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INSURANCE Flashcards

1
Q

The stated amount or percent of liquid assets that an insurer must have on hand that will satisfy future obligations to its policyholders is called:

A

reserves

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2
Q

What year was the McCarran-Ferguson Act enacted?

A

1945

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3
Q

What is the name of the law that requires insurers to disclose information gathering practices and where the information was obtained?

A

Fair Credit Reporting Act

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4
Q

Who elects the governing body of a mutual insurance company?

A

policyholders

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5
Q

what requires insurers to disclose when an applicant’s consumer or credit history is being investigated:

A

1970 - Fair Credit Reporting Act

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6
Q

An insurer has a contractual agreement which transfers a portion of its risk exposure to another insurer. What type of contractual arrangement is this?

A

Reinsurance contract

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7
Q

A business becoming incorporated is an example of risk ____.

A

transfer

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8
Q

Which of the following is NOT an example of risk retention?

A

Not doing a business deal after deciding it would be too risky

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9
Q

The law of large numbers enables an insurer to

A

predict losses

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10
Q

Which one of these is NOT considered to be an element of an insurable risk?

A

Speculative risk

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11
Q

How can an insurance company minimize exposure to loss?

A

Reinsuring risks

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12
Q

Risk ____ is the process of analyzing exposures that create risk and designing programs to handle them.

A

managment

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13
Q

What type of risk involves the potential for loss with no possibility for gain?

A

Pure risk

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14
Q

A condition that increases the possibility of financial loss is called a(n)

A

Hazard

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15
Q

According to the law of large numbers, how would losses be affected if the number of similar insured units increases?

A

Predictability of losses will be improved

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16
Q

what consists of an offer, acceptance, and consideration?

A

Contract

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17
Q

Insurance policies are considered aleatory contracts because

A

performance is conditioned upon a future occurrence

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18
Q

A policy of adhesion can only be modified by whom?

A

The insurance company

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19
Q

An insurance contract is considered a policy of adhesion. This means that the contract can only be modified by _____.

A

the insurer

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20
Q

The Consideration clause of an insurance contract includes:

A

the schedule and amount of premium payments

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21
Q

E and F are business partners. Each takes out a $500,000 life insurance policy on the other, naming himself as primary beneficiary. E and F eventually terminate their business, and four months later E dies. Although E was married with three children at the time of death, the primary beneficiary is still F. However, an insurable interest no longer exists. Where will the proceeds from E’s life insurance policy be directed to?

A

F

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22
Q

What is the consideration given by an insurer in the Consideration clause of a life policy?

A

Promise to pay a death benefit to a named beneficiary

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23
Q

When third-party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have:

A

insurable interest in the proposed insured

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24
Q

Which of these is considered a statement that is assured to be true in every respect?

A

Warranty

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25
Q

What type of life insurance incorporates flexible premiums and an adjustable death benefit?

A

Universal Life

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26
Q

Which of these would be considered a Limited-Pay Life policy?

A

Life Paid-Up at Age 70

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27
Q

A(n) __________ term life policy is normally used when covering an insured’s mortgage balance.

A

decreasing

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28
Q

Which of these characteristics is consistent with a Straight Life policy?

A

Premiums are payable for as long as there is insurance coverage in force

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29
Q

Whole Life insurance is sometimes referred to as “Straight Life”. What does the word “Straight” indicate when using this phrase?

A

The duration of premium payments

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30
Q

Q is looking to buy a life insurance policy that will provide the greatest amount of protection for a temporary time period. Which of these policies should Q purchase?

A

Term life

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31
Q

Q is looking to buy a life insurance policy that will provide the greatest amount of protection for a temporary time period. Which of these policies should Q purchase?

A

Term life

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32
Q

Stranger-Owned Life Insurance (STOLI) is when a person purchases life insurance only to sell to a(n):

A

third-party with no insurable interest

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33
Q

Which of the following Life insurance policies combine term insurance with an investment element?

A

Universal Life

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34
Q

K, age 45, and his wife, age 43, have three children. They purchase a Family Policy that covers K’s wife to age 65. All of these situations will pay a death benefit EXCEPT

A child dies at age 18
A child dies at age 15
K’s wife dies at age 60
K’s wife dies at age 66

A

K’s wife dies at age 66

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35
Q

A policy that becomes a Modified Endowment Contract (MEC):

A

will lose many of its tax advantages

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36
Q

T would like to be assured $10,000 is available in 10 years to replace a roof on his house. What kind of $10,000 policy should T purchase?

