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A medical expense policy that establishes the amount of benefit paid based upon the prevailing charges which fall within the standard range of fees normally charged for a specific procedure by a doctor of similar training and experience in that geographic area is known as

usual, customary and reasonable

reasoning:

The usual, customary and reasonable approach for determining insurance benefits is based upon the fees normally charged for specific procedures in the geographic location where the services are provided.

In long-term care insurance, what type of care is provided with intermediate care?

occasional nursing or rehabilitative

Reasoning

Intermediate care is nursing and rehabilitative care provided by medical personnel for stable conditions that require assistance on a less frequent basis than skilled care.

Who determines the eligibility and contribution limits of an HRA?

the employer

Reasoning

Health Reimbursement Accounts (HRAs) are open to employees of companies of all sizes; however, the employer determines eligibility and contribution limits.

A couple owns a life insurance policy with a Children’s Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability?

proof of insurability is not required

Reasoning

If a Children’s Term rider is attached to a life insurance policy, children can be covered under the policy until they reach the maximum age stated in the policy. At that point, they can convert their coverage to a new policy without having to issue proof of insurability.

What type of insurance would be used for a Return of Premium rider?

increasing

Reasoning

The Return of Premium Rider is achieved by using increasing term insurance. When added to a whole life policy it provides that at death prior to a given age, not only is the original face amount payable, but also all premiums previously paid are payable to the beneficiary.

In health insurance, if a doctor charges $50 more than what the insurance company considers usual, customary and reasonable, the extra cost

is not covered

Reasoning

An insurance company will pay the usual, reasonable, or customary amount for a given procedure based upon the average charge for that procedure.

An insured purchased a variable life insurance policy with a face amount of $50,000. Over the life of the policy, stock performance declined, and the cash value fell to $10,000. If the insured dies, how much will be paid out?

$50,000

Reasoning

The cash value of a variable life insurance policy is not guaranteed. However, even if investments devalue significantly, they cannot be lower than the initial guaranteed benefit amount.

An employee insured under a group health policy is injured in a car wreck while performing her duties for her employer. This results in a long hospitalization period. Which of the following is true?

the group plan will not pay because the employee was injured at work

Because the employee's injuries were work related, the group health policy would not respond. The insured would have to rely on worker's compensation for coverage.

In a replacement situation, all of the following must be considered EXCEPT

assets

Reasoning

In a replacement situation the agent must be careful to compare the benefits, limitations and exclusions found in the current and the proposed replacement policy.

Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured?

option b

Reasoning

Under Option B the death benefit includes the annual increase in cash value so that the death benefit gradually increases each year by the amount that the cash value increases. At any point in time, the total death benefit will always be equal to the face amount of the policy plus the current amount of cash value.

Which of the following is TRUE regarding variable annuities?

the annuitant assumes the risks on investment

Reasoning

The payments that the annuitant invests into the variable annuity are invested in the insurer's separate account. The separate account under many annuities provides the annuitant with a dozen or more investment options ranging from "money market funds" to "growth stock funds" to "precious metal funds". Therefore, the annuitant assumes the risk of the investment.

The Federal Fair Credit Reporting Act

regulates consumer reports

The Federal Fair Credit Reporting Act regulates consumer reports, also known as consumer investigative reports, or credit reports.

Which is true about a spouse term rider?

the rider is usually level term insurance

Reasoning

The spouse term rider allows a spouse to be added for coverage. It is available for a limited amount of time, typically expiring at age 65. A spouse term rider (just like any other insured rider) is usually level term insurance.

In the event of a divorce, which of the following would allow a divorcee to continue receiving group health coverage under an insured spouse's plan for an additional 36 months?

cobra

Reasoning

Dependents of employees are eligible to receive group health insurance under the employee’s plan. If the employee and the dependent become legally separated or divorced, or if the employee dies, the dependent will be eligible for COBRA benefits for up to 36 months.

When an insured purchased her disability income policy, she misstated her age to the agent. She told the agent that she was 30 years old, when in fact, she was 37. If the policy contains the optional misstatement of age provision,

amounts payable under the policy will reflect

Reasoning

If an insured misstates their age upon policy application, the optional misstatement of age provision will change the payable benefit to that which would have been purchased at the insured's actual age.

Which of the following information about the applicant is NOT included in the General Information section of the application for insurance?

medical background

Reasoning

Part 1 - General Information of the application includes the general questions about the applicant, including name, age, address, birth date, gender, income, marital status, and occupation. The applicant's medical background is addressed in Part 2 - Medical Information.

All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT

it is a life contingency option

Reasoning

Under the installments for a fixed period annuity settlement option, the annuitant selects the time period for the benefits; the insurer determines how much each payment will be. This option pays for a specific amount of time only, and there are no life contingencies.

Which of the following is NOT covered under Plan A in Medigap insurance?

the medicare part a deductible

Reasoning

Medicare Supplement Plan A provides the core, or basic, benefits established by law. All of the above are part of the basic benefits, except for the Medicare Part A deductible, which is a benefit offered through nine other plans.

R has a life insurance policy that specifically excludes his death from being covered should it occur in an act of war. Where must this be spelled out in the policy?

on the face of the policy

Reasoning

This provision stipulates that life insurance policies must include a notice of any war or aviation exclusions. The notice must be prominently displayed on the face of the policy and clearly name and explain the exclusions.

