Insurance Health 2

When a health policy requires payment of an additional premium to provide coverage for a newborn, how many days after the birth is the first payment due?

10 days

60 days

14 days

30 days

The correct answer is "30". When an accident and health policy requires payment of an additional premium to provide coverage for a newborn, the first payment is due 30 days after the date of birth.

A group Disability Income plan that pays tax-free benefits to covered employees is considered

1.  group contributory

2.  fully contributory 

3.  non-contributory 

4.  partially contributory

The correct answer is, "fully contributory". Fully contributory group plans require the employee to pay all premium cost, therefore, any benefits received by covered employees are received tax-free.

An annuity is primarily used to provide

1.  death benefits

2.  disability income

3.  long-term care benefits 

4.  retirement income 

The correct answer is, "retirement income". The principal use of an annuity is to provide income for retirement.

All of these are valid options for an Adjustable Life Policy EXCEPT

The policy's death benefit can be increased or decreased

A nonforfeiture option can be used to increase the death benefit

The policy's premium can be increased or decreased

The policy's protection period can be modified

The correct answer is, "A nonforfeiture option can be used to increase the death benefit". Increasing the death benefit by using one of the nonforfeiture options is not an option in an Adjustable Life Policy.

Elizabeth is the beneficiary of a life insurance policy. She is receiving the death benefit in payments of $10,000 per month until the principal and interest has been paid out. Which option was chosen?

Interest only

Fixed period

Life income

Fixed amount

The correct answer is, "Fixed amount". The fixed amount installment option pays a fixed death benefit in specified installment amounts until the principal and interest are exhausted.

Bill requires some nursing care and supervision but NOT full-time care. Which of these nursing home options would best serve him?

1.  Assisted living 

2.  Custodial residence 

3.  Congregate housing

4.  Nursing home

The correct answer is, "Assisted living". An assisted living facility would best suit an individual who needs some nursing care and supervision but not full-time care.

Low frequency diseases can be exclusively covered by what kind of health insurance policies?

Limited policies

Restricted policies

Blanket policies

Employer policies

The correct answer is, "Limited policies". Health insurance policies that can be purchased to cover specific low frequency diseases are called limited policies.

According to HIPAA, when an insured individual leaves an employer and immediately begins working for a new company that offers group health insurance, the individual

must continue coverage with the previous employer

must wait 360 days to be eligible for coverage

is eligible for coverage upon hire

is eligible for only health insurance, not life or dental insurance

The correct answer is "is eligible for coverage upon hire". According to HIPAA, when an insured individual leaves an employer and immediately begins working for a new company that offers group health insurance, the individual is eligible for coverage upon hire.

Under the Health Insurance Portability and Accountability Act (HIPAA), the employee's new Group Health Plan will verify Creditable Coverage so that the

employee cannot be excluded from the new employer's health plan

employee's benefits still owed can be claimed

employee's waiting period for coverage of a preexisting condition can be reduced under the new employer's health plan

new health insurance carrier will have a clear record of any chronic conditions that exist

The correct answer is "employee's waiting period for coverage of a preexisting condition can be reduced under the new employer's health plan". Under the Health Insurance Portability and Accountability Act (HIPAA), the employee's new Group Health Plan will verify Creditable Coverage so that the employee's waiting period for coverage of a preexisting condition can be reduced under the new employer's health plan.

An agent's commission for the sale of a Medicare supplement policy in the first year following its effective date cannot exceed ___ of the commission paid for selling or servicing the policy in the second year.

400%

100%

200%

300%

An agent's commission for the sale of a Medicare supplement policy in the first year following its effective date cannot exceed 200 percent of the commission paid for selling or servicing the policy in the second year.

Charles is an agent who is licensed in New York but resides in New Jersey. Charles is considered to be a(n)

foreign agent

reciprocal agent

nonresident agent

admitted agent

The correct answer is "nonresident agent". An agent who is licensed in another state as a resident and solicits insurance in New York is called a nonresident agent.

To be classified as a small employer in New York, an employer must employ

1.  2-50 employees 

2.  1-10 employees

3.  2-25 employees 

4.  1-100 employees

The correct answer is "2-50 employees". A small employer is defined as one that employed between 2-50 employees the preceding calendar year.

Within ___ days after policy delivery, both Medicare Supplement and Long-Term Care policies can be returned for a 100% premium refund.