A

Ten-Year Endowment

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37
Q

A term life insurance policy matures:

A

upon the insured’s death during the term of the policy

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38
Q

Which of the following types of permanent life insurance policies offers the highest initial cash value?

A

Single premium

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39
Q

Which statement is correct regarding the premium payment schedule for whole life policies?

A single premium is paid at time of application/ coverage lasts until retirement

Premiums are payable for a set period/ coverage expires at that point

Premiums are payable throughout the insured’s lifetime/ coverage lasts until death of the insured

Premiums are payable until age 65/ coverage lasts a lifetime

A

Premiums are payable throughout the insured’s lifetime/ coverage lasts until death of the insured

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40
Q

If a 10-Year Term Life policy contains a Renewability provision, the policy will renew

A

without evidence of insurability

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41
Q

Which statement is TRUE regarding a Variable Whole Life policy?

Its premiums and benefits are variable

It is a combination of an Endowment and a Increasing Term policy

A minimum guaranteed Death benefit is provided

It has guaranteed dividends

A

A minimum guaranteed Death benefit is provided

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42
Q

What type of policy would offer a 40-year old the quickest accumulation of cash value?

A

20-pay life

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43
Q

P owns a $25,000 Life Policy that pays the face amount to him if he lives to age 70, or to his beneficiary if he dies before age 70. What kind of policy does P own?

A

Endowment at Age 70

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44
Q

S is covered by a whole life policy. Which insurance product can cover his children?

A

Child term rider

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45
Q

Which of the following types of policies pays a benefit if the insured goes blind?

A

AD&D

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46
Q

Which of these provisions require proof of insurability after a policy

A

Reinstatement

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47
Q

A policyowner may generate taxable income from which of the following Dividend Options?

A

Accumulation at Interest

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48
Q

Which provision prevents an insurer from changing the terms of the contract with the policyowner by referring to documents not found within the policy itself?

A

Entire Contract Provision

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49
Q

D was actively serving in the Marines when he was killed in an automobile accident while on leave. His $100,000 Whole life policy contains a War Exclusion clause. How much will D’s beneficiary’s receive?

A

The full face amount

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50
Q

K’s whole life insurance policy lapsed two months ago due to nonpayment. She would now like to reinstate the policy. All of these statements are correct about the policy’s reinstatement EXCEPT

A

K will forfeit the right to use the automatic loan provision upon reinstatement

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51
Q

The Accidental Death and Dismemberment (AD&D) provision in a life insurance policy would pay additional benefits if the insured:

A

is blinded in an accident

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52
Q

M has an insurance policy that also has an outstanding policy loan at the time of M’s death. The insurer will deduct the outstanding loan balance from the:

A

policy proceeds

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53
Q

B recently died and was insured with a life insurance policy for over five years. During the claims process, the insurer discovered that B had understated his age by 5 years at the time of application. In this situation, the insurer will

A

pay the amount that the premium would have purchased at the correct age

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54
Q

P is blinded in an industrial accident. Which provision of his life insurance policy will pay a stated benefit amount?

A

Accidental Death and Dismemberment clause

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55
Q

How are surrender charges deducted in a life policy with a rear-end loaded provision?

A

Deducted when the policy is discontinued

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56
Q

T took out a $50,000 life insurance policy with an Accidental Death and Dismemberment rider. Five years later, T commits suicide. How much will the insurer pay?

A

$50,000

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57
Q

S buys a $10,000 Whole Life policy in 2003 and pays an annual premium of $100. S dies 5 years later in 2008 and the insurer pays the beneficiary $10,500. What kind of rider did S include on the policy?

A

Return of premium rider

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58
Q

The agreement in a life insurance contract that states a specific sum of money will be paid to a designated person upon an insured’s death is called a(n):

A

Insuring agreement

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59
Q

S has a Whole Life policy with a premium payment due soon. Which provision would keep the policy in force if S does not make the required payment and the policy has adequate cash value from which the premium payment can be made?

A

Automatic Policy Loan

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60
Q

The purpose of the _______ Period clause is to avoid an unintentional lapse of a life insurance policy.

A

Grace

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61
Q

The Automatic Premium Loan provision is designed to:

A

avoid a policy lapse

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62
Q

Which statement regarding the Misstatement of Age provision is considered to be true?