In a long-term care policy, pre-existing condition limitations

must appear as a separate paragraph and be clearly labeled

Reasoning

If there are any limitations in the policy with respect to pre-existing conditions these limitations must appear in a separate paragraph in the policy labeled “Pre-existing Condition Limitations.” A long-term care policy cannot deny a claim for losses incurred more than 6 months from the effective date of coverage because of a pre-existing condition.

Which of the following would NOT be an acceptable interest rate on a policy loan?

10%

Reasoning

Policy loan interest rates may not exceed 8% per year.

All of the following are legitimate reasons for a group health insurance policy nonrenewal EXCEPT

any misrepresentation by the plan sponsor on the application for insurance

Reasoning

Only fraud or intentional misrepresentation of a material fact will be grounds for policy discontinuance or nonrenewal. In addition, the group plan sponsor must pay timely premium and comply with the minimum participation and employer contribution requirements from group health plans.

How must a replacing producer respond to an applicant wishing to replace existing life insurance?

The producer must provide the applicant with a Notice Regarding Replacement.

Reasoning

In a replacement transaction, a producer must present to the applicant a Notice Regarding Replacement, signed by both the applicant and the producer.

An insurer cannot transact business until it obtains a/an

certificate of authority

Reasoning

No insurance company may transact business in Missouri unless it first obtains from the Director a Certificate of Authority.

How long must an insurer maintain advertisements used in the sale of life insurance?

5 years

Reasoning

Insurers must maintain a record of all advertisements, testimonials, appraisals, and policy analyses for at least 5 years, or upon examination by the Director.

Which of the following is NOT required on an application for a variable life insurance policy?

A statement explaining the use of separate accounts in variable insurance

Reasoning

There is no requirement that applications for variable life insurance policies contain a statement explaining separate accounts to the applicant.

During replacement of life insurance, a replacing insurer must do which of the following?

Obtain a list of all life insurance policies that will be replaced

Reasoning

The replacing insurance company must require from the producer a list of the applicant’s life insurance policies to be replaced and a copy of the replacement notice provided to the applicant, and send each existing insurance company a written communication advising of the proposed replacement.

Which of the following is true of benefits provided in a health insurance policy for insureds that are diagnosed with diabetes?

Benefits may be subject to deductibles and copayments not greater than those applied to any other covered illness.

Reasoning

The care and treatment of diabetes must be provided, subject to deductibles and copayments that are applied to any other covered illness.

Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance?

Replacement rule

Reasoning

Anytime a new policy is issued that replaces or modifies existing insurance, a replacement form must be submitted to the ceding company.

What must an insurance company that is organized in, and has its home office in Missouri, do in order to legally transact insurance in the state?

Receive a Certificate of Authority from the Director

Reasoning

All insurance companies must obtain a Certificate of Authority from the Director before transacting insurance in Missouri.

An insured's health insurance carrier denied his claim for coverage. After weeks of going through their appeals process, he decides to request an independent review organization to look into the case. After initially reviewing the case, the organization requests several medical records from the insurance carrier. If the carrier receives the request on Monday April 2nd, by what day must the carrier send the requested documents to the review organization?

april 5

Reasoning

All documents requested by the reviewing organization must be received from the carrier within 3 business days of notification.

All of the following information about a customer must be used in determining annuity suitability EXCEPT

Beneficiary’s age.

Reasoning

To ensure suitability of annuity products, producers must obtain relevant information about the consumer’s age, income, financial status, tax status, financial experience and objectives. Beneficiary’s age is not a suitability factor.

Which of the following does NOT have to be disclosed in a long-term care (LTC) policy?

The aggregate amount of premiums due

Reasoning

All LTC policies must disclose and explain the renewability provisions. With regard to life insurance policies that provide an accelerated benefit for long-term care, the policy must include a statement to the effect that receipt of the accelerated benefits may be taxable, and that the insured should seek assistance from a personal tax advisor.

What is the purpose of the insurability provision in group life policies issued in this state?

To allow the insurer to require proof of insurability from individual insured

Reasoning

Under the insurability provision in group life policies, the insurer has the right to require an individual applicant to provide evidence of insurability as a condition for coverage

An insured has a life insurance policy with graded death benefits. In the first year of the policy, the death benefit is less than 50% of the face amount on the policy. What amount must the policy contain in accidental death benefits during the graded death benefit period?

full face amount of the policy

Reasoning

Life insurance policies with graded death benefits must provide accidental death benefits in an amount of at least the face amount of the policy during the graded death benefit period (this requirement only applies to policies that provide less than 50% of the face amount as a first-year death benefit).

Individual and group health policies in this state will cover which of the following procedures for women?

A mammogram every year for women age 50 and over

Reasoning

With individual and group health policies providing coverage on an expense-incurred basis, the benefits include at least: a baseline mammogram for women 35 to 39; a mammogram for women 40 to 49 every two years (or more based on a physician’s recommendation); a mammogram every year for women 50 and older; and a mammogram for any woman whose mother or sister has a history of breast cancer.

Colorectal screenings performed under individual and group health policies are required to be in compliance with the standards set by which of the following organizations?

american cancer society

Reasoning

All individual and group health policies must offer benefits for a colorectal cancer examination and laboratory tests for cancer for any nonsymptomatic person covered, all in accordance with the current American Cancer Society guidelines.