually renewable term life
Compare the death benefit of Universal Life Option A vs Universal Life Option B
Option A - Level death benefit
Option B - Increasing death benefit
Compare the cash value of Universal Life Option A vs Universal Life Option B
Option A - Cash value is accessible only to the policyowner while they are alive
Option B - Both the face value and cash value are paid to the beneficiary upon the death of the insured
What type of death benefit does Term Life have?
Pure death benefit - only pays out the benefit upon the death of the insured. There is no cash value.
Does Term Life have a cash value?
No
What type of premium does Term Life have?
Level premium for the full term
Compare the types of account and who’s responsible for Variable vs Fixed Annuities
Variable - Separate account; policyholder is fully responsible
Fixed - Insurer’s general account; insurer is fully responsible
Compare face amount vs cash value
Face amount - death benefit
Cash value - savings that can be withdrawn or borrowed against
Is evidence of insurability required when converting Term Life?
No
What is adjustable on an adjustable life insurance policy (x3)?
- Premium
- Death benefit
- Coverage period (sometimes)
When converting Term Life, how is the premium amount determined?
Attained age
How is the pay-out of Pure/Straight Life Annuities structured?
Guaranteed Income for the life of the annuitant
What is the cash value and death benefit of Pure/Straight Life Annuities?
No cash value and no death benefit
What must the policyowner of an Adjustable Life Insurance policy provide to increase the death benefit?
Evidence of insurability
What is another name for interest-sensitive whole life insurance?
Current assumption whole life insurance
What are the two ways the principal is treated in Return of Premium Term Life Insurance?
- It is returned to insured if they outlive the term
- It is returned to beneficiary if insured dies during term
With the Life with Guaranteed Minimum annuity settlement option, what happens to the principal amount if the annuitant dies?
The Guaranteed Minimum provision means the beneficiary is refunded the remainder of the principal
What characteristic makes whole life permanent protection?
Coverage until death or age 100
Which types of policies offer endorsements (riders) for LTC?
Which types don’t?
Life insurance policies DO
Health care insurance policies DON’T
What type of insurance is a children’s rider added to an insured’s permanent life insurance policy?
Term insurance covering all the children which is convertible to permanent insurance once the child reaches the maximum age without evidence of insurability
What type of retirement account does not require distributions to start by a certain age?
Roth IRAs
What happens to the principle in an interest-only settlement option?
It stays with the insurer to generate the interest distributed in the pay-out unless the beneficiary chooses to access it sooner
To comply with the Fair Credit Reporting Act, when must a producer notify the applicant that a credit report may be requested?
At the time of application
COBRA applies to employers with at least how many employees?
20
Which nonforfeiture option has the highest amount of protection?
Extended term
It has the same face amount as the original policy but for a shorter period of time
An insured has chosen the Joint and 2/3 Survivorship settlement option. What does this mean to the beneficiary?
While both annuitants (typically a couple) are alive, they receive a set income payment; however, when one person dies, the surviving person will continue to receive 2/3 of that original payment amount for the rest of their life
Are the benefits from individual LTC plans taxed?
No
Unless they exceed the daily cost of LTC
What must all definitions of total disability include?
A person’s ability to work is significantly reduced or eliminated for the rest of their life
The type of policy that can be changed from one that does not accumulate cash value to one that does is a…
Convertible term policy
At what age do Social Security credits start to accrue and how many must they accrue to claim benefits through age 31?
Accrual starts at 21
They must have accrued a minimum of half-time credits between 21 and the time of injury (i.e. 2 per year)
If the free-look period is 10+ days, when can the Buyer’s Guide be delivered?
With the policy
If the free-look period is less than 10 days, when must the Buyer’s Guide be delivered?
Prior to accepting the first premium
How are key person insurance premiums and benefits taxed?
Premiums are not tax deductible but benefits are tax free
What does a term rider attached to a permanent life insurance policy enable the policyowner to do?