Coverage will be adjusted to reflect the insured’s true age if a misstatement of age is discovered

Requires that a new policy must be applied for if a misstatement of age is found on the current policy

Insurer may void the policy if a misstatement of age is discovered

Misstatement of Age provision is valid only during the contestable period

A

Coverage will be adjusted to reflect the insured’s true age if a misstatement of age is discovered

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63
Q

Which of the following Nonforfeiture options offers the highest death benefit?

Cash surrender
Extended term
Reduced Paid-up
Dividend

A

Extended Term

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64
Q

A life insurance policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached?

Return of Premium
Cost of Living
Waiver of Premium
Accelerated Benefits

A

Waiver of Premium

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65
Q

Which of these is NOT an element of Life insurance premiums?

A

Morbidity rate

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66
Q

Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary?

A

Life Income

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67
Q

Which type of life insurance beneficiary requires his/her consent when a change of beneficiary is attempted by the policyowner?

A

Irrevocable beneficiary

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68
Q

How would a contingent beneficiary receive the policy proceeds in an Accidental Death and Dismemberment (AD&D) policy?

A

If the primary beneficiary dies before the insured.

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69
Q

A whole life insurance policyowner does not wish to continue making premium payments. Which of the following enables the policyowner to sell the policy for more than its cash value?

A

Life settlement contract

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70
Q

A primary beneficiary has died before the insured in a life insurance policy. A contingent beneficiary is also named in the policy. Which of the following will occur when the insured dies?

A

Proceeds will go to the contingent beneficiary

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71
Q

On a life insurance policy, who is qualified to change the beneficiary designation?

A

Policyowner

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72
Q

If the insured and primary beneficiary are both killed in the same accident and it cannot be determined who died first, where are the death proceeds to be directed under the Uniform Simultaneous Death Act?

A

Insured’s contingent beneficiar

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73
Q

T is covered by an Accidental Death and Dismemberment (AD&D) policy that has an irrevocable beneficiary. What action will the insurance company take if T requests a change of beneficiary?

A

Request of the change will be refused

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74
Q

____ of personal life insurance premiums is usually deductible for federal income tax purposes.

50%
0%
100%
75%

A

0%

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75
Q

A level premium indicates:

A

The premium is fixed for the entire duration of the contract

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76
Q

A policyowner is allowed to pay premiums more than once a year under which provision?

A

Mode of Premium

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77
Q

C is trying to determine whether to convert her convertible term life policy to whole life insurance using her original age or attained age. What factor would affect her decision the most?

A

The cost

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78
Q

K has a life insurance policy where her husband is beneficiary and her daughter is contingent beneficiary. Under the Common Disaster clause, if K and her husband are both killed in an automobile accident, where would the death proceeds be directed?

A

Daughter

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79
Q

P and Q are married and have three children. P is the primary beneficiary on Q’s Accidental Death and Dismemberment (AD&D) policy and Q’s sister R is the contingent beneficiary. P, Q, and R are involved in a car accident and Q and R are killed instantly. The Accidental Death benefits will be paid to:

A

P only

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80
Q

Which factors are taken into consideration when an insurance company determines the premium rate for a Whole Life policy on an applicant?

A

Risk classification

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81
Q

M completes an application for life insurance but does not pay the initial premium. All of these actions must occur before M’s policy goes into effect, EXCEPT:

policy is delivered
initial premium is collected
insurance company issues policy
free-look period has expired

A

free-look period has expired

82
Q

A life insurance application must be signed by all of these, EXCEPT:

the insured (if an adult)
the policyowner
the agent
beneficiary

A

beneficiary

83
Q

T applies for a life insurance policy and is told by the producer that the insurer is bound to the coverage as of the date of the application or medical examination, whichever is later. Assuming that T is an acceptable risk, what item is given to T?

A

Conditional receipt

84
Q

T cash surrenders a recently-issued whole life policy. He also requests that the proceeds be payable to an unrelated third party. T would likely be red-flagged for violation of

A

anti-money laundering rules

85
Q

K is an agent who takes an application for individual life insurance and accepts a check from the client. He submits the application and check to the insurance company, however the check was never signed by the applicant. If the application is approved, when will coverage be effective?

