At what point must a life insurance applicant be informed of their right that fall under the Fair Credit Reporting Act?
upon completion of the application
Who elects the governing body of a mutual insurance company?
policyholders
An insurance applicant MUST be informed of an investigation regarding his/her reputation and character according to the
Fair Credit Reporting Act
What type of reinsurance contract involves two companies automatically sharing their risk exposure?
Treaty
The stated amount or percent of liquid assets that an insurer must have on hand that will satisfy future obligations to its policyholders is called
Reserves
Which statement is TRUE regarding a group accident and health policy issued to an employer?
Neither the employer or employee are policy owners
The employer is issued a certificate of coverage and each employee receives a policy * The employer receives the
The employer receives the policy and each employee is issued a certificate.
G is an accountant who has ten employees and is concerned about how the business would survive financially if G became disabled. The type of policy which BEST addresses this concern is
Business Overhead Expense
Disability Income
Key Employee Life
Contribu
Business Overhead Expense-- this policy's purpose is to cover certain overhead expenses that continue when the business own is disabled.
How does group insurance differ from individual insurance?
Group insurance differs from individual insurance in that it provided coverage at a lower cost.
The difference between group insurance and blanket health policies is
Blanket health policies do not issue certificates.
Which of the following statements BEST describes how a policy that uses the "accidental bodily injury" definition of an accident differs from one that used the "accidental means" definition? *double indemnity
benefits are taxable
more restrictive *less re
Less restrictive. A policy that uses "accidental bodily injury" definition of an accident is less restrictive than the one that uses the "accidental means" definition.
Which of the following characteristics is associated with a large group disability income policy?
no waiting periods
no medical underwriting
no elimination periods
no limit of benefits
No medical underwriting. A large group disability income policy can be distinguished by no medical underwriting.
Which contract permits the remaining partners to buy-out the interest of a disabled business partner?
A disability buy-sell plan allows the remaining partners to buy out the interest of the disabled business partner.
An insurance company would MOST likely pay benefits under Accidental Death and Dismemberment policy who which of the following losses?
loss of life due to a heart attack
loss of eyesight due to an accidental injury *loss of the spleen due to an accidental
Loss of eyesight due to an accidental injury.
XYZ Company pays the entire premium for its group health plan. The MINIMUM percentage of eligible employees that must be covered is
25%
50% *75%
or *100%
Most noncontributory health plans require 100% participation by eligible employees.
P is a new employee and will be obtaining non-contributory group Major Medical insurance from her employer. Which of the following actions must she take during the open enrollment period?
Authorize for payroll deductions
Agree to a physical examination
Si
A new employee must sign an enrollment card during the open enrollment period.
A medical care provider which typically delivers health services at its own local medical facility is know as a
Health Maintenance Organization
Regional Provider
Multiple Employer Trust
Preferred Provider Organization
Health Maintenance Organization. HMO's traditionally provide services to its members at its own local health care facilities.
Which type of provider is know for stressing preventative medical care?
Multiple Employer Welfare Arrangements (MEWA)
Major medical provider
Health Maintenance Organizations (HMO's)
Preferred Provider Organizations (PPO's)
The health provider that stresses preventative medical care is know as a Health Maintenance Organization.
Which of the following BEST describes how a Preferred Provider Organization (PPO) is less restrictive than a Health Maintenance Organization (HMO)?
Typically not subject to deductibles
Not regulated by the federal government
More benefits available
More p
PPO's normally provide a wider choice of physicians and hospitals.
The situation in which a group of physicians are salaried employees and conduct business in an HMO facility is called a(n)
closed panel
open panel
co-op panel
capitation panel
Closed panel. This is when an HMO is represented by a group of physicians who are salaried employees and work out of the HMO's facility.
Medicare is intended for all of the following groups EXCEPT
those enrolled as a full-time student
those receiving Social Security disability benefits for at least 24 months * Those afflicted with chronic kidney failure
*those 65 and older
Those enrolled as a full-time student. All of these groups of people are typically eligible for Medicare except full-time students.
Medicare Part A and Part B do NOT pay for
dental work
hospitalization *skilled nursing care
*physical therapy
Dental work --dental services are not covered by Medicare Part A or B
The health insurance program which is administered by each state and funded by both the federal and state governments is called
long-term care
Medicaid
Medicare Supplemental Program
Medicare
Medicaid is funded by both the federal and state governments and administered by the individual states.
