Insurance Flashcards
Health and Life
According to the state corporation commission, the purpose of licensing prospective agents in the state of Virginia is?
qualifying the agent to represent an authorized insurer for soliciting and negotiating their insurance product
How many employees must an employer have for the consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) to apply?
20 or more
Life insurance premiums are computed on what three factors?
Mortality, interest & expenses
Respite coverage is usually found in a?
Long term care policy
The reason for back dating a policy is?
to obtain a premium rate based on an earlier age
Someone who is licensed to negotiate a viatical settlement contract is called?
Viatical settlement broker
What is the maximum social security disability benefit amount an insured can receive?
100% of the insured primary insurance amount (PIA)
What triggers a benefit under the presumptive disability provision?
Loss of one limb
What type of insurance policy covers two or more persons and pays the face amount in the death of the first insured?
Joint life
How many hours per week is an employee required to work to qualify for a small employer health plan?
30
Virginia offers an extended COBRA insurance plan for companies with how many employees?
2-19 employees
At what point are death proceeds paid in a joint life insurance policy?
When the first insured dies
How long can an insurer legally defer paying the cash value of a surrendered life insurance policy?
6 months
What does a beneficiary designation by class mean?
Refers to a designation that includes a group of individuals rather than naming specific individuals
How is a community rating used for underwriting purposes?
The same rates are charged for individual and group plans in the same geographical area, regardless of their health status
Which life insurance settlement pays payments to two or more people?
Joint and survivorship
A licensee who must complete continuing education as requirement for license renewal must do so every ? years
2
In Virginia, an insurer must file a written notice of employment with the state corporation commission within how many days?
30 days of the first insurance application submitted by the licensee
An insurance policy that can also be classified as a securities product is called?
Variable life
A material change in a modified endowment contract (MEC) results in
The seven pay test applies again
What is a 7 pay test?
A test that calculates whether the total premiums paid within the first seven years of the policy exceed the maximum amount that would pay up the policy completely
What is the maximum amount of employees (earning at least $5000) can have to in order to qualify for a SIMPLE retirement plan?
100
The coordination of benefits provision is added to a group health plan in order to?
Avoid over insurance
The highest mortality rate belongs to which group?
age 70 males
How many employees are needed in Virginia for a small employer medical plan?
1-50 so at least 2
What is the actuarial value of a bronze level health plan?
60%
What is the actuarial value of a silver level health plan?
70%
What is the actuarial value of a gold level health plan?
80%
What is the actuarial value of a platinum level health plan?
90%
How many years must an agent maintain customer records following the completion date of the insurance transaction?
5 years
False advertisement is an example of
misrepresentation
A terminally ill policy owner selling his insurance policy at a discount to help support his family is called?
viatical settlement
Ambiguities in insurance contracts are typically interpreted in favor of the insured. This rule is referred to as?
Reasonable expectations
For every reporting period, Virginia requires every insurance agent to complete how many hours of continued education on ethics?
3
When an agent is determining the suitability of an annuity for a client, what is taken into consideration?
Annual income, age, financial objectives
In a disability buy-sell agreement, the policies funding the agreement are owned by?
Business entity
What helps determine group health insurance premiums?
Average age of the group, group size and previous claims experience of the group
What event triggers a deferred annuity to start making benefit payments to the annuitant?
When a contract is annuitized
Policy loans are not permitted in a universal life insurance policy
False
In a universal life insurance policy, the mortality charge is deducted from the policy’s cash value every month
True
In a universal life insurance policy, the policy states which percentage of the premium is contributed to the cash value and which pays for the cost of the premium
True
When an insured contests the amount of a claim payment by the insurer, he or she has what period of time to bring legal action if necessary?
3 years
What type of insurance typically offers mortgage protection?
Decreasing term
Information that would influence the judgement of a prudent insurer in deciding whether to accept the risk is called
Material
Notice of information practices must be given to the policyholder every how many years?
3
When dividend option choices are offered on a whole life policy, the policy must?
Contain a statement that dividends are NOT guaranteed
Third part administration has become fairly common in accident and health insurance due to?
Self funding benefits
An applicant must be enrolled in a high deductible health plan in order to?
Contribute to a Health Saving Account
Which health policy clause specifies the amount of benefits to be paid?
Insuring clause
In an IRA Individual Retirement account, rollover contributions are?
Unlimited by the dollar amount
What type of private insurance covers the cost sharing amounts under medicare?
Medicare supplement
What are allowable exclusions under long term care health insurance?
Self inflicted injuries, acute care, and custodial care outside of the US.
What can be adjusted with an adjustable life insurance policy?
Length of coverage, accumulated cash value, and premiums can be adjusted to fit specific needs
What does a fixed life annuity protect against?
Savings depletion due to longevity
What is the name of the period of time when an employee is ineligible for group health insurance?
Probationary period
Name 3 Unfair Claims Settlement practices
- Refusing to pay claims without conducting a a reasonable expectation
- Compelling insureds to initiate a lawsuit by offering less on a insurance claims
- Failing to acknowledge and act promptly with respect to insurance claims
A preferred provider plan and an indemnity plan are similar in what way?
Both pay on a fee for service basis
Why do employers require a minimum participation in a group insurance plan?
To minimize adverse selection
An MET administrator is NOT responsible for performing what function?