A

The date the agent delivered the policy, collected the initial premium, and obtained a good health statement from the insured

86
Q

The underwriting process involves all of these, EXCEPT for:

Credit report
Application
Risk classification
Policy loan

A

Policy loan

87
Q

What is the initial source of underwriting for an insurance policy?

A

Application containing statements from the insured

88
Q

P is a producer who notices 5 questions on a life application were not answered. What actions should P take?

A

Set up a meeting with the applicant to answer the remaining questions

89
Q

What action should a producer take if the initial premium is NOT submitted with the application?

A

Forward the application to the insurer without the initial premium

90
Q

An incomplete life insurance application submitted to an insurer will result in which of these actions?

A

Application will be returned to the writing agent

91
Q

Before a life insurance policy is issued, which of these components of the contract is required?

A

Applicant’s signature on application

92
Q

the entity whose sole purpose is sharing medical data among its member companies is called the

A

Medical Information Bureau (MIB)

93
Q

Under a trustee group life policy, who would be eligible for a certificate of coverage?

A

Employee

94
Q

When an employee is terminated, which statement about a group term life conversion is true?

A

Policy proceeds will be paid if the employee dies during the conversion period.

95
Q

If a corporation pays the premium on a group life policy for its employees, the corporation is required to report how much additional taxable income for each employee?

A

nothing

96
Q

If its employees share in the cost of insurance, what type of group life insurance plan would a corporation have?

A

Contributory

97
Q

Which provision is NOT a requirement in a group life policy?

A

Accidental

98
Q

All individuals covered under a group contract will receive a(n)

A

certificate

99
Q

What type of group insurance plan involves employees sharing the cost?

A

contributory plan

100
Q

Which of the following statements about noncontributory employee group life insurance is FALSE?

A

A minimum number of employees is required to participate

101
Q

Which requirement must be met for an association to be eligible for a group life plan?

A

Group was formed for a purpose other than acquiring insurance

102
Q

Group life insurance policies are generally written as:

A

annually renewable term

103
Q

A(n) ________ annuity pays benefits based on units rather than stated dollar amounts.

A

Variable

104
Q

An immediate annuity consists of a:

A

single premium

105
Q

P is a forty year old woman and would like to purchase an annuity that will provide a lifetime income stream beginning at age sixty. Which of the following did she NOT buy?

An immediate annuity
A straight life annuity
A straight life deferred annuity
A deferred annuity

A

An immediate annuity

106
Q

P, age 50, purchased an annuity that P will fund with $500/ month for 15 years. The annuity will then pay P retirement payments after the 15 years. Which type of annuity did P purchase?

A

Deferred

107
Q

S recently received a $500,000 lump sum retirement buyout from her employer. She would like to buy an annuity that will immediately furnish her with a guaranteed income for life. What type of annuity is best suited for her situation?

A

Single Premium

108
Q

T has an annuity that guarantees an income payment for the rest of his life. The contract also guarantees that if T dies before receiving payments for 20 years, the remaining payments will be paid to his son for the balance of the 20 years. What type of annuity is this?

A

Life Annuity with Period Certain

109
Q

W is a 39-year old female who just purchased an annuity to provide income for life starting at age 60. All of these would be acceptable annuity choices, EXCEPT a(n):

Straight Life annuity
Variable annuity
Flexible Premium Deferred annuity
Immediate annuity

A

Immediate annuity

110
Q

Which of these statements concerning an Individual Straight Life annuity is accurate?

A

Payments are made to an annuitant for life

111
Q

T purchased a $100,000 single premium, Straight Life annuity 5 years ago. He has received monthly payments since the inception of the annuity. If T dies, the insurance company

A

does NOT have to make any further payments

112
Q

What is the basic function of an annuity?

A

The systematic liquidation of accumulated funds

113
Q

A Key Employee policy is taken out by Company X on its vice president. Ten years later, this employee leaves Company X and begins working for Company Y. If this individual were to die and the policy is still in force and unchanged, where would the death proceeds be directed?

A

Company X

114
Q

K is an insured under a life insurance policy owned by a third party. Which of these statements is true?

A

K has no ownership rights

115
Q

An architecture firm would stand to lose a lot of money in the event of the death of its project manager. Which type of policy should the firm purchase on its project manager?

A

Key Person Life Policy

116
Q

Which of these is NOT relevant when determining the amount of personal life insurance needed?

A

Local unemployment rate

117
Q

In life insurance, the needs approach is used mostly to establish:

A

how much life insurance a client should apply for

118
Q

What does a 401(k) plan generally provide its participants?