J is a subscriber to a plan which contracts with doctors and hospitals to provide medical benefits at a predetermined price. What type of plan does J belong to? * Multiple Employer Welfare Arrangement
Multiple Employer Trust
Health Maintenance Organizatio
A Health Maintenance Organization (HMO) contracts with doctors and hospitals to provide medical benefits to subscribers at a predetermined price.
Which of the following statements is true about most Blue Cross/Blue Shield organizations?
They are the same as private insurance companies
They are federally sponsored *They are nonprofit organizations
*They are owned by hospitals and physicians
They are nonprofit organizations. Most BC/BS organizations are considered nonprofit.
What is the maximum Social Security Disability benefit amount an insured can receive? *50% of the insured's Primary Insurance Amount (PIA)
75% of the insured's PIA
100% of the insured's PIA
*100% of the insured's PIA minus any monies received from a retir
100% of the insured's PIA. The MAXIMUM Social Security Security Disability benefit an insured may receive is equal to 100% f the insured's Primary Insurance Amount
Which of the following health insurance policy provisions specifies the health care services a policy will provide?
Insuring clause
Usual, Customary and Reasonable clause
Consideration Clause
Benefit clause
The Insuring Clause identifies the specific type of health care services that are covered by a policy.
Which of the following provisions specifies how long a policy owner's health coverage will remain in effect if the policy owner does not pay the premium when it is due?
Grace Period
Consideration
Waiver of Premium
Reinstatement
The Grace Period is the additional period of time after a premium payment is due that will allow the policy to remain in force in the event of nonpayment.
The provision that defines to whom the insurer will pay benefits to is called
Entire Contract
Proof of Loss
Claim Forms
Payment of Claims
The Payment of Claims provision in a Health Insurance policy states to whom claims will be paid.
With Accidental Death and Dismemberment policies, what is the purpose of the Grace Period? * Gives the policy owner additional time to pay past due premiums
*Gives the policy owner additional time to file a lawsuit
*Gives the policy owner additional time
Gives the policy owner additional time to pay any past due premiums-- the purpose of the Grace Period is to give the policy owner time to pay any past due premiums.
Which of these is considered a mandatory provision?
Payment of Claims
Insurance with Other Insurers
Misstatement of Age
Change of Occupation
Payment of Claims is considered a mandatory provision and directs where the claim benefits will go. The others are considered optional provisions.
If an insurance company issues a Disability Income policy that it cannot cancel or for which it cannot increase premiums, the type of renewability that best describes this policy is called
noncancellable
conditionally renewable *cancellable
*guaranteed re
Noncancellable. A noncancellable policy is one which the insurance company cannot cancel and which premiums cannot be increased.
What is the purpose of the Time of Payment of Claims provision? * Requires the insured to wait 60 days after submitting Proof of Loss before filing a lawsuit
*Prevents delayed claim payments made by the insurer
Requires a probation period for each claim f
The purpose of the Time of Payment of Claims provision is to prevent the insurance company from delaying claim payments.
T files a claim on his Accident and Health policy after being treated for an illness. The insurance company believes that T misrepresented his actual health on the initial insurance application and is, therefore, disputing the claim's validity. The provis
The Time Limit on Certain Defenses (Incontestability) provision limits the time during which the insurance company may challenge the validity of an insurance claim on the basis of a misstatement made on the insured's application.
P is a Major Medical policy owner who is hospitalized as a result of injuries sustained from participating in a carjacking. How will the insurer most likely handle this claim?
Claim will be denied and policy terminated
Claim will be partially paid * Claim
The claim will be denied. If a person is insured while committing an illegal act, health insurance will not cover the expense of the injury.
Which health policy clause specifies the amount of benefits to be paid?
Insuring
Consideration
Free-look
Payment mode
Insuring. In an Accident and Health policy, the insuring clause states the amount of benefits to be paid.
An agent takes an individual Disability Income application, collects the appropriate premium, and issues the prospective insured a conditional receipt. The next step the insurance company will take is to
issue the policy only when the initial premium chec
With a conditional receipt, the insurance company will complete standard underwriting procedures before making a decision about whether to insure the applicant.
Which of the following actions will an insurance company most likely NOT take if an applicant, who has diabetes, applies for a Disability Income policy?
Issue the policy with a diabetes exclusion
Issue the policy with an altered Time of Payment of Claims
The correct answer is "Issue the policy with an altered Time of Payment of Claims provision". The insurance company may take all of these actions EXCEPT issue the policy with an altered Time of Payment of Claims provision.
