Xcel Solutions Final Exam Overview

XCEL SOLUTIONS - FINAL EXAM K has a life insurance policy where her husband is beneficiary and her daughter is contingent beneficiary. Under the Common Disaster clause, if K and her husband are both killed in an automobile accident, where would the death proceeds be directed? Daughter When is a Group Health policy required to provide coverage for a newborn child? At the moment of birth What is the required renewability status of all Medicare supplement policies? Guaranteed renewable Who issues Medicare Supplement policies? insurance companies P is the insured on a participating life policy. Which statement is true if P's premiums are waived due to disability? P will still receive declared dividends What type of policy would offer a 40-year old the quickest accumulation of cash value? 20-pay life The Nevada Insurance Guaranty Association protects Nevada insurance policy owners in the event an insurance company becomes insolvent The most important factor to consider when determining whether to convert term insurance at the insured's attained age or to the insured's original age is: the cost A Medicare Supplement policy may be cancelled for which of the following reasons? The premiums has not been paid by the insured A noncontributory group term life plan is characterized by: The entire cost of the plan is paid for by the employer Variable annuities may invest premiums in each of the following, EXCEPT: Insurer's corporate business account Which of the following costs would a Basic Hospital/Surgical policy likely cover? Surgically removing a facial birthmark Information obtained from a phone conversation to the proposed insured can be found in which of these reports? Inspection report T is receiving $3,000/month from a Disability Income policy in which T's employer has pad the premiums. How are the $3,000 benefit payments taxable? Benefits are taxable to T. What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies? Family Maintenance Policy Basic Medical Expense insurance: has lower benefit limits than Major Medical Insurance What is the requirement for maintaining an individual Nevada producer license? completing 30 hours of continuing education every 3 years J is a producer who has induced an insured through misrepresentation to surrender an existing insurance policy. What is J guilty of? Twisting Which of these is considered a mandatory provision? payment of claims Which life insurance rider typically appears on a Juvenile life insurance policy? payor benefit rider What is the excise tax rate the IRS imposes on individuals aged 70 1/2 or older who do not take the required minimum distributions from their qualified retirement plan? 50% An individual has a Major Medical policy with a $5,000 deductible and an 80/20 Coinsurance clause. How much will the INSURED have to pay if a total of $15,000 in covered medical expenses are incurred? $7,000 Within how many days after policy delivery can a Long-term Care policy be returned for a 100% premium refund? 30 Which of the following is an example of defamation? circulating brochures that falsely denounce the financial condition of an insurer 1/8 T has a Disability Income policy that pays a monthly benefit of $5,000. If T becomes partially disabled, what can he likely expect? Less than $5,000 per month benefit regardless of the cause A Medicare Supplement policyholder has ___ days to return the policy and receive a full premium refund. 30 The health insurance program which is administered by each state and funded by both the federal and state governments is called: Medicaid Which of these is NOT considered to be a cost connected with an individual's death? Business expenses Group life insurance policies are generally written as annually renewable term W gave W's age as 50 when W purchased a Life policy. At the time of W's death seven years later, the company discovered W's true The proceeds would be reduced based on whatever the premium age at issue had been 59. What would the normal procedure be would have been if purchased at age 59 under the misstatement of age provision in regard to the payment of the death claim? According to the Affordable Care Act (ACA), a dependent child's eligibility status is determined by age A Long-Term Care policy sold in Nevada MUST be guaranteed renewable A health insurance policyholder has ___ days to return the policy and receive a full refund 10 M purchased an Accidental Death and Dismemberment (AD&D) policy and named his son as beneficiary. M has the right to change the beneficiary designation at anytime. What type of beneficiary is his son? revocable On a life insurance policy, who is qualified to change the beneficiary designation? Policyowner Which is true concerning a Variable Universal Life policy? Policyowner controls where the investment will go and selects the amount of the premium payment N has a Major Medical policy that only pays a portion of N's medical expenses. N is responsible for paying the remaining balance. This provision is known as coinsurance Which health policy clause specifies the amount of benefits to be paid? Insuring According to Nevada law, when must an agent deliver the Outline of Coverage to a Medicare Supplement applicant? At the time application Which of the following is considered to be misrepresentation? A producer guaranteeing a policy's dividends T is covered by an Accidental Death and Dismemberment (AD&D) policy that has an irrevocable beneficiary. What action will the insurance company take if T requests a change of beneficiary? Request of the change will be refused 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, something