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ExamFX L&H Insurance Exam Prep > Final Exam Prep > Flashcards

Final Exam Prep Flashcards

1
Q

What four services do HMO and PPO plans cover that are not covered by Medicare or Medicare Supplement policies?

A

Prescriptions, eye exams, hearing aids or dental care

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2
Q

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?

A

100%

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3
Q

Are there life contingencies with an annuity certain?

A

No

A life contingency in an annuity is an option that provides a death benefit if the annuitant dies during the accumulation stage

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4
Q

What is the purpose of a conditional receipt?

A

To provide coverage on a date prior to the policy issue

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5
Q

What does it mean to legally bind coverage?

A

It means that an insurance company has confirmed that coverage is in place for a policyholder

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6
Q

As a general rule, are premiums for life insurance tax deductible?

A

No

The exception would be when an employer buys group term life insurance for his employees since it is considered a business expense

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7
Q

What three conditions must be met for a life insurance policy to begin coverage?

A
  • Policy delivery
  • Collection of the initial premium
  • Applicant completes an acceptable Statement of Good Health
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8
Q

Are physical examination and autopsy mandatory for health insurance policies?

A

Yes

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9
Q

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

A

Within 90 days or as soon as reasonable but not to exceed 1 year

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10
Q

Do HMOs provide financing as well as reimbursement?

A

They do provide financing, not reimbursement

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11
Q

Do group disability benefits apply to injuries incurred both on and off the job?

A

No, on the job injuries are covered by Workers Comp

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12
Q

Does coverage for illness start immediately upon the reinstatement of a health insurance policy?

A

No

Accidental injury is covered immediately but illness is not to protect the insurer against adverse selection. Illness is covered 10 days after reinstatement.

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13
Q

What document describes the insured’s medical history, including diagnoses and treatments?

A

The APS (Attending Physician’s Statement)

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14
Q

What are the three features of noncancellable policies?

A
  • Insurer cannot cancel the policy
  • Premiums cannot be increased for the term of the policy
  • Apply only to a certain age, usually 65
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15
Q

If an individual already receives Social Security disability benefits, what do they need to do to qualify for Medicare when they turn 65?

A

Nothing, they’re already qualified for Medicare Parts A and B once they turn 65

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16
Q

What is the maximum age for qualifying for a catastrophic plan?

A

30

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17
Q

Which has a higher premium and why: joint life or survivorship life?

A

Joint because survivorship pays on the last rather than the first death so premiums are spread out over a longer period of time

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18
Q

After the deductible, what percent of covered expenses will Medicare Plan B pay?

A

80%

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19
Q

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?

A

45

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20
Q

What contract characteristic defines the requirement that both the insured and the insurer must meet certain conditions?

A

Conditional

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21
Q

Does AD&D insurance cover presumptive disabilities?

A

Yes

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22
Q

How are accelerated benefits paid to a chronically ill insured taxed?

A

A portion of the benefit to a certain limit is tax free; the rest is taxable income

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23
Q

What is the waiting period on a Waiver of Premium rider in life insurance policies?

A

6 months

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24
Q

Who examines the books and records of insurance companies in Florida and how often?

A

The CFO and the Office of Insurance Regulation every 5 years

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25
Q

What method do insurers use to protect themselves against catastrophic losses?

A

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

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26
Q

Who must sign the Notice Regarding Replacement?

A

Both the applicant and the agent

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27
Q

Compare the premium of Universal vs Whole or Straight Life

A

Universal - less expensive and variable premium

Whole/Straight - more expensive and level/fixed premium

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28
Q

Compare the cash value guarantee of Universal vs Whole or Straight Life

A

Universal - cash value NOT guaranteed because it returns current market rates

Whole/Straight - Guaranteed cash value because it returns a fixed interest rate

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29
Q

Compare the death benefit of Universal vs Whole or Straight Life

A

Universal - Death benefit amount is not guaranteed because the cash value is not guaranteed

Whole/Straight - Guaranteed death benefit because it’s fixed

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30
Q

Compare the cost of Universal vs Whole or Straight Life

A

Universal - Less expensive

Whole/Straight - More expensive

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31
Q

What type of death protection does Universal Life offer

A

Annually renewable term life

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32
Q

Compare the death benefit of Universal Life Option A vs Universal Life Option B

A

Option A - Level death benefit

Option B - Increasing death benefit

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33
Q

Compare the cash value of Universal Life Option A vs Universal Life Option B

A

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

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34
Q

What type of death benefit does Term Life have?

