Xcel Final Exam Overview

Xcel Final Exam Typically, Long-Term Disability benefits are coordinated with which benefit plan? Social Security 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 adverse selection A non-contributory health insurance plan helps the insurer avoid 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 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? must complete the required pre-licensing education within 12 months of license application 12 months pre-existing conditions may be excluded for a maximum of 12 months from the date of enrollment. benefit schedule 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 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 Giving the insured an article of merchandise printed with the producer's name costing $5 Which of the following is NOT an illegal inducement? $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 change of occupation Which of the following is NOT a required provision in an accident and health insurance policy? the change of occupation provision is considered an OPTIONAL provision Funded by federal, sate, and local taxes Which of these statements about Medicaid is CORRECT? Medicaid is funded by federal, state, and local taxes but is administered by each state. Marital Status All of these are considered key factors in underwriting life insurance EXCEPT Correct: tobacco use, health history, age The time limit for filing claim disputes is addressed in which provision of an accident and health policy? legal actions Health reimbursement Arrangement plan All of the following plans allow for employee contributions to be taken on a pre-tax basis EXCEPT employers contribute to health reimbursement Arrangement planz (HRA's), not employees. 1 / 13 $5 pen Which of the following gifts from a producer would NOT be considered rebating? A producer quoting life insurance may give an applicant an article of merchandise having an invoice value of $5.00 or less. Written notice for a health claim must be given to the insurer ___ days after the occurrence of the loss. 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? 20 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. Human life value approach Which approach predicts a person's earning potential and deterThe human life value approach predicts an individual's future mines how much of that amount would be devoted to dependents? 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 Guaranteed lifetime withdrawal benefit Phil is shopping for an annuity that guarantees he CANNOT outThe guaranteed lifetime withdrawal benefit normally requires a live the benefits. Which of these benefit options would he choose? fee, but it ensures that the income benefit will be paid for life without actually annuitizing the contract. average age Which of these factors would an insurer consider when determining whether to accept a group life plan? 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) Child term rider Jonas is a whole life insurance policyowner and would like to add coverage for his two children. Which of the following products A child term rider is a level term insurance that can be added to would allow him to accomplish this? an existing policy. The typical long-term care insurance policy is designed to provide a minimum of __ year(s) of coverage. 1 How many employees must an employer have for a terminated employee to be eligible for COBRA? 20 Term Which of the following policies does NOT build cash value? CORRECT: straight life, endowment, variable life Life annuity Which type of annuity stops all payments upon the death of the annuitant? 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 Noncancellable Disability Income plans which require that the insurer can NEVER change or alter premium rates are usually considered A noncancellable policy cannot be cancelled nor can its premium rates be increased under any circumstances. 2 / 13 preferred provider organization plan Coordination of Benefits regulation applies to all of the following plans EXCEPT 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 $900 deductible and a 90% coinsurance provision. She incurs $1,500 in covered health care services. How much will her group insurance In this situation, the group insurance carrier will pay 90% of the carrier pay? 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 must have an appointed guardian To receive proceeds from a death benefit, a minor 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. Home health care Which of the following services MUST be provided by HMO plans? 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 $4,000 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%, In this situation, Ron may increase the face value of his policy by how much may Ron increase the face value of the policy? $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 Calendar-year deductible Ted has a health insurance plan that requires him to pay a specific sum out of pocket before any benefits are paid in a calendar year. A calendar-year deductible is paid before any benefits are paid in Which of these does his health plan have? a calendar year. An insurer would be committing Unfair Discrimination if coverage was denied based upon A licensee who is required to take continuing education MUST include how many ethics coursework hours? marital status 3 3 / 13 A licensee is required to take 24 hours of continuing education every two years. Of the 24 hours, 3 must be in ethics Barbara's policy includes a rider which allows her to purchase additional insurance at specific dates or events without evidence of insurability. This rider is called a(n) Guaranteed insurability rider When calculating the amount of life insurance needed for an the family's Financial objectives if the income earner were to die income earner, what has to be determined when using the Needs or become disabled Approach? Dorian exercised a nonforfeiture option by using his life policy's cash value to purchase an extended term insurance option. When the term insurance expires, the protection ends When the insured gives birth, coverage for eligible newly born children consists of coverage of injury or sickness including birth abnormalities Annuities are intended to create an estate Which of these is NOT considered to be a purpose of an annuity? 