LIfe and Health Insurance - Nevada Edition

What are the four required elements of an insurance contract?

Agreement, consideration, competent parties, and legal purpose.

What two parts make up a life insurance application?

General Information and the Medical Information. An agent's report can go in a life insurance application but is not included in the life insurance policy.

When must insurable interest exist in life insurance?

At the time of application.

When does coverage begin, if the premium was submitted with the application, and the policy was issued two weeks later?

At the time of the application.

If an agent makes a mistake on the application and then corrects it, who must initial that change?

The applicant.

Insurers may change what on a guaranteed renewable health insurance polity?

The rates by class.

At what age may an individual make withdrawals from an HSA for nonhealth purposes without being penalized?

At age 65.

Which provision states how much time must pass between two like illnesses in order for the second one to be covered under a new set of benefits?

Recurrent Disability Provision

In forming an insurance contract, when does acceptance occur?

When an insurer's underwriter approves coverage

What is an important feature of a dental expense insurance plan that is not found in a medical expense insurance plan?

Diagnostic and preventive care

What best describes the "first-dollar coverage" principle in basic medical insurance?

The insured is not required to pay a deductible

Occasional visits by what medical professionals will not be covered under Long-Term Care's home health care?

Attending physicians

Can an individual who belongs to a POS plan use an out-of-network physician?

Yes, they can use any physician even if not part of the HMO

What is the advantage of reinstating a policy instead of applying for a new one?

The original age is used for premium determination

What would basic medical expense coverage not cover?

Surgeon's services

What is not provided by an HMO?

Reimbursement

What insurance arrangements will be appropriate for a parent buying a life insurance policy on a child where the parent is the policyowner?

Third-party ownership

What is not true about dividends?

Dividend amounts are guaranteed in the policy

What is not true about Accidental Death and Dismemberment?

Death benefits are paid only if death occurs within 24 hours of an accident

When would a 20-pay whole life policy endow?

When the insured reaches age 100

What section of a health policy that states the causes of eligible loss under which an insurance is assumed to be disabled?

Insuring Clause

The insurance clause of a disability policy usually states what except?

The method of premium payment

What best describes annually renewable term insurance?

It is level term insurance

What best describes an annuity period?

Period of time during which accumulated money is converted into income payments

What is an eligibility requirement for all Social Security Disability Income benefits?

Have attained fully insured status

What protects the insured from unintentional policy lapse due to a nonpayment of premium?

Automatic premium loan

What is the maximum amount that the Nevada Life & Health Insurance Guaranty Association be obligated to pay with respect to life insurance death benefits for one life?

$300,000

What is the penalty for transacting insurance without a proper license?

$1,000 for each violation

What type of misrepresentation persuades an insured to cancel, lapse, or switch policies from one to another?

Twisting

The patient protection and affordable care act includes what except?

Individual tax deduction for premiums paid

What entity determines if an advertisement is deceptive of confusing?

The Commissioner

How many days does a nonresident procedure have to file a change of address when the agent moves to Nevada from another state?

30 days

What is not considered a misrepresentation?

Making comparisons between different policies

A producer who has allowed their license to lapse may reinstate the license without retaking the examination within what maximum time period?

12 months or 1 year

Who is a person, other than a viator, that enters into a viatical settlement?

Viatical Settlement Provider

How many days after cancellation of a license in another state does a new resident agent have to apply for Nevada producer license without having to fulfill licensing examination and education requirements?

90 days

What are the three basic types of term life insurance?

The three basic types of term life insurance are level, increasing, and decreasing.

When would a whole life insurance policy mature?

The whole life insurance policy matures when the insured dies or turns 100.

Who is an annuitant?

The annuitant is the person on whose life expectancy the annuity is written and who receives benefits from the annuity.

What constitutes the entire contract?

The entire contract constitutes the policy, a copy of application, and any riders or amendments.

Which rider allows an insured to purchase additional coverage without evidence of insurability?

The Guaranteed Insurability Rider allows an insured to purchase additional coverage without evidence of insurability.

What are the three nonforfeiture options?

The three nonforfeiture options are reduced paid-up, extended term, and cash surrender value.

In group life insurance, who receives the master contract?

The employer receives the master contract in group life insurance.

What are some examples of qualified retirement plans?

Traditional IRA, Roth IRA, SIMPLE, SEP, and 401(k)

When would life insurance death benefits be tax free?

If paid as a lump sum to the beneficiary

What do individuals use to transfer their risk of loss to a larger group?

Insurance

What is insurance the transfer of?

Risk

Insurance is a contract by which one seeks to protect another from

Loss

What type of report provides information about the applicant's hobbies, habits, and financial status?