Customize the life insurance policy to their needs (e.g. additional temporary insurance for themselves or family members, etc.)
Most policies will pay accidental death benefits as long as the death was caused by the accident and occurs within how many days?
90
What is required from each state in order to add a provision to a health care policy that is consistent with uniform provisions?
Approval
Hospital indemnity/hospital confinement indemnity will provide payment based on what?
Only on the number of days confined in a hospital
What is an accumulation at interest option?
A feature in certain life insurance policies where dividends paid to the policyholder are reinvested back into the policy and allowed to accumulate interest over time
What is third party ownership of a life insurance policy?
It is when the policy owner is different from the insured person (e.g. group or key person life insurance)
In health insurance, who pays for any amount a doctor charges above what the insurer considers usual, customary and reasonable?
The insured
What type of insurance only covers medical costs related to accidents?
Accident-only
If someone 65+ still has health insurance through their employer, what purpose does Medicare have if any?
Employer’s health coverage is primary, Medicare is secondary
Which type of annuity will generally pay the highest monthly income and why?
Straight Life
It only pays for as long as the annuitant lives with no death benefit and no cash value
What kind of organization is formed to provide insurance benefits for members of an affiliated lodge or religious organization?
Fraternal benefit society
What are insurance companies formed in-state, out of state and out of country called?
Domestic, foreign and alien
What is the minimum age required to obtain a life insurance license?
18
Which replacement regulations are applicable when an employer changes its group life insurance policy to a similar one with a different insurer?
None. Replacement regulations do not apply in this situation.
What is another name for time limit on certain actions?
Statute of limitations
How are taxes on accumulation handled for both qualified and nonqualified retirement plans?
They’re both tax deferred in the accumulation phase
What is Durable Medical Equipment?
Equipment prescribed by a doctor (e.g. oxygen equipment, wheelchairs, etc.)
Compare coinsurance vs copayment
Coinsurance is a percent of cost, copayment is a flat amount
What option enables policyowners to use dividends to pay their next premium?
Reduction of premium
What are nonforfeiture values and are they optional?
They are provisions in life insurance policies that allow policyholders to receive some value from their policy if they can no longer pay premiums. These options can be used if a policy lapses or is canceled.
They are required by Florida state law.
How are group medical expense premiums and benefits taxed?
Premiums are paid with pre-tax business proceeds so they are tax deductible
Benefits are not taxed as income to the employee
What type of policy must maintain a “corridor” or gap between the cash value and the death benefit and why?
Universal Life Option A
Not doing so nullifies the life insurance tax benefits
Both consumer reports and investigative consumer reports provide information from an outside source about a customer’s character and reputation. What is unique about consumer investigative reports?
The customer’s associates, friends, and neighbors provide the report’s data
What retirement benefits plans are best suited for the self-employed and very small businesses?
What is the key advantage?
HR-10 (Keogh Plans)
Higher contribution limits for high income business owners
Compare probationary period vs elimination period
Probationary period - the time between purchasing a policy and when you can file a claim
Elimination period - time between filing a claim and when you can start receiving benefits
What happens to money in an HRA when an employee leaves the company?
The HRA funds stay with the business but can be used by the former employee at the employer’s discretion
How much does the accidental death rider pay if death is the result of an accident as defined in the policy and occurs within 90 days of such an accident?
2 to 3 times the face amount
Compare Roth IRAs with Traditional IRAs
Roth IRAs:
- Contributions are after-tax and not tax deductible
- Distributions are tax free
Traditional IRAs:
- Contributions are pre-tax and tax deductible
- Distributions are taxed as income
Compare the paid-up option vs the paid-up addition
Paid-up option - uses dividends and interest to pay the policy earlier than planned
Paid-up addition - uses dividends and interest to buy additional policies OF THE SAME TYPE or additional face amount
Does Medicaid offer disability coverage for work-related injuries?