A

Salary-deferral contributions

119
Q

In a qualified retirement plan, the yearly contributions to an employee’s account:

A

are restricted to maximum levels set by the IRS

120
Q

Who is normally considered to be the owner of a 403(b) tax-sheltered annuity?

A

The employee

121
Q

How are Roth IRA distributions normally taxed?

A

Distributions are received tax-free

122
Q

In an individual retirement account (IRA), rollover contributions are:

A

not limited by dollar amount

123
Q

Which of the following is TRUE about a qualified retirement that is “top heavy”?

A

More than 60% of plan assets are in key employee accounts

124
Q

Which product would best serve a retired individual looking to invest a lump-sum of money through an insurance company?

A

Annuity

125
Q

Rick recently died and left behind an individual IRA account in his name. His widow was forwarded the balance of the IRA. The widow qualifies for the:

A

marital deduction

126
Q

A sole proprietor may use this plan ONLY if the employees of this business are included.

A

Keogh Pension Plan

127
Q

At the age of 45, an individual withdraws $50,000 from his Qualified Profit-Sharing Plan and then deposits this amount into a personal savings account. This action would result in:

A

Income tax and a 10% penalty assessed upon funds withdrawn from the Qualified Plan

128
Q

Which of the following does Social Security NOT provide benefits for?

A

Dismemberment

129
Q

All of these are considered to be a benefit under Social Security, EXCEPT for:

A
130
Q

Which of these is NOT a source of funding for Social Security benefits?

A

Federal Government

131
Q

P is insured under a basic cancer plan. Which of the following conditions would be covered under this plan?

A

Operation for a malignant tumor

132
Q

The benefits under a Disability Buy-Out policy are:

A

payable to the company or another shareholder

133
Q

Which contract permits the remaining partners to buy-out the interest of a disabled business partner?

A

Disability Buy-Sell

134
Q

Which of these circumstances is a Business Disability Buy-Sell policy designed to help in the sale of a business?

A

Business owner becoming disabled

135
Q

Which type of policy would pay an employee’s salary if the employer was injured in a bicycle accident and out of work for six weeks?

A

Business Overhead Expense

136
Q

Dental care coverage is designed to cover the costs of all of the following EXCEPT:

A

Loss of income

137
Q

A Business Disability Buyout plan policy is designed:

A

to pay benefits to the Corporation or other shareholders

138
Q

A policyowner would like to change the beneficiary on an Accidental Death and Dismemberment (AD&D) insurance policy and make the change permanent. Which type of designation would fulfill this need?

A

Irrevocable

139
Q

All of the following statements regarding group health insurance is true, EXCEPT:

A

An individual policy is given to each member

140
Q

Which of the following BEST describes how a policy that uses the “accidental bodily injury” definition of an accident differs from one that uses the “accidental means” definition?

A

Less restrictive

141
Q

All students attending a large university could be covered by:

A

A blanket policy

142
Q

How does group insurance differ from individual insurance?

A

Premiums are lower

143
Q

Many small business owners worry how their business would survive financially if the owner becomes disabled. The policy which BEST addresses this concern is:

A

Business Overhead Expense

144
Q

J has an Accidental Death and Dismemberment policy with a principal sum of $50,000. While trimming the hedges, J cuts off one of his fingers. What is the MAXIMUM J will receive from his policy?

A

$25,000

145
Q

the difference between group insurance and blanket health policies is:

A

Blanket health policies do not issue certificates

146
Q

Which of these is considered a true statement regarding Medicaid?

A

Funded by both state and federal governments

147
Q

The individual who provides general medical care for a patient as well as the referral for specialized care is known as a:

A

Primary Care Physician

148
Q

Under what system do a group of doctors and hospitals in a designated area contract with an insurer to provide services at a prearranged cost to the insured?

A

HMO (Health Maintenance Organization)

149
Q

Which of the following actions is required by an insured who leaves the primary area of medical coverage and seeks medical care?

A

Obtain prior approval from the insurer for the medical service

150
Q

Which of the following reimburses its insureds for covered medical expenses?

Commercial insurers
Service providers
Health maintenance organizations
Preferred provider organizations

A

Commercial insurers

151
Q

Which of the following statements is true about most Blue Cross/Blue Shield organizations?