A

Pure death benefit - only pays out the benefit upon the death of the insured. There is no cash value.

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35
Q

Does Term Life have a cash value?

A

No

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36
Q

What type of premium does Term Life have?

A

Level premium for the full term

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37
Q

Compare the types of account and who’s responsible for Variable vs Fixed Annuities

A

Variable - Separate account; policyholder is fully responsible

Fixed - Insurer’s general account; insurer is fully responsible

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38
Q

Compare face amount vs cash value

A

Face amount - death benefit

Cash value - savings that can be withdrawn or borrowed against

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39
Q

Is evidence of insurability required when converting Term Life?

A

No

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40
Q

What is adjustable on an adjustable life insurance policy (x3)?

A
  • Premium
  • Death benefit
  • Coverage period (sometimes)
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41
Q

When converting Term Life, how is the premium amount determined?

A

Attained age

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42
Q

How is the pay-out of Pure/Straight Life Annuities structured?

A

Guaranteed Income for the life of the annuitant

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43
Q

What is the cash value and death benefit of Pure/Straight Life Annuities?

A

No cash value and no death benefit

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44
Q

What must the policyowner of an Adjustable Life Insurance policy provide to increase the death benefit?

A

Evidence of insurability

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45
Q

What is another name for interest-sensitive whole life insurance?

A

Current assumption whole life insurance

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46
Q

What are the two ways the principal is treated in Return of Premium Term Life Insurance?

A
  • It is returned to insured if they outlive the term
  • It is returned to beneficiary if insured dies during term
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47
Q

With the Life with Guaranteed Minimum annuity settlement option, what happens to the principal amount if the annuitant dies?

A

The Guaranteed Minimum provision means the beneficiary is refunded the remainder of the principal

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48
Q

What characteristic makes whole life permanent protection?

A

Coverage until death or age 100

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49
Q

Which types of policies offer endorsements (riders) for LTC?

Which types don’t?

A

Life insurance policies DO

Health care insurance policies DON’T

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50
Q

What type of insurance is a children’s rider added to an insured’s permanent life insurance policy?

A

Term insurance covering all the children which is convertible to permanent insurance once the child reaches the maximum age without evidence of insurability

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51
Q

What type of retirement account does not require distributions to start by a certain age?

A

Roth IRAs

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52
Q

What happens to the principle in an interest-only settlement option?

A

It stays with the insurer to generate the interest distributed in the pay-out unless the beneficiary chooses to access it sooner

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53
Q

To comply with the Fair Credit Reporting Act, when must a producer notify the applicant that a credit report may be requested?

A

At the time of application

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54
Q

COBRA applies to employers with at least how many employees?

A

20

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55
Q

Which nonforfeiture option has the highest amount of protection?

A

Extended term

It has the same face amount as the original policy but for a shorter period of time

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56
Q

An insured has chosen the Joint and 2/3 Survivorship settlement option. What does this mean to the beneficiary?

A

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

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57
Q

Are the benefits from individual LTC plans taxed?

A

No

Unless they exceed the daily cost of LTC

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58
Q

What must all definitions of total disability include?

A

A person’s ability to work is significantly reduced or eliminated for the rest of their life

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59
Q

The type of policy that can be changed from one that does not accumulate cash value to one that does is a…

A

Convertible term policy

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60
Q

At what age do Social Security credits start to accrue and how many must they accrue to claim benefits through age 31?