Inspection Report

What law protects consumers from the circulation of inaccurate or obsolete information

The Fair Credit Reporting Act

What term describes the fee a person pays an insurance company to receive coverage?

Premium

What is the purpose of the agent's report during the application process?

The agent's report discusses the agent's personal observations about the proposed insured that may help in the underwriting process.

What two elements are necessary for a life insurance contract to have a legal purpose?

Insurable interest and consent

What does it mean when health insurance contracts are unilateral?

Only one party makes a legally enforceable promise

How is the information obtained for an investigative consumer report?

Through interviews with the applicant's associates, friends, and neighbors

What is the name of the process that insurance companies use to determine whether or not an applicant is insurable?

Underwriting

What are the three types of risk rating classifications in life insurance?

Standard, substandard, and preferred

When would a misrepresentation on an insurance application be considered fraud?

When it is intentional and material

What entities make up the Medical Information Bureau?

Insurers

What risk classification would typically qualify for lower premiums?

Preferred Risk

What is policy replacement?

A new policy is issued while an existing policy is terminated or reissued with a reduction in cash value

What best describes the concept that the insured pays a small amount of premium for a large amount of risk on the part of the insurance company?

Aleatory Contract

What best describes gross annual premium?

Net premium plus expenses

What is the appropriate action by the insurer if a prospective insured submitted an incomplete application?

Return the application to the applicant for completion

What is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?

Warranty

What is the minimum interest rate on an equity indexed annuity often based?

An index like Standard & Poor's 500

What annuity settlement option provides income payments to the annuitant for the duration of their life and also guarantees payment for a specified number of years?

Life income with period certain

If the annuitant dies before the annuitization period starts, what will beneficiary receive?

Either the amount paid into the annuity or cash value, whichever is greater

In annually renewable term policies, what is the annual premium based upon?

The insured's attained age

If the annuitant dies during the accumulation period, who will receive the annuity benefits?

The beneficiary

What does the term "level" refer to in level term insurance?

Face amount

What type of life insurance is best suited to cover a mortgage?

Decreasing term

Who receives income payments from an annuity?

Annuitant

What type of premium is charged on a straight life policy?

A level premium for the life of the insured

In variable universal life insurance, to what policy component does the term "variable" refer?

Cash value and death benefit

A whole policy that requires that the policyowner only pays premiums for a specified number of years is known as what kind of policy?

Limited-Pay Whole Life

In an annuity, the accumulated money is converted into a stream of income during which phase?

Annuitization period

Whose life expectancy is taken into consideration in an annuity contract?

The annuitant

What type of life insurance offers an applicant a cash value element?

Permanent Insurance

Mortality tables are used by insurance companies to predict what?

Life expectancy and the death rates for specific groups of individuals

If there is no named beneficiary for the annuity benefits, to which entity will the benefits be paid?

The annuitant's estate

How soon can income payments begin in an immediate annuity?

No later than 1 year from the time of annuity purchase

What type of annuity requires an agent to have a securities license?

Variable annuity

What policy loans are not available on term insurance?

There is no cash value to borrow against

An individual has a contract that will provide them with a certain amount of income for the rest of their life, however, this is not a life insurance policy. What type of contract does this person have?

Annuity

How long will a life annuity with a 15-year period certain pay?

For the life of the annuitant unless they die within the first 15 years of the annuitization period; then the payments will last 15 years

When does an adjustable life policy accumulate cash value?

When the premiums paid are more than the cost of the policy

What type of whole life insurance policies only requires a payment of premium at its inception, and in addition to providing insurance protection for the life of the insured, endows at the insured's age 100?

Single premium whole life

What type of insurance would perform the function of cash accumulation?

Whole Life Insurance

What are the two components of a universal policy?

Insurance and cash account

Which Universal Life option has a gradually increasing cash value and a level death benefit?

Option A

What policies would have an IRS required corridor or gap between the cash value and the death benefit?

Universal Life, Option A

What is the main difference between immediate and deferred annuities?

When the income payments begin

In a survivorship life policy, when does the insurer pay the death benefit?

Upon the last death

Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean?

The beneficiary will only receive payments of the interest earned on the death benefit

What happens to a policy's cash value under an extended term nonforfeiture option?

The cash value is converted to the same face amount as in the whole life policy

What nonforfeiture option is automatically selected by the company if not chosen by the policyowner?

Extended Term

What is the purpose of settlement options in life insurance policies?

to determine how the death benefit will be paid to the beneficiary

What is the life insurance policy rider that provides coverage on the insured's family members?

Other-Insured Rider

What is the advantage of reinstating a life insurance policy as opposed to applying for a new one?

Policy premium in a reinstated policy will be set according to the insured's original age