Xcel Testing Solutions Life and Health Insurance 215

The focus of major medical insurance is providing coverage for

medical and hospitalization expenses

An insured under a Major Medical expense plan with a zero deductible and 80/20 coinsurance provision files a $1,000 claim. How much of this claim is the insured responsible for?

$200

because this policy has a zero deductible, the insures is only responsible for the 20% coinsurance on this claim, or $200

An insured has a stop-loss limit of $5,000 and an 80/20 coinsurance. The insured incurs $25,000 of covered losses. How much will the insured pay?

$5,000

Which type of plan would be the most appropriate for an individual on Medicare and concerned that Medicare will NOT pay for charges exceeding the approved amount?

Medicare supplement Plan F

When can a group health policy renewal be denied according to the Health Insurance Portability and Accountability Act (HIPAA)?

when contribution or participation rules have been violated

What does the word "level: in Level Term describe?

the face amount

A non-contributory health insurance plan helps the insurer avoid

adverse selection

because all eligible employees are usually covered, non-contributory plans are desirable from an underwriting standpoint because adverse selection is minimized.

To qualify for a resident producer license in the state of Michigan, an individual

must complete the required pre-licensing education within 12 months of license application

Under an expense-incurred individual health policy, what is the MAXIMUM length of time after issuance of the policy that an insurer can exclude coverage for a pre-existing condition?

12 months

pre-existing conditions may be excluded for a maximum of 12 months from the date of enrollment.

An insured has a health plan that pays established amounts in accordance with a list of injuries, surgical procedures, or other losses. This list is called a

benefit schedule

benefits schedule set predetermined limits or maximums on how much money and insured can be reimbursed for a covered loss.

Who is the individual paid on a fee-for-service basis?

Provider

Which of the following is NOT an illegal inducement?

Giving the insured an article of merchandise printed with the producer's name costing $5

$5 or less of tokens or merchandise to applicants is allowed.

Making a statement that is false or maliciously critical of the financial condition of an insurer is known as

defamation

Which of these statements about Medicaid is CORRECT?

Funded by federal, sate, and local taxes

Medicaid is funded by federal, state, and local taxes but is administered by each state.

All of these are considered key factors in underwriting life insurance EXCEPT

Marital Status

Correct: tobacco use, health history, age

All of the following plans allow for employee contributions to be taken on a pre-tax basis EXCEPT

Health reimbursement Arrangement plan

employers contribute to health reimbursement Arrangement planz (HRA's), not employees.

Which of the following gifts from a producer would NOT be considered rebating?

$5 pen

A producer quoting life insurance may give an applicant an article of merchandise having an invoice value of $5.00 or less.

Chris is an insured bricklayer who severed his left hand in an automobile accident. Although his primary duty cannot be performed, Chris is also a substitute high school teacher. He collects a full disability income check every month. How does his policy define total disability?

own occupation

the "own occupation" definition of total disability requires that the insured be unable to perform the insured's current occupation as a result of an accident or sickness.

Which approach predicts a person's earning potential and determines how much of that amount would be devoted to dependents?

Human life value approach

The human life value approach predicts an individual's future earning potential and determines how much of that amount would be devoted to dependents.

Index whole life insurance contains a securities component that acts as a(n)

hedge against inflation

Phil is shopping for an annuity that guarantees he CANNOT outlive the benefits. Which of these benefit options would he choose?

Guaranteed lifetime withdrawal benefit

The guaranteed lifetime withdrawal benefit normally requires a fee, but it ensures that the income benefit will be paid for life without actually annuitizing the contract.

Which of these factors would an insurer consider when determining whether to accept a group life plan?

average age

and insurer would consider the average age when determining whether to accept a group Life Plan.

This MANDATORY health policy provision states that the policy, including endorsements and attached papers, constitutes

the entire insurance contract between the parties

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

When an insurance licensee changes his or her address under the Michigan Insurance Code, who MUST be notified?

the commissioner of the Department of Insurance and financial services (DIFS)

Jonas is a whole life insurance policyowner and would like to add coverage for his two children. Which of the following products would allow him to accomplish this?

Child term rider

A child term rider is a level term insurance that can be added to an existing policy.

How many employees must an employer have for a terminated employee to be eligible for COBRA?

20

Which of the following policies does NOT build cash value?

Term

CORRECT: straight life, endowment, variable life

Which type of annuity stops all payments upon the death of the annuitant?

Life annuity

The type of annuity in which all payments cease upon the death of an annuitant is referred to as a life annuity.

Under the subrogation clause, legal action can be taken by the insurer against the

responsible third party

Coordination of Benefits regulation applies to all of the following plans EXCEPT

preferred provider organization plan

CORRECT: group vision plan, self-funded group health plan, group health plan

A spouse and child can be added to the primary insured's coverage as what kind of rider?