A

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)

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61
Q

If the free-look period is 10+ days, when can the Buyer’s Guide be delivered?

A

With the policy

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62
Q

If the free-look period is less than 10 days, when must the Buyer’s Guide be delivered?

A

Prior to accepting the first premium

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63
Q

How are key person insurance premiums and benefits taxed?

A

Premiums are not tax deductible but benefits are tax free

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64
Q

What does a term rider attached to a permanent life insurance policy enable the policyowner to do?

A

Customize the life insurance policy to their needs (e.g. additional temporary insurance for themselves or family members, etc.)

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65
Q

Most policies will pay accidental death benefits as long as the death was caused by the accident and occurs within how many days?

A

90

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66
Q

What is required from each state in order to add a provision to a health care policy that is consistent with uniform provisions?

A

Approval

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67
Q

Hospital indemnity/hospital confinement indemnity will provide payment based on what?

A

Only on the number of days confined in a hospital

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68
Q

What is an accumulation at interest option?

A

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

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69
Q

What is third party ownership of a life insurance policy?

A

It is when the policy owner is different from the insured person (e.g. group or key person life insurance)

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70
Q

In health insurance, who pays for any amount a doctor charges above what the insurer considers usual, customary and reasonable?

A

The insured

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71
Q

What type of insurance only covers medical costs related to accidents?

A

Accident-only

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72
Q

If someone 65+ still has health insurance through their employer, what purpose does Medicare have if any?

A

Employer’s health coverage is primary, Medicare is secondary

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73
Q

Which type of annuity will generally pay the highest monthly income and why?

A

Straight Life

It only pays for as long as the annuitant lives with no death benefit and no cash value

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74
Q

What kind of organization is formed to provide insurance benefits for members of an affiliated lodge or religious organization?

A

Fraternal benefit society

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75
Q

What are insurance companies formed in-state, out of state and out of country called?

A

Domestic, foreign and alien

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76
Q

What is the minimum age required to obtain a life insurance license?

A

18

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77
Q

Which replacement regulations are applicable when an employer changes its group life insurance policy to a similar one with a different insurer?

A

None. Replacement regulations do not apply in this situation.

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78
Q

What is another name for time limit on certain actions?

A

Statute of limitations

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79
Q

How are taxes on accumulation handled for both qualified and nonqualified retirement plans?

A

They’re both tax deferred in the accumulation phase

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80
Q

What is Durable Medical Equipment?

A

Equipment prescribed by a doctor (e.g. oxygen equipment, wheelchairs, etc.)

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81
Q

Compare coinsurance vs copayment

A

Coinsurance is a percent of cost, copayment is a flat amount

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82
Q

What option enables policyowners to use dividends to pay their next premium?

A

Reduction of premium

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83
Q

What are nonforfeiture values and are they optional?

A

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.

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84
Q

How are group medical expense premiums and benefits taxed?

A

Premiums are paid with pre-tax business proceeds so they are tax deductible

Benefits are not taxed as income to the employee

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85
Q

What type of policy must maintain a “corridor” or gap between the cash value and the death benefit and why?

A

Universal Life Option A

Not doing so nullifies the life insurance tax benefits

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86
Q

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?

A

The customer’s associates, friends, and neighbors provide the report’s data

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87
Q

What retirement benefits plans are best suited for the self-employed and very small businesses?

What is the key advantage?

A

HR-10 (Keogh Plans)

Higher contribution limits for high income business owners

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88
Q

Compare probationary period vs elimination period

A

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

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89
Q

What happens to money in an HRA when an employee leaves the company?

A

The HRA funds stay with the business but can be used by the former employee at the employer’s discretion

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90
Q

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?

A

2 to 3 times the face amount

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91
Q

Compare Roth IRAs with Traditional IRAs

A

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

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92
Q

Compare the paid-up option vs the paid-up addition

A

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

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93
Q

Does Medicaid offer disability coverage for work-related injuries?