1.  25

2.  30 

3.  20

4.  15 

The correct answer is "30". Both long-term care insurance and Medicare Supplement policies may be returned by the insured for a full refund within 30 days.

Violations of US Code Title 18 section 1033, may result in

Loss of company appointment

Fine and/or imprisonment

Suspension of producer's license

Cease and desist order

Violations of US Code Title 18 section 1033 may result in a fine of up to $50,000 per violation and/or incarceration up to a maximum of 15 years. Cease and Desist Order is an administrative remedy, not a criminal penalty. Suspension of Agent's license is a state-level action. Loss of company appointments is not a federal criminal penalty. Key test point: US Code 1033 violations can result in fines and imprisonment.

Which of the following is NOT considered to be an act of fraud?

1.  Misappropriate or unreasonably withhold premiums or returned premiums 

2.  Collecting a premium for insurance that is not provided

3.  Collecting a charge for insurance that is less than the charge applicable to that insurance 

4.  Willfully collecting a premium that exceeds the amount of the actual premium

The correct answer is "Collecting a charge for insurance that is less than the charge applicable to that insurance". All of these are considered fraudulent acts EXCEPT collecting a charge for insurance that is less than the charge applicable to that insurance.

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

Interest only

Installment refund

Fixed period

Life income

The correct answer is, "Life income". The settlement option that pays a specified amount to an annuitant, but pays no residual value to a beneficiary is known as life income.

A clause that allows an insurer the right to terminate coverage at any anniversary date is called a(n)

conditionally renewability clause

selective renewability clause

cancelable clause

optional renewability clause

The correct answer is, "optional renewability clause". An optional renewability clause allows an insurer the unrestricted right to terminate coverage at any anniversary or at any premium due date.

Who assumes the investment risk with a fixed annuity contract?

The owner

The annuitant

The insurer

The beneficiary

It is the insurance company that bears the investment risk of a fixed annuity. The insurance company guarantees the annuitant's principal as well as a guaranteed minimum rate of return, even if the underlying assets underperform the guaranteed rate.

When a decreasing term policy is purchased, it contains a decreasing death benefit and

level premiums

variable premiums

decreasing premiums

increasing premiums

The correct answer is, "level premiums". A decreasing term policy is issued with a decreasing death benefit and level premiums.

Which type of disability would be less than total impairment and equal to permanent impairment?

1.  Permanent partial disability 

2.  Temporary partial disability

3.  Partial total disability

4.  Residual partial disability 

The correct answer is, "Permanent partial disability". Permanent disability that is less than total impairment and equal to permanent impairment is the definition of permanent partial disability.

An insurer's claim settlement practices are regulated by the

1.  Securities and Exchange Commission (SEC) 

2.  National Association of Insurance Commissioners (NAIC)

3.  National Association of Claims Adjusters (NACA)

4.  State insurance departments 

 The correct answer is, "State insurance departments". Claim settlement practices of insurers are regulated by State insurance departments.

A disability income policy can prevent an insured from earning a higher income than if he/she were working by utilizing

1.  deductibles 

2.  elimination periods

3.  probationary periods

4.  benefit limits 

The correct answer is, "benefit limits". To prevent an insured from earning a higher income than if he or she were working, disability income policies utilize benefit limits.

The monthly benefit for an individual disability income policy is usually limited to a percentage of the insured's income in order to avoid

1.  adverse selection 

2.  over insurance 

3.  claims

4.  the elimination period

The correct answer is, "over insurance". The monthly benefit for an individual disability income policy is usually limited to a percentage of the insured's income in order to avoid over insurance.

Which contract element is insurable interest a component of?

1.  Competent parties

2.  Legal purpose 

3.  Consideration 

4.  Offer and acceptance

The correct answer is, "Legal purpose". Insurable interest is a component of legal purpose.

All of these statements concerning whole life insurance are false EXCEPT

1.  When a whole life policy is surrendered, income taxes may be owed 

2.  The death benefit is not affected by outstanding loans

3.  Policyowner can take out a policy loan up to the face amount

4.  Coverage is normally temporary 

The correct answer is, "When a whole life policy is surrendered, income taxes may be owed". Income taxes may be due when a whole life policy is surrendered. This statement is true.

All of the following are elements of an insurance policy EXCEPT

1.  other insurance

2.  definitions

3.  claim forms 

4.  conditions 

The correct answer is, "claim forms". Claim forms are not an element of an insurance policy

What does a life insurance policy guarantee to the stated beneficiary upon the death of the insured?

