Insurance Exam Review Flashcards

Comprehensive practice questions and answers covering insurance principles, health and life policy types, retirement plans, Medicare, Medicaid, and Washington state specific regulations based on the provided lecture notes.

What is an example of an applicant intentionally lying to an insurance company to obtain a cheaper premium?

Fraud

Which type of hobby is commonly excluded from coverage in most life insurance policies?

Auto enthusiast racing automobiles once a month

Is a disclosure authorization response considered a source of underwriting information for life or health insurance?

No

What must happen for a claim to be paid if an applicant with a conditional receipt dies the day after applying?

The claim will be paid if the application is approved

Which signature is NOT required on an individual insurance application?

The insurer's signature

Is the beneficiary required to sign an insurance application?

No

How many months can a life insurance policy typically be backdated from the date of application?

$6$ months (Ohio is an exception allowing only $3$ months)

Who requests an attending physician's statement (APS) during the underwriting process?

The insurer

What is the name of the document that specifies the critical segments of an insured's life insurance policy?

Policy summary

How is a risk classified if a person is not acceptable at standard rates due to health history, occupation, or hobbies?

Substandard risk

Which 1970 law protects consumer rights regarding inspection or credit reports?

Fair Credit Reporting Act

What is a statement of fact or something guaranteed to be true in an insurance application called?

A warranty

Which personal status factor is NOT considered a key factor in underwriting life insurance?

Marital status

What is the conversion privilege found in group life plans?

It allows an employee to convert to an individual plan upon termination of employment

What document is issued to each person insured under a group life policy?

A certificate

What term describes the tendency of less favorable insurance risks to seek or continue insurance to a greater extent than others?

Adverse selection

What is an insurance plan called where the employer pays the entire premium and all eligible employees are covered?

Non-contributory plan

What is the period called when an annuity is experiencing tax-deferred growth before retirement?

Accumulation period

Which annuity payout option allows the policyowner to choose a pre-determined number of benefit payments?

Period certain

What is the minimum amount of time that must pass after purchase before periodic income payments begin in a deferred annuity?

At least $12$ months

Which annuity rider guarantees minimum withdrawals for life without requiring the contract to be annuitized?

Guaranteed lifetime withdrawal benefit (GLWB)

How are interest earnings in a deferred annuity accumulated?

On a tax-deferred basis

Who is the only person authorized to surrender an annuity during the accumulation period?

The policyowner

On what factor are annuity payments based?

The annuitant's life expectancy

What occurs if an annuitant dies before the annuity start date?

The beneficiary receives the premiums paid plus interest earned

Which Social Security period describes the time when there are no benefits for a surviving spouse between the youngest child turning $16$ and the spouse reaching age $60$?

Blackout period

How long must a disability be expected to last to qualify for Social Security Total Disability?

At least $12$ months or result in death

What type of retirement plan was specifically designed for self-employed individuals?

Keogh plans

Within how many days must a Traditional IRA rollover be completed to avoid being taxed as current income?

$60$ days

At what age can a Roth IRA owner make tax-free withdrawals, provided the account was held for at least $5$ years?

At least $59\frac{1}{2}$ years old

Which approach predicts a person's earning potential and calculates the amount devoted to dependents to determine insurance needs?

Human life value approach

What is the term for life insurance purchased to enable heirs to pay estate taxes?

Estate conservation

If an employer pays for an employee's group life insurance, are the premiums typically tax-deductible for the employer?

Yes

Who is the policyholder in a group health benefit plan?

The employer

Under COBRA, a terminated employee is eligible for continued coverage unless they were terminated for what reason?

Gross misconduct

According to HIPAA, what happens when an individual leaves one employer and starts with a new company offering group health insurance?

The individual is eligible for coverage upon hire

What are the two primary perils involved in health insurance?

Accident and sickness

How are disability income benefits treated for tax purposes if the policy is paid for by the employer?

They are considered taxable income

Is Medicare the primary or secondary payer for an individual over $65$ who is still working and covered by an employer's group plan?

Medicare is the secondary payer

What percentage of the health costs paid by a sole proprietor is tax-deductible?

$$100/$$

What does Medicare Part B cover?

Medically necessary doctors' services, preventive care, durable medical equipment, and outpatient services

What percentage of physician fees does Medicare Part B typically pay?

$$80/$$

Which government-funded program is intended specifically for poverty-stricken people?

Medicaid

Which Medicare part covers inpatient care in hospitals and skilled nursing facilities?

Medicare Part A

In a PPO, what is the result if a subscriber receives care from an out-of-network provider?

Care is covered but at a lower percentage than in-network care

What is the purpose of a rehabilitation benefit in a disability policy?

To prepare the insured to return to employment

What is the purpose of the waiting (elimination) period in disability insurance?

To exclude payments for short-term illness or injury

What disability provision automatically qualifies an insured for full benefits due to the severity of the condition, even if they can still work?

Presumptive disability

When do premiums typically start being waived under a waiver of premium rider?

Beginning at the date of disability

What is the list of prescription drugs covered by a pharmacy benefit called?

A drug formulary

Which type of care is best suited for an individual who needs some supervision but not full-time 24-hour nursing?

Assisted living

What is the primary purpose of respite care?

To provide temporary relief to the patient's primary caregiver

What are the three levels of care typically provided by Long-Term Care policies?

Skilled nursing, intermediate, and custodial care

What document constitutes the 'entire contract' in a mandatory health policy provision?

The policy, including endorsements and attached papers

What is the mandatory grace period for a monthly premium health insurance policy?

$10$ days

What law requires that when health insurance is replaced, ongoing claims under the former policy must continue to be paid under the new policy?

No loss no gain laws

How many days does an insurer have to furnish proof of loss forms to a claimant after receiving a notice of claim?

$15$ days

In Washington, for how many days does the free-look period for Long-Term Care policies last?

$30$ days

When must coverage for a newborn child begin in an accident and health family policy?

At the moment of birth

What is an insurance company called that is incorporated in another state but operating in Washington?

Foreign insurer

In Washington, what is the required grace period for life insurance policies?

$30$ days

What is the agreement between a producer and an insurer called that allows the producer to sell policies for that insurer?

An appointment

What is the frequency requirement for the Commissioner to examine domestic insurers?

At least every $5$ years

What is the crime of making maliciously critical or false statements about the financial condition of an insurer?

Defamation

What is the maximum fixed interest rate for life insurance policy loans in Washington?

$$8/$$

Under the Affordable Care Act, what actuarial value is provided by a Silver Plan?

$$70/$$

According to Washington law, how many hours of continuing education must a producer complete every $2$ years?

$24$ hours ($3$ of which must be ethics)

What is the minimum free-look period for life insurance policies in Washington upon delivery?

$10$ days

How is the annual penalty calculated for a large employer that does not provide health insurance under the ACA?

By multiplying $\$2,000$ by the number of full-time employees minus $30$

What is the maximum period an insurer can exclude coverage for a preexisting condition on a Medicare Supplement policy?

$6$ months