A

No

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94
Q

An agent selling variable annuities must be registered with?

A

FINRA (Financial Industry Regulatory Authority)

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95
Q

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?

A

25%

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96
Q

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?

A

An insurance contract

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97
Q

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?

A

$250

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98
Q

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?

A

8%

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99
Q

How long must replacing insurers maintain copies of the Notice Regarding Replacement and all sales proposals?

A

At least 3 years or until the conclusion of the next regular audit by the insurance department, whichever is later

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100
Q

How long must insurance companies retain all advertisements?

A

At least 3 years from the date that the advertisement was first used

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101
Q

Which of the following types of insurers is owned by stockholders?

A

Only stock insurance companies are owned and controlled by stockholders

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102
Q

Who does the secondary addressee provision protect?

A

The 65+ insured

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103
Q

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

A

All Medicare supplement plans (A-N) must be made available to qualifying applicants, regardless of age

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104
Q

When an insurer appoints an agent, are they bound by the agent’s acts?

A

Yes

105
Q

Under special circumstances, continuing education requirements may be extended beyond the 2-year period for a maximum period of

A

12 months

106
Q

The corridor deductible derives its name from the fact that it is applied between what two levels of coverage?

A

Basic and major medical

107
Q

If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?

A

5 days

108
Q

A waiver of premium provision may be included with which kind of health insurance policy?

A

Disability income

109
Q

In a basic expense policy, after the limits of the basic policy are exhausted, the insured must pay what kind of deductible?

A

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

110
Q

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?

A

6 months

111
Q

Is the Medicare Part A deductible covered under Plan A in Medigap insurance?

A

No

112
Q

What is a STOLI?

A

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

113
Q

The dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as the

A

One-year term option

114
Q

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

A

24 months

115
Q

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

A

Twisting

116
Q

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?

A

60

117
Q

What restriction is placed on agents in the military?

A

The agent cannot sell a policy to another active military person who is of a lower rank

118
Q

When must an insurance company present an outline of coverage to an applicant for a Medicare supplement policy?

A

At the time of application

119
Q

What can be refunded if an agent’s appointment is denied?

A

State taxes may be refunded upon a written request

120
Q

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?

A

10%

121
Q

Why can’t a person insured under a group life insurance policy make an assignment to a policyholder?

A

Because the policyholder (usually the employer) cannot directly benefit from an employee’s death benefit - it creates a conflict of interest

122
Q

Can a participating insurance policy pay dividends to the policyowner?

A

Yes

123
Q

What is the maximum elimination period in long-term care policies issued in Florida?

A

180 days

124
Q

What is the major difference between a stock company and a mutual company?

A

Mutual companies are owned by policyholders, while stock companies are owned by stockholders

125
Q

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?

A

31

126
Q

Coverage of a newborn covers transportation costs up to what amount?

A

$1000

127
Q

A corporation can be considered a “small group employer” if it has at least one and a maximum of how many employees?

A

50

128
Q

Medicare supplement policies, by law, must provide a free-look provision of

A

30 days

129
Q

When must the Medicare Supplement Buyer’s Guide be presented?

A

At the time of application

130
Q

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

A

20%

131
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

7.5%

132
Q

If an annuitant dies before annuitization occurs, what will the beneficiary receive?

A

Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount

133
Q

Is there a deductible and is coverage unlimited with Basic Surgical Expense coverage?

A

There is a deductible and coverage is not unlimited

134
Q

With coinsurance arrangements, which side is the insurer and which side the insured (e.g. 90/10)?

A

Left is insurer

Right is insured

135
Q

What is the advantage of reinstating a policy instead of applying for a new one?

A

The original age is used for premium determination

But proof of insurability is required

136
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

137
Q

When a reduced paid-up nonforfeiture option is chosen, what happens to the face amount of the policy?

A

It is reduced to the amount of what the cash value would buy as a single premium

138
Q

What are the grace periods for each premium mode?

