Life and Health PSI practice test Flashcards
To pass state exam
Which type of life policy can be continued year after year without a required medical examination but rates are dependent on the insured’s current age?
Renewable Term
All of the following are features of the spendthrift clause EXCEPT:
The beneficiary may encumber the proceeds
All of the following are tax qualified retirement plans EXCEPT:
Section 529 plan
What does it mean if a health policy is conditionally renewable?
Insurer may elect NOT to renew based on the health of the insured
Which is a disadvantage to a flexible premium annuity?
The actual amount of the annuity benefit cannot be determined in advance
When should a buy-sell agreement include a provision for the buy out of an owner’s business interest in the event of a disability?
When there is a buy sell agreement funded with disability insurance to buyout the interest of a decreased owner or partner
What is the return of premium rider?
An increasing amount of term insurance that always equals the total of premiums paid up to the current point
Which provision allows the physician to submit claim information before providing treatment?
Precertification provision
In which of the following types of contracts is only one party legally required to do something after the insured has completed the act of paying the premium?
Unilateral
The right to change the beneficiary is reserved to the policyowner UNLESS which of the following is true?
The policyowner has named an irrevocable beneficiary
All of the following are TRUE regarding incomplete applications EXCEPT:
The incomplete application can be accepted with the missing information added later
How long after being entitled to disability benefits will an individual be eligible to receive Medical Benefits?
2 years
How might someone cover the extra expenses of child care and home-related costs?
Purchasing family term insurance
How do most disability policies handle the case for a recurrent disability occurring at least 90 days after the first claim?
It must be handled as a new claim for a new period of disability, without requiring a new elimination period
Short Term Disability insurance generally only covers injuries due to which of the following?
Non-Occupational injuries
Which of the following policy types is considered double indemnity?
Accidental Death
In order to AVOID being classified as an MEC, a policy must pass which of the follow?
Seven-pay test
An insured and the beneficiary are both killed in a fatal accident. Which provision presumes the insured survived the beneficiary?
Common Disaster Clause
What is the waiver of premium provision?
In a long term care contract, the premium is waived after the insured has been confined for a specified period of time
The life insurance policy will not truly be effective until all of the following occur EXCEPT:
The agent has explained the policy to the client
The group conversion option is allowed for all of the following EXCEPT:
During the annual benefit enrollment period
Under which situation must insurable interest exist between the applicant and insured at the time of application?
When the applicant and the insured are the same person
If the insurer wishes to share an applicant’s HIV status, the applicant must be given full notice of all of the following EXCEPT:
The treatment procedures that are covered by the policy
Which of the following is TRUE for a flexible premium annuity?
The purchaser payment falling between a minimum and maximum amount
Which of the following was specifically designed to address STOLI and IOLI practices?
NCOIL Act
All of the following statements define preexisting conditions EXCEPT:
Any chronic health condition that presents symptoms and which was unknown at the time of application
What is an impairment rider?
It lists specific conditions in the contract that are excluded from the contract
All life insurance and health insurance contracts contain all of the following EXCEPT:
Representation
Which is the primary purpose of Health Reimbursement Accounts (HRAs)?
To assist covered employees with the payment of medical expenses on a high deductible plan funded through pre-tax contributions
Which is a common approach to addressing the problems inherent in naming a minor as a beneficiary to a life insurance policy?
Establishing a trust to administer proceeds
In a level term policy, which ALWAYS remains constant?
Premium
Under normal conditions which of the following is TRUE for proof of loss when a single loss is claimed?
The insured has 90 days for the date of loss to provide proof of loss
Group AD&D policies may be deducted by whom and under which deduction category?
The employer under business expenses
What is a MIB report?
Medical information on an applicant for assessing life or health insurance risk
How does a noncancelable policy differ from a guaranteed renewable policy?
With the noncancelable policy, the insured may never increase the premiums under any circumstances
According to the time period of payment of claims provision, the insurer must make the payment immediately after receiving proof of loss EXCEPT:
For claims involving periodic payments
Which of the following determines whether a person passes the financial test to qualify for Medicaid?
State law
Why are insurance policies considered conditional contracts?
Certain conditions need to be met to make the contract legally enforceable
Which type of rider reimburses health and social expenses incurred in a convalescent or nursing home facility?
Long term care rider
What does first dollar coverage mean?
As soon as covered medical expenses are incurred, the policy begins to pay
Which of the following is considered the major advantage of HIPAA?