No
An agent selling variable annuities must be registered with?
FINRA (Financial Industry Regulatory Authority)
An insured has Medicare Part D coverage. Upon reaching the initial benefit limit, what percentage of the prescription drug cost is the insured responsible for paying?
25%
What is an agreement between an insured and an insurer, where the insurer agrees to indemnify the insured for specific losses in exchange for a premium?
An insurance contract
If an agent does not notify the insurer of an address change, what is the maximum penalty that can be imposed for a one-time offense?
$250
In life policies issued in this state, insurers are permitted to charge interest during the policy grace period for the number of days elapsing before the premium is paid. What is the maximum annual interest rate?
8%
How long must replacing insurers maintain copies of the Notice Regarding Replacement and all sales proposals?
At least 3 years or until the conclusion of the next regular audit by the insurance department, whichever is later
How long must insurance companies retain all advertisements?
At least 3 years from the date that the advertisement was first used
Which of the following types of insurers is owned by stockholders?
Only stock insurance companies are owned and controlled by stockholders
Who does the secondary addressee provision protect?
The 65+ insured
Which Medicare supplement plans would be available to a reasonably healthy 91-year-old female?
All Medicare supplement plans (A-N) must be made available to qualifying applicants, regardless of age
When an insurer appoints an agent, are they bound by the agent’s acts?
Yes
Under special circumstances, continuing education requirements may be extended beyond the 2-year period for a maximum period of
12 months
The corridor deductible derives its name from the fact that it is applied between what two levels of coverage?
Basic and major medical
If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?
5 days
A waiver of premium provision may be included with which kind of health insurance policy?
Disability income
In a basic expense policy, after the limits of the basic policy are exhausted, the insured must pay what kind of deductible?
Corridor
After the limits of the basic policy are exhausted, the insured must pay a corridor deductible before the major medical coverage will pay benefits
A father purchases a life insurance policy on his teenage daughter and adds the Payor Benefit rider. How long does the father have to be disabled before the rider to waive the payment of premium kicks in?
6 months
Is the Medicare Part A deductible covered under Plan A in Medigap insurance?
No
What is a STOLI?
Stranger-originated life insurance (STOLI) policies are usually purchased by people who have no relationship with the insured with the intention of selling them for life settlements
The dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as the
One-year term option
The relation of earnings to insurance provision allows the insurance company to limit the insured’s benefits to the insured’s average income over the last
24 months
When an HMO knowingly makes any misleading representations, incomplete or fraudulent comparisons for the purpose of inducing any person to lapse, forfeit, terminate, surrender or convert any insurance policy or contract with another insurance company or HMO, they are in violation of the unfair trade practice of
Twisting
A paid-up nonforfeiture benefit will become effective as specified in the policy, unless the person entitled elects another available option within how many days after the due date of the premium in default?
60
What restriction is placed on agents in the military?
The agent cannot sell a policy to another active military person who is of a lower rank
When must an insurance company present an outline of coverage to an applicant for a Medicare supplement policy?
At the time of application
What can be refunded if an agent’s appointment is denied?
State taxes may be refunded upon a written request
An annuity contract is issued to a senior consumer over age 65. What is the maximum surrender charge for a withdrawal of money allowed on this annuity?
10%
Why can’t a person insured under a group life insurance policy make an assignment to a policyholder?
Because the policyholder (usually the employer) cannot directly benefit from an employee’s death benefit - it creates a conflict of interest
Can a participating insurance policy pay dividends to the policyowner?
Yes
What is the maximum elimination period in long-term care policies issued in Florida?
180 days
What is the major difference between a stock company and a mutual company?
Mutual companies are owned by policyholders, while stock companies are owned by stockholders
Within how many days of the termination of the insured’s group coverage must the insured notify the insurer of the decision to convert to individual coverage?
31
Coverage of a newborn covers transportation costs up to what amount?
$1000
A corporation can be considered a “small group employer” if it has at least one and a maximum of how many employees?