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 it allows for cash advances to be paid against the death benefit if life insurance policy? 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 optional renewability clause A clause that allows an insurer the right to terminate coverage at An optional renewability clause allows an insurer the unrestricted any anniversary date is called a(n) right to terminate coverage at any anniversary or at any premium due date. Number of children Which of these is NOT considered to be a risk factor in life insurance underwriting? CORRECT: health history, hobbies, occupation the benefit can be offered as a writer and a specific extra cost or may be at no cost Which of these is NOT a characteristic of the Accelerated Death CORRECT: the face amount and policy premium are not affected Benefit option? by the payment, before payment of the benefit is made, specific conditions must exist, such as suffering from a terminal illness, there may be a dollar amount on the maximum benefit Prosthodontics The branch of dentistry which deals with the replacement of missing parts is called 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 How is a health provider reimbursed if they do NOT have an agreement in place with the insurance company? With a usual, customary, and reasonable fee Which of the following provides Medicare supplement policies? Private insurance companies Sonya applied for a health insurance policy on April 1. Her agent submitted the information to the insurance company on April 6. May 30 She paid the premium on May 15 with the policy indicating the effective date being May 30. On which date would Sonya have The "effective date" is the health insurance coverage start date. coverage? 4 / 13 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 adjustable life A policyowner may change two policy features on what type of life insurance? 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 Number of claims exceed threshold CORRECT: intentional misrepresentation, noncompliance with minimum participation requirements, small employer insurer no Small employer group coverage is NOT required to be renewed in longer offers that type of coverage each of the following circumstances EXCEPT All of these are situations that allow the insurer to NOT renew small employer group coverage EXCEPT "Number of claims exceed threshold". Full-time nursing care Tom has a home health care benefit and is confined to his home. Which of these benefits is NOT typically covered? Home health care is care provided in the insured's home, usually on a part-time basis. Which of the following types of deductibles would apply a single deductible to both medical and dental insurance coverage? integrated deductible Disclosure authorization response All of these are typically sources of underwriting information for life or health insurance EXCEPT CORRECT: Consumer reports, Medical Information Bureau (MIB) reports, Attending physician's statement (APS) Kathy's annuity is currently experiencing tax-deferred growth until she retires. Which phase is this annuity in? Accumulation period 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 A person providing insurance advice to a person or business for a an insurance counselor in the State of Michigan? fee nonaffiliated third party A licensee can disclose a consumer's policy account number to all of the following EXCEPT a 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. No tax payment needed What is the tax liability for employer contributions in Health Savings Accounts (HSA's)? 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 lasik surgery A common exclusion with Vision plans is INCLUDED: eyeglass frames, the examination, contact lenses additional premiums CORRECT: loss of earnings, out-of-pocket expenses, repair and 5 / 13 replacement costs In the Michigan Insurance Code, Chapter 45, insurance fraud defines financial loss as all of the following EXCEPT All of these are considered a financial loss under Chapter 45 of the Michigan Insurance Code EXCEPT for "additional premiums". Which policy feature makes a universal life policy different from a whole life policy? A flexible premium schedule An insurer must furnish to a claimant forms for filing proof of loss within ___ days upon receiving a notice of claim. 