An individual is insured under a major medical plan with a $1,000,000 lifetime benefit. The plan has a $500 deductible and an 80% coinsurance. If the insured suffers a $50,500 medical expense during the calendar year, what is the remaining lifetime benefi
$960,000
$50,500 - $500 deductible
=$50,000.
$50,000 x 80%
=$40,000.
$1,000,000 lifetime benefit - $40,000
=$960,000 remaining.
Which of the following BEST describes a "partial disability"?
Unable to perform one or more job duties
The owner's cost basis for a non-qualified deferred annuity is typically the same as the
total premiums paid
Non-occupational disability coverage is designed for
employees who suffer non-work related disabilities, since work-related disabilities are covered by Workers' Compensation
Which of the following contracts offer deferred taxation, flexible payments, a guaranteed interest rate, and death benefits equal to the cash value?
flexible premium fixed annuity
A flexible premium fixed annuity offers flexible deposits, deferred taxation, a guaranteed minimum interest rate, and death proceeds equal to the cash value.
Under HIPAA requirements, eligibility for the pre-existing conditions exclusion waiver under new coverage is lost if
there is a break in coverage of more than 63 days
Laura added a children's rider to her life insurance policy. What type of coverage was added?
level term
Traditional individual retirement annuity (IRA) distributions must start by
April 1st of the year following the year the participant attains age 70 1/2
Distributions from a traditional IRA must be made by April 1 following the year the participant turns age 70 1/2 or an excise tax will be assessed.
Excise tax
...
Wyatt is shopping for life insurance and is mainly concerned with the policy's death benefit. Which index should he be looking at when making comparisons?
Net payment cost index
The net payment cost index is useful if one's primary concern is the amount of death benefits provided in the policy. It is helpful in comparing future costs, such as in 10 to 20 years, if one will continue to pay premiums and does
Net Gain Index
...
Cost Surrender Index
...
Guaranteed Renewable Index
Incapacity and dependency upon reaching the age limit
In Arizona, continuation of accident and health insurance plan coverage for a handicapped child beyond the age limit stated in the policy may require proof of the child's incapacity and dependency upon
An individual who purchases a modified life insurance policy expects
an improvement in future income
The purpose of modified whole life policies is to make the initial purchase of permanent insurance easier and more attractive, especially for individuals who have limited financial resources, but the promise of an improved
What must be given to a life insurance applicant when the agent receives an application and the initial premium?
Conditional receipt
Under the uniform mandatory provisions, an accident and health insurer has the right to request an autopsy
Only where not prohibited by law
Under the uniform mandatory provisions, an accident and health insurer has the right to request an autopsy only where not prohibited by law.
When using the needs approach for life insurance planning, a lump sum may be created to provide for all of the following EXCEPT
employee benefits
a lump sum may be created to provide for all of the following:
-final expenses
-charitable donation
-education
According to the Affordable Care Act (ACA), the proportion of premium revenues spent on clinical services and quality improvements is called the
medical loss ratio
The Medical Loss Ratio is the percent of premium an insurer spends on claims and expenses that improve health care quality.
Market essential coverageWhich of the following would NOT be appropriate for an immediate annuity?
...
Medical Rebate
...
Minimum issue reform
...
Under which circumstance can an insurance company offer group Health insurance?
The sponsoring group provides an employer-employee relationship
Terry suffers an injury at his workplace which is covered by workers compensation. Terry also has a medical expense insurance policy. Under medical expense insurance policies, losses that are covered by workers compensation are typically
excluded from coverage
Which of the following would NOT be appropriate for an immediate annuity?
A parent saving for a child's college
Which of the following is TRUE about a qualified retirement plan that is "top heavy"?
More than 60% of plan assets are in key employee accounts
A plan is considered to be top heavy if more than 60% of plan assets are attributable to "key employees" as of the last day of the prior plan year.
What is the MAXIMUM number of employees an employer may have for qualified medical savings accounts?
50 employees
Which of the following does TRI-CARE provide accident and health coverage to?
military families
TRI-CARE is a federal government accident and health plan which provides accident and health coverage to military families.
TRI-CARE
...
Individuals who participate in an HMO plan are called
subscribers
Regulations for variable insurance contracts are set by all of the following EXCEPT
State attorney general's office
Which statement regarding the cash value of a whole life insurance policy is correct?
Available to the policy-owner when policy has been surrendered
A life insurance policy owner would like a dividend option that results in a limited current outlay of funds. Which dividend option would be chosen?
reduction of premium payment
The reduction of premium payment option allows a policyowner to use the dividend to pay all or part of the next premium due on the policy.