Which of the following are NOT managed care organizations?
Point-of-Service plan (POS)
Preferred Provider Organization (PPO)
Medical Information Bureau (MIB)
Health Maintenance Organization (HMO)
Medical Information Bureau (MIB) is the only entity that is not a managed health care organization.
Which of the following statements about the classification of applicants is INCORRECT?
Substandard applicants are never declined by underwriters
Substandard applicants are occasionally declined by underwriters
Preferred risk applicants typically have bett
A substandard risk is below the insurer's average risk guidelines. An individual can be rated substandard for a number of reasons and can even be rejected outright.
A prepaid application for individual Disability Income insurance was recently submitted to an insurer. When the insurer received the Medical Information Bureau (MIB) report, the report showed that the applicant had suffered a stroke 18 months ago, some th
The insurance company would NOT send a notice to the MIB that the applicant was decline. The MIB does not need to be notified that the coverage was declined.
Under the Unfair Trade Practice law, agents may be found guilty of defamation if they make a false statement that is intended to
malign another insurance company
mislead a prospect about a policy's term of coverage
misrepresent the benefits payable under
Agents making a false statements intended to malign another insurance company may be found guilty of defamation.
Anyone who makes a fraudulent statement on an insurance application in order to obtain money benefits from an insurance company has committed the act of
twisting
malfeasance
coercion
misrepresentation
Making a fraudulent statement on an insurance application would be considered an act of misrepresentation.
If an agent tells an applicant that the insurance policy is like a share of stock, the agent may be guilty of
defamation
rebating
misrepresentation
coercion
If an agent tells an applicant that the insurance policy is like a share of stock, the agent may be guilty of misrepresentation.
Which of the following is an unfair claims practice?
*Providing a claims form within 15 days
*Failing to effectuate prompt, fair, and equitable settlements of claims
*paying a claim after a reasonable investigation
*Establishing specific standards to sett
Failing to effectuate prompt, fair, and equitable settlements of claims is considered to be an unfair claims practice.
A stock insurance company is BEST defined as an incorporated company that has its capital divided into shares and
specializes in selling insurance to stockholders
has its governing body elected by its policyholders *is owned exclusively by its policyholde
Owned exclusively by its shareholders. A stock insurance company is best defined as an incorporated company that has its capital divided into shares and is owned exclusively by its shareholders.
Which of the following is an example of defamation?
*a pamphlet listing a competitor's financial rating
a brochure including an untrue statement regarding a competitor's ability to pay claims
A verbal statement of a competitor's complaint ratio *A truthfu
An example of defamation would be issuing a brochure that contains untrue statements regarding a competitor's ability to pay claims.
Inducing or attempting to induce an insured person through misrepresentation to lapse, forfeit or surrender insurance is
rolling over
rebating
twisting
coercion
Twisting is inducing or attempting to induce any insured person through misrepresentation to lapse, forfeit, or surrender insurance is considered twisting.
Which of the following actions by an insurance company is considered an unfair claims settlement practice?
Requiring an insured to give a statement under oath
Requiring the insured to submit a proof of loss statement before paying a claim
Requesting a thi
Denying an insured's claim without indicating the basis of denial under the policy is considered an unfair claim settlement practice.
An agent who tells a client that dividends are guaranteed may be guilty of
fraud
rebating
misrepresentations
slander
Misrepresentation. An agent who tells a client that dividends are guaranteed may be guilty of misrepresentation.
A stock insurance company is owned by its
directors
stockholders
agents
insureds
A stock insurance company is owned by its stockholders.
An agent who tells claimants that their rights may be impaired if they fail to complete a release form within a given period of time could be guilty of
defamation
rebating
coercion
discrimination
In this situation, the agent may be guilty of coercion.
A creditor who requires a debtor to obtain insurance from a particular company or agent as a condition for a loan is guilty of
coercion
fraud
rebating
boycotting
A creditor who requires a debtor to obtain insurance from a particular company or agent as a condition of the loan is guilty of coercion.
A certificate of authority does which of the following?
Authorizes the insurance company to transact business in AR
Gives the commissioner the authority to make insurance laws in AR
Authorizes the agent to sell insurance
Authorizes the customer to complet
Authorizes the insurance company to transact business in Arkansas. A certificate of authority authorizes the insurance company to transact business in Arkansas.