15 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 In an employer-sponsored contributory group Disability Income 60% of the benefit plan, the employer pays 60% of the premium and each employee pays 40% of the premium. Any income benefits paid are taxed to 60% of an income benefit is taxed to the employee because 60% the employee at of the premiums paid come from the employer. Under the Health Insurance Portability and Accountability Act employees waiting period for coverage of a pre-existing condition (HIPAA), the employee's new Group Health Plan will verify Credcan be reduced under the new employers Health Plan itable Coverage so that the maintain the same coverage and increase premium The election of COBRA for continuation of health coverage will Continuation of coverage under COBRA results in the same coverage with increased premiums up to 102% of prior premium. Underwriting What activity does NOT require an insurance producer's license? CORRECT: soliciting, negotiating, selling Rob purchased a standard whole life policy with a $500,000 death $500,000 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 In this situation, the death benefit would be the $500,000 face value of the policy equals $250,000. Rob recently died at age 60. amount. The death benefit would be A rehabilitation benefit is intended to prepare the insured to return to employment what amount will be paid under a policy where the insured misAn amount the premium would have purchased at the correct age stated his/her 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 coverage is limited to a single devastating disease Which of the following statements is NOT true regarding a Critical CORRECT: pays a lump sum to the insured upon the diagnosis Illness Plan? 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 from insurer to insurer and no cash is received by the policyowner a tax-free section 1035 exchange of a life insurance policy to a different policy is permitted if it occurs 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. 6 / 13 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) employer who has the option to renew a small employer Health Plan? 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 $140 A policyholder has a major medical plan with a 80%/20% coinsurance and a deductible of $75. If the insured has previously met her because the insured has previously met her deductible, the eligible deductible and receives a bill for $175, how much will the insurer expenses for a claim is the entire $175. The insurance company pay? 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 converting a group plan to permanent life insurance requires the conversion being applied for within 31 days of termination insurance sales calls the Do Not Call Registry offers exemptions for calls placed from all of the following EXCEPT CORRECT: Charities, political organizations, surveys Taxable income. ____________ is NOT an element of a valid contract. Disability insurance benefits from a group policy paid for by an employer is considered taxable income. a Medicare supplement basic benefit is the first 3 pints of blood per year James is the insured on a life insurance policy you were his age was misstated on the application. Which of the following is CORRECT regarding the death benefit amount? the death benefit paid will be what the premium would have purchased at the correct age Justin is receiving disability income benefits from a group policy paid for by his employer. How are these benefits treated for tax purposes? taxable income disability insurance benefits from a group policy paid for by an employer is considered taxable income. in the state of Michigan, properly filed Health claims that are not timely paid require the insurer to pay simple interest from a date 60 days from satisfactory proof of loss at the rate of 12% per annum which form of insurer has shareholders? stock company the deeds and actions of her producer indicate what kind of authority? apparent 7 / 13 what happens to interest earned if the annuitants dies before the payout start date? it is taxable premiums paid that exceeds 7.5% of an insured's Adjusted Gross Income (AGI) are tax-deductible when paid for which of the following plans? qualified long-term care plan a renewable term life insurance policy allows the policyowner the right to renew the policy without producing proof of insurability the acceptance of the credit Life Application requires the submission of a Certificate of Insurance to the insured Within ______ days. 30 according to the Michigan Insurance Code, which of the following submit to the replacing insurer a list of all life insurance policies or MUST a producer do when replacing a Life Insurance policy? annuity contracts proposed to be replaced excludes payments for a short-term illness or injury the waiting period for disability insurance policy waiting period = elimination period accumulate without interest all of these are valid policy dividend options for life insurance policy owner EXPECT CORRECT: cash outlay to the policyowner, reduction in policy premium buy additional insurance coverage people with higher loss exposure have the tendency to purchase insurance more often than those at average risk. This is called adverse selection 2 years when can a life policy no longer be canceled for non-fraudulent Miss statements after its date of issue? the contestable period for a life policy in Michigan is 2 years. variable life insurance and universal life insurance are very similar. policyowner has the right to select the investment which will proWhich of these features are held exclusively by variable universal duce the greatest return life insurance? Bob and Tom start a business. Since each partner contributes an important element to the success of the business, they decide to take life insurance policies out on each other, and name each other as beneficiaries. Eventually, they retired and dissolved the business. Bob dies 12 months later. The policies