1.  Policy Dividend

2.  Funeral expense fund

3.  Policy's cash value 

4.  Specified amount of money 

The correct answer is, "Specified amount of money". Life insurance guarantees to the beneficiary a specified sum of money in the event of the insured's death.

A Medicare supplement plan can be canceled by the insurer

1.  after the probation period

2.  for any changes in the insured's health

3.  for nonpayment of premiums 

4.  anytime 

The correct answer is, "for nonpayment of premiums". An insurer can cancel a Medicare supplement plan after nonpayment of premiums.

Premiums paid that exceed 7 1/2% of an insured's Adjusted Gross Income (AGI) are tax-deductible when paid for which of the following plans?

1.  Group disability income plan

2.  Qualified Long-Term Care plan 

3.  Personal Disability Income plan

4.  Accidental Death and Dismemberment

Premiums paid that exceed 7 1/2% of an insured's Adjusted Gross Income (AGI) are tax-deductible when paid for a Qualified Long-Term Care plan.

Which of the following provides Medicare supplement policies?

1.  Medicaid

2.  Medicare 

3.  Associations and employers

4.  Private insurance companies 

The correct answer is, "Private insurance companies". Medicare supplement policies are provided by private insurers

Distributions from a Health Savings Account (HSA) for qualified medical expenses are

1.  tax-free 

2.  tax credits

3.  fully taxable 

4.  partially taxable

The correct answer is, "tax-free". Distributions from a Health Savings Account (HSA) for qualified medical expenses are tax-free.

How are contributions made to a Roth IRA handled for tax purposes?

1.  Partially tax deductible

2.  Fully tax deductible 

3.  Not tax deductible 

4.  Conditionally tax deductible

The correct answer is, "Not tax deductible". Contributions made to a Roth IRA are not tax deductible.

Kate has a Major Medical Plan with a 75/25 coinsurance and a deductible of $25. How much will she have to pay if she, not having met any of her deductible, visits the doctor and receives a bill for $125?

 $75.00

 $50.00 

 $100.00

 $25.00 

The correct answer is, "$50.00". In this situation, the insured will have to pay $25 deductible plus $25 coinsurance = $50.

Which of the following types of deductibles would apply a single deductible to both medical and dental insurance coverage?

1.  Standard deductible

2.  Combined deductible 

3.  Blended deductible

4.  Integrated deductible 

The correct answer is, "Integrated deductible". A single deductible applied to both medical and dental insurance coverage is referred to as an integrated deductible.

When an insured has a major medical plan with first dollar coverage, how does this impact the benefits paid?

1.  No deductible payment is required 

2.  Insured must pay a percentage of covered losses 

3.  An initial deductible plus a percentage of the remaining covered loss is owed by the insured

4.  Deductible specified in the contract is payable by the insured

The correct answer is, "No deductible payment is required". A health insurance plan with first dollar coverage means no deductible payment is required before expenses are reimbursed.

Statements made by an insurance applicant on an application are considered to be

1.  guarantees

2.  irrevocable

3.  representations 

4.  warranties 

The correct answer is, "representations". The proposed insured's statements on a life insurance application are considered to be representations.

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

1.  Forward the application to the insurer after giving the applicant a binding receipt

2.  Keep the application until premium is paid

3.  Forward the application to the insurer without the initial premium 

4.  Forward the application to the insurer after giving the applicant a conditional receipt 

The correct answer is "Forward the application to the insurer without the initial premium". In this situation, the producer should submit the application to the insurance company without the premium. However, if a premium is not paid with the application, the policy will not become valid until the initial premium is collected

Group health plans may deny participation based upon the

1.  member's pre-existing condition 

2.  member's current age

3.  member' part-time employment status 

4.  member's claims history

The correct answer is "member's part-time employment status". Group health plans may exclude participation based upon a member's part-time employment status. Full-time employees are typically eligible

HIPAA portability rules allow individuals who change from one group medical plan to another to

1.  reduce or eliminate any pre-existing conditions excluded under the new plan 

2.  convert to individual coverage when employment ends

3.  transfer coverage under the former employer to the current employer 

4.  apply copayments made under the former plan to the new coverage plan

The correct answer is "reduce or eliminate any pre-existing conditions excluded under the new plan". An employer must make full health care coverage available immediately to newly hired employees who were previously covered at another job (the individual must have had coverage for at least 18 months).