A

7 days if weekly
10 days if monthly
31 days if annually

139
Q

Under AD&D coverage, compare the benefit paid for accidental death vs dismemberment

A

Accidental death pays the principle sum (the full amount)

Accidental dismemberment pays the capital sum (some percentage of the principle sum)

140
Q

Medicare Part A will pay for up to how many days of inpatient psychiatric care?

A

190 (in the patient’s lifetime)

141
Q

For how many days of skilled nursing care will Medicare pay benefits?

A

100

142
Q

What is the minimum frequency individual disability benefits can be paid?

A

At least monthly

143
Q

How long does the initial enrollment period for Medicare Part B last?

A

7 months

144
Q

Which health insurance provision covers the insured’s right to cancel coverage?

A

Cancellation provision

145
Q

In order to be eligible for an HSA, an individual must be covered by what type of health plan?

A

HDHP - High-Deductible Health Plan

146
Q

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?

A

Deferred

147
Q

What is a SEP (Simplified Employee Plan)?

A

A simple way for small businesses to offer retirement savings benefits with minimal administrative costs

148
Q

Under what circumstances does the contingent beneficiary receive the full death benefit of a life insurance policy?

A

Only if the primary beneficiary is deceased at the time of the insured’s death

149
Q

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?

A

Survivor protection

150
Q

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?

A
  • Max of 100 employees
  • Min of $5000
  • No other qualified plan can be used
151
Q

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
  • 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
152
Q

How long is the free look period in Florida for Life insurance and annuities if dissatisfied for any reason?

A

14 days

153
Q

Is treatment received in a government hospital excluded from coverage in an individual health insurance policy?

Why?

A

Yes

Because services provided by government-funded healthcare programs like Medicare or Medicaid are excluded

154
Q

In Florida, within how many days after receiving a written communication of replacement must an existing insurer provide a policyowner with a policy summary?

A

10

155
Q

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?

A

63

156
Q

What is the purpose of a benefit schedule?

A

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.)

157
Q

Do fixed annuities provide protection against inflation?

A

No

They provide a guaranteed rate of return that is not adjusted for inflation

158
Q

Does Medicaid pay for nursing home care in any case?

A

Yes

159
Q

Do Medicare and Medigap policies provide coverage for long-term custodial or nursing home care?

A

No

160
Q

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?

A
  • Portability option
  • Conversion privilege
161
Q

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?

A

$2000

Annual benefit means that the employee can contribute up to $5000 per year. The unused remainder carries over.

162
Q

What is the maximum number of lives a Survivorship Life policy can insure?

A

2

163
Q

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?

A

Family

164
Q

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?

A

18 months

165
Q

What information is not required in the initial application for Life insurance?

A

Detailed medical history

166
Q

For a contract to be enforceable by law, the purpose of the contract must be?

A

Legal

167
Q

What percentage of the cost of a Medicare Part B service are you responsible for paying?

A

20%

168
Q

Cash Value guarantees in a whole life policy are called?

A

Nonforfeiture vaules

169
Q

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?

A

Insuring clause

170
Q

What does the renewable provision allow a policyowner to do AND not do?

A

It allows them to renew without evidence of insurability

It DOES NOT guarantee the same premium amount

171
Q

Reinsurance is an agreement between what two types of insurers?

A

Ceding and assuming

172
Q

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?

A

Sliding

173
Q

What is another name for the guaranteed purchase option?

A

The evidence/guarantee of insurability rider

174
Q

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?

A

Insurable interest

175
Q

If an individual willfully violates provisions of the Fair Credit Reporting Act, what is the maximum civil penalty?

A

$1000

176
Q

How will life insurance proceeds that are paid as a lump sum be taxed to the beneficiary?

A

Tax-free

177
Q

What is the penalty for a second failure to notify the department of a change of address?

A

At least $500 or the suspension or revocation of the license

178
Q

How long does the law require agents to maintain records of transactions pertaining to premium payments?

A

3 years

179
Q

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?