continue in force with no change. Both partners are still a married at the time of Bob's death. in this situation, who receive Bob's policy proceeds? Tom insurable interest only has to exist at the time of the application, not at the time of the claim. Being there was no change in beneficiary prior to Bob's death, Tom was still receive the policy proceeds. upon receiving a producer complaint, the Commissioner may immediately issue a cease-and-desist order recording the receipt and distribution of premiums due to an insurer a producer's fiduciary responsibility includes which of the following activities? an agent show use reasonable accounting methods to record funds received in his or her fiduciary capacity including the receipt and distribution of all premiums do each of his or her insurers. producing in an adequate amount of new premium all of the following occurrences may result in license revocation EXCEPT CORRECT: having been convicted of a felony, forging another's name to an application for insurance, failing to meet court-ordered child support obligations a proposed insured for a health insurance policy was treated for heart disease within the past year. When applying for health insurance, the heart disease treatment indicates a pre-existing condition for what purpose is a life insurance application backdated? to reduce the premium what is the name of the provision which states that a copy of the application must be attached to the policy when issued? entire contract a renewable term life insurance policy can be renewed at a predetermined date or age, regardless of the insurance health 8 / 13 Joanne has a $100,000 whole life policy with an accumulated $25,000 of cash value. She would like to borrow $15,000 against the cash value. Which of the following statements is TRUE? net death benefit will be reduced if the loan is not repaid fare-paying passenger a life insurance policy normally contains a provision that restricts coverage in the event of death under all of the following situations EXCEPT CORRECT: pilot of personal airplane, suicide, War the above may not be covered or have restrictions. which of the following signatures is not required on an individual insurance application? insurer the amount contributed by the employer CORRECT: the amount contributed by the owner, the underlying Which of the following decisions would a Health Savings Account account Investments used, the medical expenses paid for by the (HSA) owner NOT to be able to make? HSA an individual with a Health Savings a Account (HAS) can make all of these decisions except how much the employer will contribute. Hospital Indemnity plan which of the following is NOT included under health benefit plan? INCLUDED: major medical policy, basic Hospital policy, surgical expense policy A Modified Endowment Contract (MEC) is best described as a life insurance contract which accumulates cash value is higher than the IRS will allow a guaranteed issue life insurance policy has no medical underwriting which type of business insurance is meant to cover the cost of continuing to do business while the owner is disabled? business overhead expense policy which of the following is an annuity that is linked to a market-related index? equity-indexed annuity licensed producers not appointed by an insurer producer commissions may NOT be paid to CORRECT: licensed and appointed producers, licensed and appointed producers who are sharing commissions, non-resident producers Elizabeth is the beneficiary of a life insurance policy. She's receiving the death benefit and payments of $10,000 per month until the principal and interest has been paid out. Which option was chosen? fixed amount which of the following is an example of the insured's consideration? a paid premium in the state of Michigan, a licensed producer represents the insurer loss of a leg or arm which of these would NOT considered a presumptive disability? CORRECT: loss of vision and speech, loss of hearing, loss of leg and arm in Michigan, a small employer is comprised of 2 to 50 employees employer which of the following would be considered a possible application an employer would be a possible application and contract policyand contract policy holder for group health benefits? holder of a single Master contract or Master policy for group health benefits. Bill requires some nursing care and supervision but NOT full-time care. Which of these nursing home options would best serve him? 9 / 13 Assisted Living $700 in this situation, the insured will pay $500 deductible plus $200 Tim has a health insurance with a deductible of $500 and an 80/20 coinsurance = $700. coinsurance. How much will she pay if she incurs a loss of $1,500? $1500-$500=$1000 $1000×20%=$200 $500+$200=$700 which of the following is a requirement for ANY change in an insurance application? change must be initialed by the applicant what does the Consolidated Omnibus Budget Reconciliation act in the event of an employment termination, group health insurance COBRA of 1985 allow an employee to do? can be kept at the employee pays the when a decreasing term policies purchased, it contains a decreasing death benefit and level premiums work-related injuries major medical expense Plants provide coverage for each of the following EXCEPT CORRECT: medically necessary surgery, diagnostic tests, blood in urine lab screens a form of medical health insurance covering the treatment and care of gum disease is called Dental expense insurance in what form do disability income policies typically pay benefits? periodic income