Insuring the plan
An MET administrator is responsible for performing what functions?
Claims Processing, marketing the plan and underwriting the plan
MET stands for what?
Multiple Employer Trust- a legal trust established by a plan sponsor that brings together a number of small, unrelated employers for the purpose of providing group medical coverage on an insured or self funded basis
The Optionally renewable policy allows which party to cancel the contract?
The insurer
A description of a qualified plans insurance contract may be found in which ERISA reporting form?
Form 5500
a disclosure document that employee benefit plans use to satisfy annual reporting requirements under ERISA
What type of policy pays benefits to a policyholder under a Hospital Expense policy?
Reimbursement
A life policy that has term that are lower than normal during earlier years is called?
Modified life
An appointed producers implied authority is derived from?
Express authority
How much is the coinsurance for a skilled nursing facility covered by medicare after the 100% Medicare coverage ends?
A flat dollar amount per day
What is the actuarial formula for bundled insurance premiums?
Mortality costs( based on age and gender), less assumed interests= Net Premium
What is the employee welfare plan that is exempt from ERISA regulations?
Church plans
Splitting the commission with the buyer on a sale of insurance is known as what?
Rebating
What does CCIIO stand for?
Center for Consumer information and insurance oversight- they are responsible for working with states to establish New Health Insurance marketplaces
What is the maximum number of employees an employer may have for qualified medical savings accounts?
50
Switching Life Insurance policies without tax consequence is permitted under what rule?
1035 section rule allows for a tax free transfer of an existing annuity contract, life insurance policy, long-term care product or endowment for another of like kind
In a long-term care policy in Virginia, any provision limiting preexisting conditions may not exceed how long?
6 months
What effect does interest income have on Insurance premiums?
Assumed interest lowers the mortality costs, therefore lowers the premium
A health plan offered by private insurance companies is?
Medicare
To persuade an insured, to the insureds detriment, to switch policies is called what?
Twisting
In which situation would a medical exam NOT be required for an individual health insurance applicant?
Applicant’s family have a history of cancer
How do you determine the accumulation value of a deferred annuity?
Premiums paid +interest earned -expenses and withdrawals
Who normally pays the premiums for group credit life insurance?
The borrower
Which clause in an insurance and accident insurance policy are the premium requirements in?
Consideration clause
How many days does an insured have to present proof of loss to the health insurer
90 days of the occurance
A 1035 exchange does not allow what?
An annuity to be exchanged for a life insurance policy
Under a key person disability income policy, benefits are received to whom and how?
Tax free to the business
The grouping of two or more small employers in order to obtain group health insurance at a favorable rate is called?
Multiple Employer Trust (MET)
During the application process, a statement made by an applicant that becomes part of the contract is considered to be?
Warrenty
If group health benefits are to high, what could be the end result?
Overutilization of the plan
When disability buy-sell insurance benefits exceed a partners cost basis, what happens concerning taxes?
The full amount is non=taxable to the partner
Health providers are compensated by a Preferred Provider Organization(PPO) for normal dental procedures by what means?
Decreased fee schedules
What is another name for a Keogh plan?
HR10 Plan
The major medical deductible carryover period normally applies to expenses incurred during the last ? months of the plan year?
3
Custodial Care is covered under?
Long-term care insurance
Under a long-term care inflation rider, the benefit levels?
Periodically increase without proof of insurability
In a long-term care policy issued in Virginia, any provision limiting pre-existing conditions may not exceed how long?
6 months
Most long-term policies pay for eligible benefits with what kind of method?
Reimbursement or expense incurred basis, up to the policy limits
A cease and desist order issued against an agent does what?
Prohibits a specific practice listed in the order
Major medical policies are typically characterized as ?
Flat deductibles
What primarily covers inpatient hospital stays, skilled nursing facility care, hospice care and some home health care?
Medicare Part A
What kind of arrangement gives the policyowner the right to change the beneficiary?
Revocable beneficiary designation
How many days must an insured wait to bring legal action against an insurer, after written proof of loss has been received by the insurer?
60 days
Describe an HMO plan
Health Maintenance Organization- a type of insurance plan that usually limits coverage of care from doctors who work for or contract with the HMO. Generally will NOT cover out-of-network care except in an emergency
Describe a POS plan
Point of Service- a type of plan in which you pay less if you use doctors, hospitals, and other health care providers that belong to the plan’s network. POS plans also require you to get a referral from your primary care doctor in order to see a specialist.
Describe a Major Medical Plan
a type of health insurance that covers the expenses associated with serious illness or hospitalization. It is offered to help cover medical costs an average american will pay in a given year
Describe a PPO Plan
Preferred Provider Organization- a type of medical plan in which coverage is provided to participants through a network of selected health care providers, such as hospitals and physicians.
Contributions made by an employee to a qualified retirement plan are required to be?
Non-forfeitable
What health policy clause specifies the amount of benefits to be paid?
Insuring clause
What kind of policy allows a policy owner to make changes to the death benefit amount, adjust their payment on the premiums?
Flexible or adjustible life insurance
Describe a presumptive disability provision
Covers medical conditions so severe that they are obviously or easily presumed to be total disabilities with virtually no chance of full recovery
A medical fee schedule shows the amount an insurer will pay for a given procedure. This amount is considered to be?
Highest amount payable