50
Medicare supplement policies, by law, must provide a free-look provision of
30 days
When must the Medicare Supplement Buyer’s Guide be presented?
At the time of application
What is a penalty tax for nonqualified distributions from a health savings account?
20%
Individuals who itemize deductions can claim deductions for medical expenses not covered by health insurance that exceed what percent of their adjusted gross income?
7.5%
If an annuitant dies before annuitization occurs, what will the beneficiary receive?
Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount
Is there a deductible and is coverage unlimited with Basic Surgical Expense coverage?
There is a deductible and coverage is not unlimited
With coinsurance arrangements, which side is the insurer and which side the insured (e.g. 90/10)?
Left is insurer
Right is insured
What is the advantage of reinstating a policy instead of applying for a new one?
The original age is used for premium determination
But proof of insurability is required
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?
$50,000
When a reduced paid-up nonforfeiture option is chosen, what happens to the face amount of the policy?
It is reduced to the amount of what the cash value would buy as a single premium
What are the grace periods for each premium mode?
7 days if weekly
10 days if monthly
31 days if annually
Under AD&D coverage, compare the benefit paid for accidental death vs dismemberment
Accidental death pays the principle sum (the full amount)
Accidental dismemberment pays the capital sum (some percentage of the principle sum)
Medicare Part A will pay for up to how many days of inpatient psychiatric care?
190 (in the patient’s lifetime)
For how many days of skilled nursing care will Medicare pay benefits?
100
What is the minimum frequency individual disability benefits can be paid?
At least monthly
How long does the initial enrollment period for Medicare Part B last?
7 months
Which health insurance provision covers the insured’s right to cancel coverage?
Cancellation provision
In order to be eligible for an HSA, an individual must be covered by what type of health plan?
HDHP - High-Deductible Health Plan
An individual has been making periodic premium payments on an annuity. The annuity income payments are scheduled to begin after 1 year since the annuity was purchased. What type of annuity is it?
Deferred
What is a SEP (Simplified Employee Plan)?
A simple way for small businesses to offer retirement savings benefits with minimal administrative costs
Under what circumstances does the contingent beneficiary receive the full death benefit of a life insurance policy?
Only if the primary beneficiary is deceased at the time of the insured’s death
A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as what?
Survivor protection
Regarding SIMPLE Plans (Savings Incentive Match Plan for Employees of Small Employers):
- What is the max number of employees?
- What’s the minimum an employee must earn?
- Can any other qualified plans be used?
- Max of 100 employees
- Min of $5000
- No other qualified plan can be used
Regarding the cash value of a Variable Life policy:
- How is it funded?
- Who has access to it?
- What happens to it on the death of the insured?
- A portion of the premiums funds it
- Only the policyowner has access to it during their lifetime
- The insurer keeps it on the death of the insured
How long is the free look period in Florida for Life insurance and annuities if dissatisfied for any reason?
14 days
Is treatment received in a government hospital excluded from coverage in an individual health insurance policy?
Why?
Yes
Because services provided by government-funded healthcare programs like Medicare or Medicaid are excluded
In Florida, within how many days after receiving a written communication of replacement must an existing insurer provide a policyowner with a policy summary?
10
In Florida, If health coverage on a child under their parent’s health policy is terminated after the child reaches age 25, coverage may be extended, as long as the gap between termination does not exceed how many days?
63
What is the purpose of a benefit schedule?
It is a detailed list of what is and isn’t covered by the plan (e.g. maximum coverage amount, co-pays, any limitations, etc.)
Do fixed annuities provide protection against inflation?
No
They provide a guaranteed rate of return that is not adjusted for inflation
Does Medicaid pay for nursing home care in any case?
Yes
Do Medicare and Medigap policies provide coverage for long-term custodial or nursing home care?
No
Which two options give an employee the right to exchange group insurance for an individual policy within a certain number of days from termination of employment?