A life insurance company just paid a $100,000 death benefit to a beneficiary. When the insured died, the cash value was $15,000 and the total premiums-paid equaled $10,000. How much of the proceeds will be added to the beneficiary's gross income for feder
nothing
When an insured dies, proceeds of a life insurance policy paid as a lump-sum death benefit to a beneficiary are exempt from federal income tax.
What is covered under a limited accident and health insurance policy?
Limited perils and amounts
What is the insurer responsible for when a producer is acting within the scope of authority granted in the agency contract?
Responsible for acts by the producer that are authority only
The significance of authority (whether express, implied, or apparent) is that it ties the company to the acts and deeds of its producers. The law will view the producer and the company as one an
Bert's spouse passed away recently. Bert was covered under his spouse's group family health insurance plan but now is covered under COBRA. How much of the active-employee cost may be passed on to Bert for continued coverage?
maximum of 102%
. Under COBRA, no more than 102% of the active-employee cost may be passed on to a surviving spouse for continued coverage.
How does a continuous premium whole life policy differ from a limited payment whole life policy?
The time period in which premiums will be paid
. The feature that separates a continuous premium whole life policy from a limited payment whole life policy is the length of time premiums will be paid.
What would be a valid reason for naming a trust as the beneficiary of a life insurance policy as opposed to naming an individual?
Management of proceeds would be provided
An organization that requires healthcare services to be provided by a network of physicians and hospitals is known as a(n)
HMO
An insurance company's failure to enforce a contract's provision is called a(n)
waiver
Medicare Part A coinsurance payments are covered by
Medicare Supplement Plan A
What is the federal income tax liability of a death benefit paid from a health insurance policy to a named beneficiary?
benefits are NOT taxable
. Federal income taxes will not likely be applied to death benefits paid to the beneficiary of an insured under a health insurance company.
Which provision makes the application part of the annuity contract?
entire contract clause
Terry receives long-term physical therapy at her residence. What type of insurance would cover this service?
Home health care
Home health care covers long-term physical therapy or nursing services provided at the insured's residence.
In what way is a life insurance policy affected by an accelerated benefit payment?
decreases the death benefit
Which statement concerning an adjustable life insurance policy is FALSE?
Evidence of insurability is required when there is a change in premium
the following statements concerning an adjustable life insurance policy are true:
-cash surrender is possible
-combines term and permanent insurance into a single plan
-an extra premiu
Respite Care coverage is typically found in a(n)
long term care policy
A Medicare Supplement policy is required to do which of the following?
Provide a 30 day free-look period
Which event triggers a deferred annuity to start making benefit payments to the annuitant?
when the contract is annuitized
Annuitized
...
A life insurance guaranteed insurability rider gives the insured the right, without proving insurability, to
periodically purchase additional insurance
Under a typical life insurance guaranteed insurability rider, an insured has the ability to purchase additional insurance at stated intervals without providing evidence of insurability.
When does the producer give a premium receipt for a life insurance application?
When the initial premium has been paid with the application
The Arizona Life and Disability Insurance Guaranty Fund protects an insured in the event of
the insurer's insolvency
Which statement regarding the joint and survivor life insurance settlement option is NOT true?
The amount of each installment is larger than the single life income option
The following are true regarding joint and survivor life insurance settlement options:
-age of beneficiaries play a factor when determining payment amounts
-income continues until
The insured's consideration given for a health insurance policy is
the first premium payment and the application
Notice of information practices must be given to a policyholder at least
every 3 years
Which of the following guidelines does NOT apply under the pregnancy provision of the Civil Rights Act?
Post-termination extensions of medical benefits must apply equally to pregnancy
What are reasonable and customary charges for health insurance primarily based on?
average charges within a geographic region
Under which marketing system do insurers solicit customers by mass media advertising and mail without the services of an agent?
direct response
Which settlement option makes minimum guaranteed dollar payments over a stated number of years?
fixed period
In Arizona, an insurer discontinues offering a particular type of small group medical coverage. Participants must receive advance notice of at least
180 days
In a staff model HMO, enrollees normally have which of the following pharmacy options available to them?
in-house pharmacy
An accident and health insurance policy's premium requirements are set forth in which of the following provisions?
consideration clause
Premium Mode Clause
...
When group benefits under COBRA have expired, a fully insured group policy can be converted to a(n)
individual health policy
Which of the following situations would a medical exam NOT be required for an individual health insurance applicant?