Portability
During which period of a Disability Income Policy is coverage effective but during which no benefits will be paid under the policy?
Elimination Period
Which of the following is characteristic of a nonqualified plan?
Plan does not meet federal guidelines for tax benefits
When will a policy pay on a UCR basis?
When particular benefits are not listed on a payment schedule
All of the following are characteristics of variable whole life EXCEPT:
The premium is level
Which plan is most commonly paired with a High Deductible Health Plan?
Health Savings Account (HSA)
Why is relying solely on employer group life insurance generally considered inadequate for most individual’s needs?
It is financially insufficient to cover end of life expenses
Some states require life insurance policies to include a provision that gives the insurer the right, at its own expense, to do which of the following?
Perform a medical examination on the beneficiary
Which of the following is the most common method to supplement Medicare Coverage?
Coverage offered by private insurers
All of the following are characteristics of COBRA EXCEPT:
Change in medical privacy procedures
All of the following are disadvantages to an annually renewable term life policy EXCEPT:
The living benefits decrease over time
Which type of annuity covers two or more annuitants and provides monthly income only until the first annuitant dies?
Joint Life annuity
What is the maximum amount of time the insured has to file legal action against the insurer after written proof of loss is provided?
3 years
Which of the following is common in an increasing term life policy?
It begins with little or no insurance protection
Which type of life policy can be continued year after year without a required medical examination but rates are dependent on the insured’s current age?
Renewable term
Which of the following is exempted from the incontestability provision in insurance policies?
Fraudulent Misstatements
Which policy type is backed by equity investments and allows the policyholder to adjust the death benefit?
Variable universal life
What is the major reason that insurance regulators are often critical of dread disease insurance policies?
Buyers often think they are getting broader coverage than they actually purchase
Which type of coverage pays the operating costs of a small business when the owner becomes disabled?
Business overhead expense disability insurance
What is the purpose of Stranger-originated life insurance (STOLI)?
It is a fraudulent policy for financial gain of someone unknown to the insured
What is business overhead expense disability insurance?
Insurance that covers business expenses if the owner becomes disabled
It helps maintain business operations during the owner’s disability.
What is key person expense disability insurance?
Insurance that covers expenses related to the loss of a key employee due to disability
It helps businesses manage the financial impact of losing critical personnel.
What is buy-sell disability insurance?
Insurance that funds the purchase of a business interest if an owner becomes disabled
It ensures business continuity by allowing remaining owners to buy out a disabled partner.
What is individual expense disability insurance?
Insurance that covers personal living expenses if the insured becomes disabled
It provides financial support for individuals unable to work due to disability.
What is the purpose of Stranger-originated life insurance (STOLI)?
It is a fraudulent policy for financial gain of someone unknown to the insured
STOLI policies are originated primarily for resale, avoiding proof of insurable interest.
What procedure protects an insurer in case of a dispute regarding application changes?
The application and possibly the agent initial any changes made
This ensures that both parties acknowledge modifications before submission.
Which of the following is an example of a premium payment mode?
Annual premium payment
Other modes include payment by check and automatic deduction.
Why is rehabilitation considered worthy of federal help under workers’ compensation?
It reduces insurance losses and helps regain the workers’ dignity
Rehabilitation services support workers in returning to work and maintaining their quality of life.
What are two characteristics of Health Maintenance Organizations (HMOs)?
Containing costs and early treatment
HMOs focus on preventative care and managing healthcare expenses.
What is the maximum amount of time for reinstatement of a policy after a conditional receipt when premium is paid late?
45 days
This is the timeframe allowed for reinstating a policy after the grace period.
When courts look at a contract, what is considered to determine the intent of the parties?
The entire contract
Courts assess the full context of the contract rather than isolated clauses.
In which type of insurance is individually purchased coverage commonly more economical than group offered coverage?
Disability insurance
Individual policies can be tailored and may provide better benefits than group plans.
What is a requirement for producers when applying for a policy with an accelerated benefit provision?
Provide the applicant a summary of coverage
This summary must include effects on cash value and eligibility for Medicaid.
Which policy provision subtracts an amount equal to the premium due from the cash value?
Automatic premium loan
This provision prevents the lapse of the policy by using cash value to cover premium payments.
What happens when the lifetime maximum benefit limit has been reached?
The insured will pay all of the remaining medical costs for as long as the policy is in force
Once the limit is reached, the insurer stops covering costs.
What does the grace period protect the policyholder from?
An unintentional lapse of the policy
It allows time to pay the premium without losing coverage.