which of these techniques will remove the risk of losing money in the stock market by never purchasing stocks? risk avoidance health insurance involves two parents, accident and _______ sickness continuous 24-hour care provided by licensed medical professionals under the direct supervision of a physician is called skilled nursing care declarations in what part of an insurance policy are policy benefits found? essentially, the insurance declaration page is like a quick guide to the insurance policy, providing all the basic information the policyholder needs to know. what type of policy would only provide coverage for specific types of illnesses (cancer, stroke, Etc)? dread disease insurance Shawn, Mike, and Dave are brothers who have a $100,000 "first to die" joint life policy covering all three of their lives. If Mike dies first, the policy proceeds will no longer provide Insurance protection physical therapy which of the following is NOT a common exclusion for medical expense policy? CORRECT: Act of War, on the job injury, self inflicted injury The Limited period of time given to all members to sign up for a group health plan is called the enrollment period Amy has a group medical policy through him player with a $500 $900 deductible and the 90% coinsurance provision. She encourages $1,500 in covered Health Care Services. How much will her group in this situation, the group insurance carrier will pay 90% of the insurance carrier pay? covered loss after the deductible has been applied. Kurt is an active-duty service man who was recently killed in an accident while home on leave. Which military service exclusion cause would pay upon his death? Results the results Claus States the insurer is excused from paying the amount only the death as a result of War. the unfair trade practice of using threat or Force to restrict fair trade in the transaction of insurance is called intimidation Preferred Risk policies with reduced premiums are issued by insurance companies because the insured has better than average mortality or morbidity experience 10 / 13 talking in a long term care policy, activities of daily living (ADL's) can be each of the following EXCEPT CORRECT: Dressing, transferring, feeding oneself a producer who knowingly submits a FALSE statement in support of a claim.may be found guilty of fraud who were Keogh plans designed to provide pension benefits for? the self-employed A policyholder's unmarried child is incapable of self support due to physical disability. the child is provided medical care coverage under the parent's policy until policy term with proof of incapacity written proof of disability and dependcy is required to prove a mental or physical handicap for a dependent child. individual underwriting All of the following are characteristics of a Group Life Insurance Plan EXCEPT CORRECT: group underwriting, master contract, probationary period it provides a source of income for a meaningful standard of living during retirement All of the following statements correctly describe the purpose of CORRECT: It provides havoc protection against financial probSocial Security EXCEPT lems accompanying death, disability and retirement, it augments a sound personal insurance plan, it provides a time in survivor benefits to a worker and the workers family law of agency the authority granted to a licensed producer is provided via the according to the law of agency, the producer/agent represents the principal/insurer and is guaranteed actual, implied and apparent authority to act on behalf of the insurer. the law of agency makes the principal responsible for these acts of the agent. waiver of premium All of the following riders can increase the death benefit amount EXCEPT CORRECT: Cost of living, accidental deathrider, guaranteed insurability an insurer must furnished to a claimant forms for filing proof of loss within _____ days upon receiving a notice of claim. 15 death benefit which of these is not subject to income taxation under a modified endowment contract (MEC)? CORRECT: loan against the cash value, policy withdrawal, policy dividend which type of life insurance policy pays the face amount at the end of the specified period if the insured is still alive? endowment policy an example of a tax qualified retirement plan would be a defined contribution plan interest-only which of these is NOT considered to be a nonforfeiture option in a whole life insurance policy? CORRECT: reduced paid up insurance, extended term insurance, cash surrender lifetime protection limited payment whole life policy provides premiums on limited payment whole life insurance or paid for a limited number of years, but the benefits last a lifetime. exclusion ratio has been calculated under and I'm qualified annuity, interest this text after the the taxable and non-taxable portions of annuity payments are determined by the exclusion ratio. how are annuities given favorable tax treatment? gains are taxed at distribution protecting the business by covering entry-level employees with life insurance 11 / 13 CORRECT: attracting quality employees by offering a group Life all the following are considered appropriate uses of life insurance Plan, funding and entity buy-sell agreement, protecting the busifor business purposes EXCEPT ness by covering team plays with life insurance Shirley has a Medigap policy, which is designed to pay costs associated with Medicare Parts A & B what is the purpose of the medical information Bureau (MIB)? to help Underwriters evaluate risk the IRS allows a taxpayer to deduct medical