A foreign company operating in Arkansas is a company incorporated or organized under the laws of
Arkansas
Florida
Canada
Europe
Florida. Foreign insurance company is a company whose home office is located in another state. Therefore, a company chartered in Florida would be a foreign company in Arkansas.
An alien insurance company is defined as one formed in
AR
Florida
New Mexico
Europe
Europe. Alien insurance company is a company that is charted and organized in any country other than the US. Therefore, a company chartered in Europe would be an alien company in Arkansas.
In AR, an insurance company must do which of the following to terminate a producer's appointment?
*Notify the commissioner within 30 days
*Notify the Agent within 30 days
*Notify the commissioner within 15 days
*Notify the policy holders within 30 days
Notify the commissioner within 30 days. In AR, an insurance company must notify the commissioner within 30 days to terminate a producer's appointment.
All of the following are requirements to become an insurance producer in the state of AR except:
Be at least 18 years of age
Completed a Prelicensing course
Passed the state exam for the line of authority sought
Graduate High School
All of these are requirements to become an insurance producer in the state of AR except graduate high school.
If a producer knowingly violates a cease and desist order issued by the Arkansas Commissioner for unfair trade practices, the producer may receive which of the following penalties for each violation?
$10,000 for each violation not to total more than $50,000. If a producer knowingly violates a cease and desist order issued by the Arkansas Commissioner for unfair trade practices, the producer may receive a penalty of $10,000 for each violation, not tota
In Arkansas, the Commissioner may place on probation, suspend, revoke, refuse to renew, or deny a license for all of the following reasons EXCEPT:
Forging a name to an insurance document or application
Filing bankruptcy
Failing to comply with a court orde
In AR,the Commissioner may place on probation, suspend, revoke refuse to renew, or deny a license for all of these reasons EXCEPT filing bankruptcy.
In Arkansas, the minimum number of days the insurance company must allow for a grace period on a life policy is
10 days
15 days
20 days
30 days
30 days. IN AR the minimum number of days the insurance company must allow for a grace period on a life policy is 30 days.
Replacement is involved in all of the following situations EXCEPT when
Depleting Cash value in an existing policy and applying for a new one
Taking a reduced paid up option for a policy and applying for a new one
Maintaining an existing policy and applyin
Replacement is involved in all of the following situations EXCEPT when maintaining an existing policy and applying for a new one.
The purpose of the Guaranty Fund is to *Protect consumers from an insurance company's insolvency
Issue and maintain insurance producer records
Determine the appropriate level for agent commissions *Assist in the subsidy of life insurance premiums for seni
The purpose of the Guaranty Fund is to protect consumers from an insurance company's insolvency.
What group term life feature permits an individual to depart from the group and continue to be covered without providing evidence of insurability?
Commingling
Conversion
Renewing
Replacing
Conversion permits an individual to depart from the group and continue to be covered without providing evidence of insurability.
Which of the following parties must provide an insured with proper disclosure concerning the replacement of an insurance company?
Producer
Applicant
Underwriter
Commissioner
The Producer must provide an insured with proper disclosure concerning the replacement of an insurance company.
In AR, what is the maximum amount of interest an insurance company can charge a consumer on a policy loan?
5.00%
Prime Plus 2.99%
8,00%
12.25%
8.00% In AR, the maximum amount of interest an insurance company can charge a consumer on a policy loan is 8.00%.
How often must an agent complete continuing education to maintain their license in Arkansas?
Every year
Every 2 years *Never as long as they are working for an authorized insurance company
* Every 4 years
2 years. An agent must complete continuing education every 2 years in order to maintain their license in AR.
What is the minimum age for a person to enter in to an insurance agreement in the state of Arkansas?
15
18
18
21
18. A person must be at least 18 years of age to enter into an insurance agreement in the state of AR
In Arkansas, how long is the "free look" period?
10 days
15 days
20 days
30 days
10 days. The "free look" period in Arkansas is 10 days.
What is the maximum tax rate a beneficiary will be charged on proceeds collected in the state of AR?
0%
5%
10%
20%
0%. In AR, a beneficiary will not be taxes on proceeds collected.
In AR, a producer who moves to a new address must notify the Commissioner of the address changes within how many days?
15 days
30 days
45 days
60 days
30 days. In AR, a producer who moves to a new address must notify the Commissioner of the address change within 30 days.
What is the MINIMUM number of Activities of Daily Living (ADL) an insured must be unable to perform to qualify for Long Term Care benefits?
1
2
3
4
2. A qualified Long Term Car policy must stipulate that the insured be incapable of performing at least two of the ADL's without assistance for at least 90 days to qualify for benefits.