Family term

Amy has a group medical policy through her employer with a $500 deductible and a 90% coinsurance provision. She incurs $1,500 in covered health care services. How much will her group insurance carrier pay?

$900

In this situation, the group insurance carrier will pay 90% of the covered loss after the deductible has been applied.

In order to save on premiums, a Life Insurance policy can legally be backdated up to

6 months

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

representations

To receive proceeds from a death benefit, a minor

must have an appointed guardian

In the interest of protecting the assets of a minor, state law requires that a guardian be appointed to administer the proceeds payable to the minor child.

Which of the following services MUST be provided by HMO plans?

Home health care

Home health services is an HMO mandatory benefit in Michigan.

The unfair trade practice of replacing an insurance policy from one insurer to another based on misrepresentation is called

twisting

In determining whether a pre-existing condition applies, the enrollee CANNOT have more than how many days' gap in health insurance?

63

A business will typically use which type of life insurance to cover their employees?

Group policy

Within how many days must a Traditional IRA be rolled over to another IRA in order to avoid tax consequences?

60

Ron has a life insurance policy with a face value of $100,000 and a cost of living rider. If the consumer price index has gone up 4%, how much may Ron increase the face value of the policy?

$4,000

In this situation, Ron may increase the face value of his policy by $4,000. $100,000 X .04 = $4,000.

When an accident and 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?

31

Peter has a policy where 80% to 90% of the premium is invested in traditional fixed income securities and the remainder of the premium is invested in contracts tied to a stipulated stock index. What kind of policy is this?

Equity index whole life

A life insurance policy that contains a guaranteed interest rate with the chance to earn a rate that is higher than the guaranteed rate is called

universal life

What is issued to each employee of an employer health plan?

Certificate

An insurer would be committing Unfair Discrimination if coverage was denied based upon

marital status

A licensee who is required to take continuing education MUST include how many ethics coursework hours?

3

A licensee is required to take 24 hours of continuing education every two years. Of the 24 hours, 3 must be in ethics

When calculating the amount of life insurance needed for an income earner, what has to be determined when using the Needs Approach?

the family's Financial objectives if the income earner were to die or become disabled

When the insured gives birth, coverage for eligible newly born children consists of coverage of injury or sickness including

birth abnormalities

Which of these is NOT considered to be a purpose of an annuity?

Annuities are intended to create an estate

CORRECT: annuities are indented to liquidate an estate, annuities are intended for the tax-free growth of principal, and annuities are intended to distribute accumulate principal

What is the purpose for having an accelerated death benefit on a life insurance policy?

it allows for cash advances to be paid against the death benefit if the insured becomes terminally ill

Donald is the primary insured of a life insurance policy and adds a children's term rider. What is the advantage of adding this rider?

can be converted to permanent coverage without evidence of insurability

Life insurance policies will normally pay for losses arising from

commercial aviation

Medical Expense Insurance would cover

an injury occurring at the insured's residence

The branch of dentistry which deals with the replacement of missing parts is called

Prosthodontics

Prosthodontics is the branch of dentistry concerned with the design, manufacture, and fitting of artificial replacements for teeth and other parts of the mouth.

Under long-term care insurance, which of the following MUST an insurer offer to each policyowner at the time of purchase?

An inflation protection feature

Which of the following provides Medicare supplement policies?

Private insurance companies

A producer MUST be appointed by the insurer within how many days from the date the agency contract application is submitted?

15

Which of the following is a reinstatement condition?

proof of insurability

A policyowner may change two policy features on what type of life insurance?

adjustable life

adjustable life allows the policyowner to change to policy features: premium and face amount.

A notice of cash surrender value must be sent to a Universal Life policyowner

at least annually

Which of the following does Coordination of Benefits allow?

allows the secondary payer to reduce their benefit payments so no more than 100% of the claim is paid

Small employer group coverage is NOT required to be renewed in each of the following circumstances EXCEPT

Number of claims exceed threshold

CORRECT: intentional misrepresentation, noncompliance with minimum participation requirements, small employer insurer no longer offers that type of coverage

All of these are situations that allow the insurer to NOT renew small employer group coverage EXCEPT "Number of claims exceed threshold".

Tom has a home health care benefit and is confined to his home. Which of these benefits is NOT typically covered?

Full-time nursing care

Home health care is care provided in the insured's home, usually on a part-time basis.

All of these are typically sources of underwriting information for life or health insurance EXCEPT

Disclosure authorization response

CORRECT: Consumer reports, Medical Information Bureau (MIB) reports, Attending physician's statement (APS)

Under Michigan Insurance Code, Chapter 45, insurance fraud defines financial loss as

loss of income

Which of the following individuals is REQUIRED to be licensed as an insurance counselor in the State of Michigan?