- Portability option
- Conversion privilege
An employee has a Flexible Spending Account (FSA) with a $5,000 annual benefit. This year the employee used $3,000. What would be the amount of the benefit available to the employee next year?
And why?
$2000
Annual benefit means that the employee can contribute up to $5000 per year. The unused remainder carries over.
What is the maximum number of lives a Survivorship Life policy can insure?
2
A husband and wife both incur expenses that are attributed to a single major medical insurance deductible. Which type of deductible do they have in their policy?
Family
Florida law requires that both individual and group health insurance policies provide coverage for a newborn child of a covered family member, other than the insured, for a period of?
18 months
What information is not required in the initial application for Life insurance?
Detailed medical history
For a contract to be enforceable by law, the purpose of the contract must be?
Legal
What percentage of the cost of a Medicare Part B service are you responsible for paying?
20%
Cash Value guarantees in a whole life policy are called?
Nonforfeiture vaules
The provision or clause that sets forth the basic agreement between the insurer and the insured and states the insurer’s promise to pay the death benefit upon the insured’s death is called the?
Insuring clause
What does the renewable provision allow a policyowner to do AND not do?
It allows them to renew without evidence of insurability
It DOES NOT guarantee the same premium amount
Reinsurance is an agreement between what two types of insurers?
Ceding and assuming
An insurance agent B likes to add additional coverages to applicants’ policies and charge them for such coverages without their knowledge. The agents is guilty of?
Sliding
What is another name for the guaranteed purchase option?
The evidence/guarantee of insurability rider
To purchase insurance, the policyowner must face the possibility of losing money or something of value in the event of loss. What is this concept called?
Insurable interest
If an individual willfully violates provisions of the Fair Credit Reporting Act, what is the maximum civil penalty?
$1000
How will life insurance proceeds that are paid as a lump sum be taxed to the beneficiary?
Tax-free
What is the penalty for a second failure to notify the department of a change of address?
At least $500 or the suspension or revocation of the license
How long does the law require agents to maintain records of transactions pertaining to premium payments?
3 years
An insured submits a proof of loss form within 10 days of a loss. The insurer, however, does not acknowledge the form for 3 months. Which of the following violations has the insurer committed?
Unfair claims settlement
In Florida, what program was designed to ensure continued access to affordable health insurance coverage for employees of small employers, their dependents, and other qualified beneficiaries not currently protected by COBRA?
Florida Health Insurance Coverage Continuation Act
In Florida, what are the 2 offices of the Financial Services Commission?
The Office of Financial Regulation and the Office of Insurance Regulation
At what age do individuals become INELIGIBLE for Florida Healthy Kids coverage?
19
Are the benefits of Medical Expense Insurance tax-free?
Yes
Compare custodial, intermediate and skilled care?
Custodial - non-medical care provided to individuals with daily living activities
Intermediate - skilled care on an occasional basis
Skilled - skilled care on an continual basis
An insured’s hospital policy states that it will pay him a flat fee of $75 per day for each day he is hospitalized. The policy pays benefits on what basis?
Indemnity
Which pay a fixed amount for a specific covered event
Your client is sole proprietor and wishes to include his family on a medical expense plan. How much of the cost of the medical expense plan can be deducted (since he is considered self-employed)?
100%
Because he’s a sole proprietor
What Florida insurance regulation established an outline of appropriate and inappropriate business behavior for life insurance agents?
The Code of Ethics of the Florida Association of Insurance and Financial Advisors
On individual health insurance policies, an insurer must furnish the claimant with claim forms within how many days?
15 days
Within how many days from termination of employment must an insured under a group health insurance policy provide notice to an insurer in order to continue coverage under the employer’s plan?
60 days
An employee has earned 6 quarters of coverage during the previous 13-quarter period. What status of coverage does the employee have under Social Security?
Currently insured
Upon the surrender of a life insurance policy, how is any cash value accumulated in excess of the premium payments taxed?