If a retiree on Medicare required five hospital stays in one year, which policy would provide the best insurance for excess hospital expenses?
Long-term care
Indemnity
Medicare Supplement
Medicaid
Medicare Supplement. IN this situation, a Medicare Supplement policy would provide the subscriber the best coverage for excess charges.
Which of the following will a Long Term Care plan typically provide benefits for?
disability income
death
unemployment
home health care
Home health care. A Long Term Policy will typically pay for home health care.
The individual most likely to buy a Medicare Supplement policy would be a(an)
*unemployed 64-year old female
*62-year old male covered by Medicaid
*68-year old male covered my Medicare
*uninsured 60-year old male
68-year old male. Medicare Supplement are available to those covered by Medicare.
Long Term Care policies will usually pay for eligible benefits using which of the following methods?
Delayed
Fee for service
Expense incurred
Respite
Expense incurred. Most long-term care policies pay on a reimbursement (or expense-incurred) basis, up to the policy limits.
Which of the following health insurance policy provisions specifies the health care services a policy will provide?
Insuring clause
Usual, Customary, and Reasonable clause
Consideration clause
Benefit Cls.
Insuring Clause. The insuring clause identifies the specific type of health care services that are covered by that policy.
S filed a written Proof of Loss for a Disability Income claim on September 1. The insurance company did not respond to the claim. S can take legal action against the insurer beginning
Sept. 21
Oct 16
Nov 1
Dec 1
November 1. The insured must wait 60 days after written proof of loss before legal action can be brought against the company.
Which of the following statements describes what an Accident and Health policy owner may NOT do?
file a covered claim
assign ownership
cancel coverage
adjust the premium payments
Adjust the premium payments. The owner of an Accident and Health policy may not change the premium amount.
The policy provision that entitles the insurer to establish conditions the insured must meet while a claim is pending is
Grace Period
Physical Exam and Autopsy
Entire Contract
Time Limit on Certain Defenses
Time Limit on Certain Defenses. This provision limits the period during which an insurer can deny a claim based on a misstatement made by the insured.
What must the policy owner provide to the insurer for validation that a loss has occurred?
Proof of Coverage
Proof of Claim
Proof of Loss
Proof of Payment
Proof of Loss statement must be provided to an insurance company to show that a loss actually occurred.
What is considered to be a characteristic of a Conditionally Renewable Health Insurance policy?
*Premiums may increase at time of renewal
*Premiums may increase at any time
*Policy may be renewed at the discretion of the insured
*Policy may be amended by
Premiums may increase at time of renewal.
A Conditionally Renewable Health Insurance policy can increase premiums at time of renewal.
M's insurance company denied a reinstatement application for her lapsed health insurance policy. The company did not notify M of this denial. How many days from the reinstatement application date does the insurance company have to notify M of the denial b
45 days. Health insurance will automatically be placed back in force if the insurer fails to notify an applicant within 45 days that the reinstatement application was denied.
With Optionally Renewable Health policies, the insurer may
renew the policy only if no claims have been filed the previous year
renew the policy only with the insured's consent
review the policy whenever they please and determine whether or not to renew i
With an Optionally Renewable policy, the insurance company may review the policy annually and choose whether or not to renew it.
If an insurance company issues a Disability Income policy that it cannot cancel or for which it cannot increase premiums, the type of renewability that best describes this policy is called
noncancellable
conditionally renewable
cancellable
guaranteed rene
Noncancellable. A noncancellable policy is one which the insurance company cannot cancel and which premiums cannot be increased.
A Disability Income policy owner recently submitted a claim for a chronic neck problem that has now resulted in total disability. The original injury occurred before the application was taken 5 years prior. The neck injury was never disclosed to the insur
Claim will be paid and coverage will remain in force. After a policy has been in force for 2 (sometimes 3) years, it enters the incontestable period, in which the insurer may not deny a claim based on information not disclosed at the time of application.
Pre-hospitalization authorization is considered an example of
managed care
PPO care *Medicaid
*Major Medical Insurance
Managed care. Pre-hospitalization authorization is the insurer's approval of an insured entering a hospital. Many health policies require this as part of an effort to manage costs.
Which of the following BEST describes how pre-admission certifications are used?
Used to assist in underwriting
used to prevent nonessential medical costs
Used to minimize hospital lawsuits
used to help process claims
Used to prevent nonessential medical costs.