Applicant's family members have a history of cancer
the following situations require a medical exam:
-applicant was recently hospitalized
-applicant has not had a physical exam in a number of years
-applicant has NO prior health insurance
Periodic health claim payments MUST be made at least
monthly
Under an individual health policy, periodic claim payments must be made at least monthly. This applies primarily to disability income benefit payments.
What qualifies as acceptance of an insurance contract offer?
an issued policy
A survivorship life insurance policy usually covers how many lives?
2
Survivorship life insurance policies insure the lives of two people. It is a variation of a joint life policy that also insures the lives of two people.
Suriviorship Life insurance policy
...
Medicare Supplement insurance requires an individual to be at least how old for open enrollment?
no minimum age
ABC Partnership is a business with a limited number of partners. Which disability buy-sell agreement is best suited for this business?
cross purchase agreement
A disability buy-sell agreement best suited for businesses with a limited number of partners is called a cross purchase agreement.
John bought a deferred annuity on Mary. John amends the contract years later to name Tom as the recipient of the proceeds if Mary dies. Who is the annuitant for this contract?
mary
The owner of a single premium deferred annuity is entitled to do all of these EXCEPT
make additional payments into the annuity
owner is entitled to do all of the following:
-choose the length of payout period
-choose who will be the recipient of the annuity payments
-cash surrender the contract
How many employees must an employer have for the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) to apply?
20 or more
COBRA is a federal law that requires employers with 20 or more employees to provide former employees and their families a continuation of benefits under the employer's group health insurance plan.
Which of these must be disclosed in a universal life policy?
the policy's surrender charges
A Guaranteed Renewable provision allows
premiums which can only be increased per rate class
Reductions in coverage are one feature of _______ in Health insurance policies.
cost containment
An insured must notify an insurer of a medical claim within how many days after an accident?
20 days
After an insurance application has been originated, the producer normally
is the major personal contact to the insured
The contractual rights which allow the owner of a deferred annuity to surrender the cash value several years before the annuity date are called
non-forfeiture options
If the owner of a deferred annuity surrenders the contract several years before the annuity date in exchange for the cash value, the owner is said to be exercising contractual rights called "nonforfeiture options".
An insured, age 67, is covered under a disability income policy. What will the insurer normally require in order for the insured to continue coverage?
The insured must be actively at work for a specified number of hours per week.
Disability income policies require the insured to be actively working if coverage extends past age 65.
Under an adjustable life insurance policy, which of the following may NOT be changed without further underwriting?
person insured
Which of the following is NOT covered by a comprehensive long-term care policy?
acute care
What type of life insurance policy covers two or more persons and pays the face amount upon the death of the first insured?
joint life
The grouping of two or more small employers in order to obtain group health insurance at a favorable rate is called a multiple employer
trust
Grouping
...
Alliance
...
What kind of life policy typically offers mortgage protection?
decreasing term
Tim had an on-the-job accident and collects benefits from his individual disability income policy. Which factor could possibly reduce these benefits?
benefits he receives from workers compensation
When a disability income insurance policy covers disability arising out of a work-related illness or injury, the amount of disability income payments for an on-the-job injury may be reduced by benefits paid u
What does the term "field underwriting" refer to in the health insurance industry?
producers contact with the applicant
A producer must maintain customer records for how many years following the completion date of the insurance transaction?
3
What type of employee welfare plans are not subject to ERISA regulations?
Church Plans
the following are subject to ERISA regulations:
-major medical plans
-corporate plans
-qualified plans
Church Plans
...
A retirement plan that sets aside part of the company's net income for distributions to qualified employees is called a
profit-sharing plan
Rollover plan
...
403 (B) plan
...
Salary Reduction Plan
...
Tina is insured under a business overhead expense insurance policy. Which of the following would be covered if she were to become disabled?
Business property rental expense
Business overhead expense insurance is designed to cover certain overhead expenses that continue when the business owner is disabled.
Life insurance premiums are computed on what three factors?
mortality, interest, expenses
What is the name of the period of time during which a new employee is ineligible for group Health insurance coverage?
probationary period
Larry wants to purchase an individual disability income policy to provide continuous income while disabled. He is also covered by a two-month wage continuation benefit from his employer. What should the policy elimination period be for his individual poli
60 days
Which of these plans allow a participant to choose either a network or non-network provider at the time when medical care is needed?
point-of-service
A point-of-service-plan allows an insured to choose either a network or an out-of-network provider at the time care is needed.
A Keogh plan is a(n)
qualified plan for the self employed
Security laws passed by Congress are enforced by which Federal agency?
security and exchange commission
If a group endorses an accident and health insurance product in an advertisement, the public must be made aware of
Any control by the insurer over the group