As ordinary income
For what length of time can LTC policies deny coverage for pre-existing conditions?
6 months
What is the maximum amount of group life insurance coverage per employee an employer can deduct as a business expense?
$50,000
How do employer contributions to a Health Savings Account affect:
- Employers taxes?
- Employees taxes?
Contributions are tax deductible for the employer
Benefits are not taxed to the employee
Do equity indexed annuities have guaranteed minimum interest rates?
Yes
The sole beneficiary of a life insurance policy dies before the insured. If the policyowner fails to change the beneficiary before the insured’s death, the proceeds of the policy will go to?
The insured’s estate
What is concealment?
The act of withholding material information that would be crucial to an underwriting decision
Do Medicare supplement insurance policies cover the cost of extended nursing home care?
No
In order to receive Social Security disability benefits, the medically determinable physical or mental impairment must…?
Be expected to result in death or last for a continuous period of 12 months
How long is the waiting period in order to receive Social Security disability benefits?
5 months
The inflation protection feature in long-term care policies issued in Florida must provide protection for inflation at what percent annually?
5%
An applicant for a life agent’s license may obtain a temporary license for a maximum period of?
6 months
Is a worker’s occupation a factor in determining qualifications for Social
Security disability benefits?
No
Insurance is a transfer of…?
Risk
A paid-up nonforfeiture benefit will become effective as specified in the policy, unless the person entitled elects another available option within how many days after the due date of the premium in default?
60
To comply with the requirements of the Affordable Care Act, if an insurer rescinds coverage, they must provide the insured advance notice of at least
30 days
A hospital indemnity policy will pay
A benefit for each day the insured is in a hospital
Under what circumstances can an agent’s appointment be transferred to another person?
Under no circumstances
The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective?
As of the application date
What percentage of noncontributory group disability benefits is taxed to the employee?
100%
What kind of policy provides coverage on a first-dollar basis?
Basic expense
The provision which prevents the insured from bringing any legal action against the company for at least 60 days after proof of loss is known as
Legal actions
How are Business Overhead policies taxed?
Premiums are deductible, benefits are taxed
What is subrogation (x2)?
A provision found in insurance policies which prevents the insured from collecting twice for the same loss
When an insurance company pays a policyholder for an injury or property damage, the policyholder’s right to sue the responsible party is transferred to the insurance company
Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?
3 days
What are the three areas of valid insurable interest?
- Your own life
- The life of a family member (relative or spouse)
- The life of a business partner, key employee, or someone who has a financial obligation to the policyowner
What are the two aspects of a group that determine the cost of group life insurance?
- Ration of men to women
- Average age of the group
What provision in Major Medical coverage requires a single deductible for all family members injured in the same accident?
Common accident provision
What are the conditions that justify an insurer cancelling a noncancellable policy at renewal?
Non-payment of premiums or fraud
What three things preclude you from being eligible for an HSA?
- Eligible for Medicare (65+)
- Having healthcare coverage other than HDHP
- Claimed as a dependent
Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as
Contracts of adhesion
How are dividends of participating policies taxed?
The aren’t taxed
How do benefits under a Social Security rider work?
They provide benefits when the amount payable under Social Security is less than the amount payable under the rider (in this case only the difference will be paid)
Following hospitalization because of an accident, an insured was confined to a skilled nursing facility. Medicare will pay 100% of the benefits in this facility for how many days?
20
From 21-100 days, Medicare will cover 80% of the costs
Compare accidental means vs accidental injury in Disability Income policies
Accidental means - a situation where not only the resulting injury, but also the event that caused the injury, must be entirely accidental and unexpected
Accidental injury - an injury caused by an accident regardless of intent
Which two terms are associated directly with the way an annuity is funded?
Single payment and periodic payments
Which two terms are associated directly with the way an annuity is paid out?