A person providing insurance advice to a person or business for a fee

A licensee can disclose a consumer's policy account number to all of the following EXCEPT a

nonaffiliated third party

CORRECT: member in an affinity program that was identified to the consumer upon entering the program, service provider marketing on behalf of licensee, consumer reporting agency.

What is the tax liability for employer contributions in Health Savings Accounts (HSA's)?

No tax payment needed

Employer-paid contributions to Health Savings Accounts are tax-free to the employee.

A licensee who informs an insured of inaccurate terms, benefits, or advantages of any policy is committing which of the following violations?

Misrepresention

what is the primary reason for buying an annuity?

Provide future economic security

A common exclusion with Vision plans is

lasik surgery

INCLUDED: eyeglass frames, the examination, contact lenses

In the Michigan Insurance Code, Chapter 45, insurance fraud defines financial loss as all of the following EXCEPT

additional premiums

CORRECT: loss of earnings, out-of-pocket expenses, repair and replacement costs

All of these are considered a financial loss under Chapter 45 of the Michigan Insurance Code EXCEPT for "additional premiums".

A life insurance rider that allows an individual to purchase insurance as they grow older, regardless of insurability, is called a(n)

guaranteed insurability rider

In which of the following processes will the insurer oversee the insured's hospital stay to confirm everything is going according to schedule and that the insured will be released as planned?

Concurrent review

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

employees waiting period for coverage of a pre-existing condition can be reduced under the new employers Health Plan

The election of COBRA for continuation of health coverage will

maintain the same coverage and increase premium

Continuation of coverage under COBRA results in the same coverage with increased premiums up to 102% of prior premium.

What activity does NOT require an insurance producer's license?

Underwriting

CORRECT: soliciting, negotiating, selling

Rob purchased a standard whole life policy with a $500,000 death benefit when he was age 30. His insurance agent told him the policy would be paid up if he reached age 100. The present cash value of the policy equals $250,000. Rob recently died at age 60. The death benefit would be

$500,000

In this situation, the death benefit would be the $500,000 face amount.

A rehabilitation benefit is intended to

prepare the insured to return to employment

what amount will be paid under a policy where the insured misstated his/her age?

An amount the premium would have purchased at the correct age

An example of naming a beneficiary by class would be

to the children born of my union with the Ned Jackson

In group health care, what is the purpose of the coordination of benefits provision?

determines what is paid by the primary and secondary insurers in the event of the claim

Which of the following statements is NOT true regarding a Critical Illness Plan?

coverage is limited to a single devastating disease

CORRECT: pays a lump sum to the insured upon the diagnosis of a critical illness, the insurer may have a list of critical illnesses they will cover, also known as Specified Disease Plans

Dana is an employee who deposits a percentage of her income into her individual annuity. Her company also contributes a percentage into a separate Company pension plan. What kind of annuity is this considered?

qualified retirement annuity

Which of these is considered to be a Lving Benefit option in a life insurance policy?

accelerated death benefit

a tax-free section 1035 exchange of a life insurance policy to a different policy is permitted if it occurs

from insurer to insurer and no cash is received by the policyowner

the Internal Revenue Code (IRC) enables a tax-free section 1035 exchange of a life insurance policy to a different policy if it occurs from insurer ensure and the policyowner does not receive any cash.

which of the following is required to be licensed as an insurance producer?

a business entity soliciting insurance

ABC Insurance Agency is entering each applicant who purchases insurance through their agency into a drawing to win a free trip. This is an unlawful Insurance practice known as

illegal inducement

let and then an employer-sponsored group accident and health plan, a master contract is issued to the

employer

if the annuitants dies before the annuity start date,

the premiums paid plus interest earned will be given to the beneficiary

With a scheduled Dental policy, how are covered expenses paid?

benefits are limited to a specific maximum dollar amount per procedure

how long must an individual be unable to engage in any gainful activity due to physical or mental disability in order to qualify for Social Security total disability?

12 months

which of the following protects the policyowner from a misrepresentation caused by an innocent mistake?

incontestable clause

The Entity that has power to revoke a producer's insurance license is the

Department of Insurance and financial services (DIFS)

who has the option to renew a small employer Health Plan?

employer

a small employer carrier that offers health coverage in the small employer Group market shall renew or continue to enforce that plan at the option of the small employer.

when does an immediate annuity begin making payments?

after the first premium has been paid

A policyholder has a major medical plan with a 80%/20% coinsurance and a deductible of $75. If the insured has previously met her deductible and receives a bill for $175, how much will the insurer pay?

$140

because the insured has previously met her deductible, the eligible expenses for a claim is the entire $175. The insurance company pays 80% of $175, or $140.

when are group disability benefits considered to be tax-free to the insured?

when the recipient pays the premium