They are nonprofit organizations
They are owned by hospitals and physicians
They are the same as private insurance companies
They are federally sponsored

A

They are nonprofit organizations

152
Q

Medicaid was designed to assist individuals who are:

A

Below a specific income limit

153
Q

Which of the following BEST describes how a Preferred Provider Organization (PPO) is less restrictive than a Health Maintenance Organization (HMO)?

More benefits available
Typically not subject to deductibles
More physicians to choose from
Not regulated by the federal government

A

More physicians to choose from

154
Q

A medical care provider which typically delivers health services at its own local medical facility is known as a:

A

Health Maintenance Organization

155
Q

The individual Health Insurance policy that offers the broadest protection is a(n) _______ _______ policy

A

Major Medical

156
Q

Which of the following phrases refers to the fees charged by a healthcare professional?

Deductible
Hospital expense
Usual, customary, and reasonable expenses
Coinsurance

A

Usual, customary, and reasonable expenses

157
Q

Which of the following medical expenses does Cancer insurance NOT cover?

Arthritis
Radiation treatment
Physician visit
Chemotherapy

A

Arthritis

158
Q

An insured covered by a group Major Medical plan is hospitalized after sustaining injuries that resulted from an automobile accident. Assuming the plan had a $1,000 deductible and an 80/20 Coinsurance clause, how much will the INSURED be responsible to pay with $11,000 in covered medical expenses?

A

3,000

159
Q

A major medical policy typically:

A

Provides benefits for reasonable and necessary medical expenses, subject to policy limits

160
Q

M is insured under a basic Hospital/Surgical Expense policy. A physician performs surgery on M. What determines the claim M is eligible for?

A

Determined by the terms of the policy

161
Q

The first portion of a covered Major Medical insurance expense that the insured is required to pay is called the:

A

initial deductible

162
Q

T was treated for an ailment 2 months prior to applying for a health insurance policy. This condition was noted on the application and the policy was issued shortly afterwards. How will the insurer likely consider this condition?

A

Insurer will likely treat as a pre-existing condition which may not be covered for one year

163
Q

This type of deductible provision states that should more than one family member be involved in a common accident, or suffer the same illness, only one individual deductible amount shall be applied.

A

Common accident deductible

164
Q

Which of the following statements BEST defines usual, customary, and reasonable (UCR) charges?

The maximum amount an employer can contribute to a contributory health plan
The maximum premium an insurer can charge for their health insurance based on geography
The maximum deductible an insured can be charged
The maximum amount considered eligible for reimbursement by an insurance company under a health plan

A

The maximum amount considered eligible for reimbursement by an insurance company under a health plan

165
Q

Which of the following situations does a Critical Illness plan cover?

A

Leukemia

166
Q

What type of policy would only provide coverage for specific types of illnesses (cancer, stroke, etc.)?

A

Dread disease insurance

167
Q

A comprehensive major medical health insurance policy contains an Eligible Expenses provision which identifies the types of health care services that are covered. All of the following health care services are typically covered, EXCEPT for:

A

Experimental and investigative services

168
Q

Generally, how long is a benefit period for a Major Medical Expense Plan?

A

One year

169
Q

Under a Basic Medical Expense policy, what does the hospitalization expense portion cover?

A

hospital room and board

170
Q

An individual Disability Income insurance applicant may be required to submit all of the following information, EXCEPT:

occupation
medical history
gross income
spouse’s occupation

A

spouse’s occupation

171
Q

M becomes disabled and is unable to work for six months. M dies soon after from complications arising from this disability. M has a Disability Income policy that pays $2,000 a month. Which of the following statements BEST describes what is owed to her estate?

A

Earned, but unpaid benefits

172
Q

P received Disability income benefits for 3 months then returns to work. She is able to work one month before her condition returns, leaving her disabled once again. What would the insurance company most likely regard this second period of disability as?

A

A recurrent disability

173
Q

T has Disability Income policy that pays a monthly benefit of $5000. If T becomes partially disabled, what can he likely expect?

A

Less than $5,000 per month benefit regardless of the cause

174
Q

V is insured under an individual Disability Income policy with a 30-day Elimination period. On July 1, he is involved in an accident and temporarily disabled. He returns to work on December 1. How many months of benefit are

A

4 months

175
Q

A disability elimination period is best described as a:

A

time deductible

176
Q

R had received full disability income benefits for 6 months. When he returns to work, he is only able to resume half his normal daily workload. Which provision pays reduced benefits to R while he is not working at full capacity?