A

Unfair claims settlement

180
Q

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?

A

Florida Health Insurance Coverage Continuation Act

181
Q

In Florida, what are the 2 offices of the Financial Services Commission?

A

The Office of Financial Regulation and the Office of Insurance Regulation

182
Q

At what age do individuals become INELIGIBLE for Florida Healthy Kids coverage?

A

19

183
Q

Are the benefits of Medical Expense Insurance tax-free?

A

Yes

184
Q

Compare custodial, intermediate and skilled care?

A

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

185
Q

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?

A

Indemnity

Which pay a fixed amount for a specific covered event

186
Q

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)?

A

100%

Because he’s a sole proprietor

187
Q

What Florida insurance regulation established an outline of appropriate and inappropriate business behavior for life insurance agents?

A

The Code of Ethics of the Florida Association of Insurance and Financial Advisors

188
Q

On individual health insurance policies, an insurer must furnish the claimant with claim forms within how many days?

A

15 days

189
Q

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?

A

60 days

190
Q

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?

A

Currently insured

191
Q

Upon the surrender of a life insurance policy, how is any cash value accumulated in excess of the premium payments taxed?

A

As ordinary income

192
Q

For what length of time can LTC policies deny coverage for pre-existing conditions?

A

6 months

193
Q

What is the maximum amount of group life insurance coverage per employee an employer can deduct as a business expense?

A

$50,000

194
Q

How do employer contributions to a Health Savings Account affect:
- Employers taxes?
- Employees taxes?

A

Contributions are tax deductible for the employer

Benefits are not taxed to the employee

195
Q

Do equity indexed annuities have guaranteed minimum interest rates?

A

Yes

196
Q

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?

A

The insured’s estate

197
Q

What is concealment?

A

The act of withholding material information that would be crucial to an underwriting decision

198
Q

Do Medicare supplement insurance policies cover the cost of extended nursing home care?

A

No

199
Q

In order to receive Social Security disability benefits, the medically determinable physical or mental impairment must…?

A

Be expected to result in death or last for a continuous period of 12 months

200
Q

How long is the waiting period in order to receive Social Security disability benefits?

A

5 months

201
Q

The inflation protection feature in long-term care policies issued in Florida must provide protection for inflation at what percent annually?

A

5%

202
Q

An applicant for a life agent’s license may obtain a temporary license for a maximum period of?

A

6 months

203
Q

Is a worker’s occupation a factor in determining qualifications for Social
Security disability benefits?

A

No

204
Q

Insurance is a transfer of…?

A

Risk

205
Q

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?

A

60

206
Q

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

A

30 days

207
Q

A hospital indemnity policy will pay

A

A benefit for each day the insured is in a hospital

208
Q

Under what circumstances can an agent’s appointment be transferred to another person?

A

Under no circumstances

209
Q

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?

A

As of the application date

210
Q

What percentage of noncontributory group disability benefits is taxed to the employee?

A

100%

211
Q

What kind of policy provides coverage on a first-dollar basis?

A

Basic expense

212
Q

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

A

Legal actions

213
Q

How are Business Overhead policies taxed?

A

Premiums are deductible, benefits are taxed

214
Q

What is subrogation (x2)?

A

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

215
Q

Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?

A

3 days

216
Q

What are the three areas of valid insurable interest?

A
  • 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
217
Q

What are the two aspects of a group that determine the cost of group life insurance?

A
  • Ration of men to women
  • Average age of the group
218
Q

What provision in Major Medical coverage requires a single deductible for all family members injured in the same accident?

A

Common accident provision

219
Q

What are the conditions that justify an insurer cancelling a noncancellable policy at renewal?

A

Non-payment of premiums or fraud

220
Q

What three things preclude you from being eligible for an HSA?

A
  • Eligible for Medicare (65+)
  • Having healthcare coverage other than HDHP
  • Claimed as a dependent
221
Q

Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as

A

Contracts of adhesion

222
Q

How are dividends of participating policies taxed?