expenses that exceed 7.5% of their adjusted gross income. Which of the following is considered a tax deductible medical expense under this rule? long-term care insurance premiums which of these annuities require premium payments that vary from year to year? flexible premium deferred annuity which of the following is considered to be an alternative to a life settlement? accelerated death benefit Rider Joe has a life insurance policy that has a face amount of $300,000. After a number of years, the policy's cash value accumulates the $50,000 and the face amount becomes $350,000. What kind of policy is this? universal life policy which annuity payout option allows the policyowner to choose a predetermined number of benefit payments? period certain the double indemnity provision in a life insurance policy pertains to an insurance death caused by an accident deferred compensation call the following are examples of a business continuation plan EXCEPT CORRECT: key person Insurance, cross purchase agreement, stock Redemption plan in addition to the actual policy, an entire contract includes which of the following? application which type of policy combines the flexibility of a universal policy with investment choices? variable universal life policy without a section 125 plan in place, what would happen to an employee's payroll contribution to an HSA? it would be considered taxable income to the employee and insurer, in general business practice, fails to promptly provide a reasonable explanation for the denial of a claim. This is considered to be an unfair claim Settlement practice in Michigan, legal action can be taken against insurer for failure to pay LIFE insurance claims for a period not to exceed 6 years The purpose of Medicare supplement insurance is to address gaps in Medicare coverage, which can include Medicare in hospital deductible a Securities license is required for life insurance provider to sell variable life insurance which of the following nursing home options would BEST suit an individual who needs some nursing Care and supervision but NOT full-time care? assisted living facilities Mark continues working after the age of 65 and is covered through his employers Group Health Plan. Which of the following statements is TRUE? Medicare is a secondary payer deferred commissions may be paid to a person who sold an insurance policy when the person was a licensed producer in the time of the sale sole Proprietors are permitted tax deductions for health costs paid from their earnings in the amount of 100% of cost when can a life policy no longer be canceled for non fraudulent statements after its date of issue? 2 years "maximum benefits" refers to the upper limit of the total lifetime benefits the insurance company will pay 12 / 13 provides the insured a specific dollar amount for services an Indemnity plan also known as fee-for-service plans a provision in a whole life policy that allows a policy owner to terminate the policy in return for a reduced paid-up policy of the same time is called a nonforfeiture provision in Michigan, legal action can be taken against an insurer for fail to pay HEALTH insurance claims for a period not to exceed 3 years the period in which there are no Social Security benefits for the surviving spouse is called the blackout period the elimination period under a hospital Indemnity plan is the specified number of days in insured must wait before becoming eligible to receive benefits for each hospitalization Group insurance premiums made by an employer under the terms of a taft-hartley trust or paid directly to the trust after an insured gives notice of loss, what must he or she do if the insurer does not furnish forms? file written proof of loss which of these describes the result of a modified endowment contract that failed to meet the seven pay test? pre-death distributions are typically taxable group dental plans with frequently place a limit on annual benefits in order to minimize adverse selection Rehabilitation benefit is intended to prepare the insured to return to employment bi-weekly which of these premium payment frequencies is not typically available to a policyowner? CORRECT: monthly, quarterly, semi annual Pharmacy benefit covers prescription drugs derived from a list called a drug formulary a health insurance policy that allows an insurer to change the policy owners premiums, but NOT cancel the policy is called guaranteed renewable policy 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 a group disability income plan that pays tax free benefits to cover employees is considered fully contributory in order for a contract to be valid, it must contain an offer and an acceptance Krissa purchases a 10 year level term life insurance policy that has a death benefit of $200,000. Which of these statements is true? the face amount and premium will remain constant over the 10-year. what happens to the coverage under a children's term Rider when that child reaches a certain specified age? coverage is eliminated which type of annuity stops all payments upon the death of the annuitant? life annuity changes made by the producer all of the following are included as part of the contract in the entire contract provision EXCEPT the CORRECT: Riders, application, policy members part-time employment status under which criteria may a Group Health Plan exclude participation? CANNOT: members claim history, members current age, members pre-existing condition low-frequency diseases can be exclusively covered by what kind of Health policy is? 13 / 13 limited policies