A

Residual Disability

177
Q

Z owns a Disability Income policy with a 30-day Elimination period. Z contracts pneumonia that leaves him unable to work from January 1 until January 15. Z then becomes disabled from an accident on February 1 and the disability lasts until July 1 the same year. Z will become eligible to receive benefits starting on:

A

1-Mar

178
Q

T was insured under an individual Disability Income policy and was severely burned in a fire. As a result, T became totally disabled. The insurer began making monthly benefit payments, but later discovered that the fire was set by T in what was described as arson. What actions will the insurer take?

A

The insurer will rescind the policy, deny the claim, and recover all payments made

179
Q

An insured owns an individual Disability Income policy with a 30-day Elimination Period for sickness and accidents and a monthly indemnity benefit of $500. If the insured is disabled for 3 1/2 months, what is the MAXIMUM amount he would receive for an approved claim?

A

$1,250

180
Q

If a retiree on Medicare required five hospital stays in one year, which policy would provide the best insurance for excess hospital expenses?

A

Medicare Supplement

181
Q

Medicare Part C is:

A

available to those who are enrolled in Medicare Part A and Part B

182
Q

Which Long Term Care insurance statement is true?

A

Pre-existing conditions must be covered after the coverage has been in force for six months

183
Q

Which of the following will a Long Term Care plan typically provide benefits for?

A

home health care

184
Q

Which of the following types of care is typically not covered in a Long-Term Care policy?

A

Acupuncture

185
Q

What is the initial requirement for an insured to become eligible for benefits under the Waiver of Premium provision?

A

Insured must be under a physician’s care

186
Q

What type of rider would be added to an Accident and Health policy if the policyowner wants to ensure the policy will continue if he/she ever becomes totally disabled?

A

Waiver of Premium rider

187
Q

Which of the following BEST describes a short-term medical expense policy?

Conditionally renewable
Noncancellable
Nonrenewable
Guaranteed renewable

A

Nonrenewable

188
Q

Which of the following policy provisions prohibits an insurance company from incorporating external documents into an insurance policy?

A

Entire Contract

189
Q

What is considered to be a characteristic of a Conditionally Renewable Health Insurance policy?

A

Premiums may increase at time of renewal

190
Q

When an insurance company sends a policy to the insured with an attached application, the element that makes the application part of the contract between the insured and the insurer is called the:

A

Entire Contract provision

191
Q

M’s insurance company denied a reinstatement application for her lapsed health insurance policy. The company did not notify M of this denial. How many days from the reinstatement application date does the insurance company have to notify M of the denial before the policy will be automatically placed back in force?

A

45 days

192
Q

The Legal Actions provision of an insurance contract is designed to do all of the following, EXCEPT:

give the insured guidelines for pursuing legal action against and insurer
protect the producer
provide the insurer adequate time to research a claim
protect the insured from having claim research delayed

A

Protect the producer

193
Q

A Disability Income policy that only the policyowner can terminate and which the rates will never go up is considered to be

A

Noncancellable

194
Q

If an individual is covered under an Accidental Death Policy and dies, an autopsy can be performed in all these situations, EXCEPT:

When consent for the autopsy is not obtained
When foul play was a contributing factor
When the state prohibits this by law
When the cause of death is unknown

A

When the state prohibits this by law

195
Q

J, an Accidental Death and Dismemberment (AD&D) policy holder, dies after injuries sustained in an accident. J’s age, as stated on the application five years ago, was found to be understated by ten years. Which of the following actions will the insurance company take?

A

The insurer will adjust the benefit to what the premiums paid would have purchased at the insured’s actual age

196
Q

Which health policy clause specifies the amount of benefits to be paid?

A

Insuring

197
Q

P is a Major Medical policyowner who is hospitalized as a result of injuries sustained from participating in a carjacking. How will the insurer most likely handle this claim?

A

Claim will be denied

198
Q

The ________ clause identifies which losses resulting from an accident or sickness are insured by the policy.

A

Insuring

199
Q

The policy provision that entitles the insurer to establish conditions the insured must meet while a claim is pending is:

A

Time Limit on Certain Defenses

200
Q

Under a Guaranteed Renewable health insurance policy, the insurer

A

may cancel the policy for nonpayment only

201
Q
A

BLAW (7 decks)

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