A

The aren’t taxed

223
Q

How do benefits under a Social Security rider work?

A

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)

224
Q

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?

A

20

From 21-100 days, Medicare will cover 80% of the costs

225
Q

Compare accidental means vs accidental injury in Disability Income policies

A

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

226
Q

Which two terms are associated directly with the way an annuity is funded?

A

Single payment and periodic payments

227
Q

Which two terms are associated directly with the way an annuity is paid out?

A

Immediate (within a year) and deferred (after a year)

228
Q

When may an insured deduct unreimbursed medical expenses (e.g. copays, coinsurance, deductibles) paid under a long-term care policy?

A

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

229
Q

Why is an equity indexed annuity considered to be a fixed annuity?

A

It has a guaranteed minimum interest rate

230
Q

Under what two conditions are HIV exams legal?

A
  • A separate written consent form must be obtained prior to an HIV exam
  • HIV exam results may be disclosed to underwriters, but not agents
231
Q

What determines the cash value of a variable life policy?

A

The performance of the policy portfolio

232
Q

What are three other terms for the pay out period of an annuity?

A

Annuity period
Annuitization period
Liquidation period

233
Q

What is another name for a cross-purchase plan?

A

A partnership buy-sell agreement

234
Q

What is the purpose of settlement options?

A

They determine how death proceeds will be paid

235
Q

What percentage participation of members is required in noncontributory life insurance plans?

A

100%

236
Q

What is the penalty tax on premature distribution from a modified endowment contract (MEC)?

A

10%

237
Q

Prior to what age are distributions from a modified endowment contract (MEC) considered premature?

A

59 1/2

238
Q

Prior to purchasing a Medigap policy, a person must be enrolled in what?

A

Parts A and B of Medicare

239
Q

Under the Affordable Care Act, what percentage of preventive care must be covered without cost sharing?

A

100%

240
Q

Is the interest gained in the accumulation at interest option taxable?

A

Yes

It is taxable whether or not the policyowner receives the interest

241
Q

Does basic medical expense coverage cover surgeon’s services, mental illness, maternity and hospice care?

A

No, it covers all of the above EXCEPT surgeon’s services

242
Q

What federal law prohibits health plan issuers from collecting genetic information for underwriting purposes or limits their ability to request genetic tests?

A

The Genetic Information and Nondiscrimination Act

243
Q

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?

A

100

244
Q

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?

A

300%

245
Q

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?

A

Guaranteed issue

246
Q

All agents licensed in this state must complete how many hours of continuing education specific to law and ethics?

A

4

247
Q

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?

A

31 days

248
Q

Who must be licensed in a branch agency?

A

The agent in charge

249
Q

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?

A

For 5 years after the insurance transaction is completed by the insurer

250
Q

How long and to whom does hospice provide care?

A

6 months or less to the terminally ill

251
Q

Who can make a fully deductible contribution to a traditional IRA?

A

Individuals who are not covered by an employer-sponsored plan may deduct the amount of their IRA contributions regardless of their income level

252
Q

Are executive bonuses an example of a business use of Life Insurance?

A

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.

253
Q

What definition of total disability would make it easier to qualify for total disability benefits?

A

The more liberal “own occupation”

More liberal because “own occupation” is the least strict definition

254
Q

Compare the Payor Benefit rider with the Waiver of Premium rider

A

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.

255
Q

What medical professionals will NOT be covered under LTC’s home health care?

A

Attending physicians

256
Q

What does “level” refer to in level term insurance?

A

Face amount

Premiums also remain level, but that is not what the term refers to in level term insurance

257
Q

Health insurance that contains a carry-over provision entitles the insured to what?

A

The amount paid toward the deductible in one year that did not meet the limit is carried-over to the next year

258
Q

Do fixed annuities provide a hedge against inflation?

A

No, they provide a guaranteed rate of return that may or may not equal the rate of inflation

ExamFX L&H Insurance Exam Prep (14 decks)

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