Immediate (within a year) and deferred (after a year)
When may an insured deduct unreimbursed medical expenses (e.g. copays, coinsurance, deductibles) paid under a long-term care policy?
When the expenses exceed a certain percentage of the insured’s adjusted gross income
Why is an equity indexed annuity considered to be a fixed annuity?
It has a guaranteed minimum interest rate
Under what two conditions are HIV exams legal?
- A separate written consent form must be obtained prior to an HIV exam
- HIV exam results may be disclosed to underwriters, but not agents
What determines the cash value of a variable life policy?
The performance of the policy portfolio
What are three other terms for the pay out period of an annuity?
Annuity period
Annuitization period
Liquidation period
What is another name for a cross-purchase plan?
A partnership buy-sell agreement
What is the purpose of settlement options?
They determine how death proceeds will be paid
What percentage participation of members is required in noncontributory life insurance plans?
100%
What is the penalty tax on premature distribution from a modified endowment contract (MEC)?
10%
Prior to what age are distributions from a modified endowment contract (MEC) considered premature?
59 1/2
Prior to purchasing a Medigap policy, a person must be enrolled in what?
Parts A and B of Medicare
Under the Affordable Care Act, what percentage of preventive care must be covered without cost sharing?
100%
Is the interest gained in the accumulation at interest option taxable?
Yes
It is taxable whether or not the policyowner receives the interest
Does basic medical expense coverage cover surgeon’s services, mental illness, maternity and hospice care?
No, it covers all of the above EXCEPT surgeon’s services
What federal law prohibits health plan issuers from collecting genetic information for underwriting purposes or limits their ability to request genetic tests?
The Genetic Information and Nondiscrimination Act
In order for a debtor group to qualify for group life insurance, what should be the minimum number of participants joining the plan every year?
100
If a parent would like to enroll a child over the age of 5 into the Florida Healthy Kids program, their family income must be under a certain percentage of the federal poverty level. What percentage?
300%
All small employer group health plans, in order to comply with the requirements of the Florida Employee Health Care Access Act, must be issued on what basis?
Guaranteed issue
All agents licensed in this state must complete how many hours of continuing education specific to law and ethics?
4
Within how many days of the termination of the insured’s group coverage must the insured notify the insurer of the decision to convert to individual coverage?
31 days
Who must be licensed in a branch agency?
The agent in charge
How long must insurers maintain records of the information collected from senior consumers and other information used in making recommendations that were the basis for insurance transactions?
For 5 years after the insurance transaction is completed by the insurer
How long and to whom does hospice provide care?
6 months or less to the terminally ill
Who can make a fully deductible contribution to a traditional IRA?
Individuals who are not covered by an employer-sponsored plan may deduct the amount of their IRA contributions regardless of their income level
Are executive bonuses an example of a business use of Life Insurance?
Yes
For example, the employer provides a bonus to an employee which is used to pay the premiums on a life insurance policy that the employee owns, essentially acting as an incentive to retain key employees; this allows the employee to access benefits like cash value growth and designate beneficiaries.
What definition of total disability would make it easier to qualify for total disability benefits?
The more liberal “own occupation”
More liberal because “own occupation” is the least strict definition
Compare the Payor Benefit rider with the Waiver of Premium rider
Payor benefit rider applies to policies where the payor and insured are different people. This rider protects the policy if the payor dies or becomes disabled.
Waiver of premium rider applies to policies where the payor and insured are the same person. This rider protects the policy if the insured becomes disabled.
What medical professionals will NOT be covered under LTC’s home health care?
Attending physicians
What does “level” refer to in level term insurance?
Face amount
Premiums also remain level, but that is not what the term refers to in level term insurance
Health insurance that contains a carry-over provision entitles the insured to what?
The amount paid toward the deductible in one year that did not meet the limit is carried-over to the next year
Do fixed annuities provide a hedge against inflation?
No, they provide a guaranteed rate of return that may or may not equal the rate of inflation