that was not disclosed on the application. Which of the following actions would the insurance company NOT take? Send a notice to the MIB that the applicant was declined A person who is insured within a group contract will be given a certificate Which of thee contracts are affected by replacement regulations? Ordinary Life insurance Which of the following actions is NOT required when a producer is replacing a Medicare Supplement policy? Producer must notify the Commissioner of replacement Which statement regarding the Change of Beneficiary provision is true? The policyowner can change the beneficiary A group life insurance policy can be converted to an individual whole life policy under which circumstance? employment termination 2/8 Pre-existing conditions may be excluded on a Medicare Supplement policy for up to 6 months M becomes disabled and is unable to work for six months. M dies soon after from complications arising from this disability. M has a Disability Income policy that pays $2,000 a month. Which of the following statements BEST describes what is owed to her estate? Earned, but unpaid benefits An insurance producer could be found guilty of rebating by sharing commissions with a client who purchased insurance C is trying to determine whether to convert her convertible term life policy to whole life insurance using her original age or attained age. What factor would affect her decision the most? the cost Which of these actions is taken when a policy owner uses a Life Insurance policy as collateral for a bank loan? collateral assignment Group Life policies in Nevada are required to contain a conversion privilege that allows for conversion to an individual policy for a stated period of time All of these are a prerequisite for becoming a licensed resident producer in Nevada EXCEPT Graduate from high school What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies? Family Maintenance policy What is the requirement for maintaining an Individual Nevada producer license? completing 30 hours of continuing education every 3 years An insured is past due on his life insurance premium, but is still within the Grace Period. What will the beneficiary receive if the insured dies during this Grace Period? Full face amount minus any past due premiums Pre-hospitalization authorization is considered an example managed care The first portion of a covered Major Medical Insurance expense that the insured is required to pay is called the: initial deductible What does a Medicare Supplement policy cover? allowable amounts under Medicare Part B An employee with $25,000 group life coverage was recently fired. This employee's group coverage may be converted to a: $25,000 individual whole life policy P is self-employed and owns an Individual Disability Income policy. $0 (Disability income benefits that derive from an individual policy He becomes totally disabled on June 1 and receives $2,000 a which was paid entirely by the policy owner is not subject to federal month for the next 10 months. How much of this income is subject income tax.) to federal income tax? The investment gains from a Universal Life Policy usually go toward: the cash value A domestic insurance company in Nevada MUST be incorporated and formed in Nevada A non-disabled individual is first eligible for a Medicare Supplement policy at age 65 The Consideration clause of an insurance contract includes: the schedule and amount of premium payments Which of the following is NOT included in an annuity contract? AD&D rider What type of life policy covers 2 lives and pays the face amount after the first one dies? Joint Life Policy The Notice of Claims provision requires a policy owner to: notify an insurer of a claim within a specified time Many small business owners worry how their business would survive financially if the owner becomes disabled. The policy which BEST addresses this concern is: Business Overhead Expense Credit life insurance is typically issued with which of the following types of coverage? Decreasing Term Which type of policy is considered to be overfunded, as stated by IRS guidelines? Modified Endowment Contract The required free-look period in a Medicare Supplement policy is ___days 30 3/8 Which of the following is included under newborn child health coverage? birth abnormalities What is the primary factor that determines the benefits paid under a disability income policy? Wages Non-occupational disability coverage is designed for employees who suffer non-work related disabilities, since work-related disabilities are covered by Worker's Compensation Which of the following is a requirement to attain a nonresident producer license? Be licensed as a producer in the person's state of domicile G purchased a Family Income policy at age 40, The policy has a 20-year rider period. If G were to die at age 50, how long would G's family receive an income? 10 years Replacement can be defined as exchanging an existing policy for a new policy A producer is attempting to replace an existing life insurance policy with a new one. What must this producer submit as part of the application? A signed statement by the applicant regarding the replacement After selling an individual life insurance policy, a Nevada producer MUST deliver to the policy owner a(n) policy summary an buyer's guide 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 before the policy will be automatically placed back in force? 45 days S is covered by a whole life policy. Which insurance product can cover his children? Child Term rider D is an architect receiving Disability Income benefits who is not able to return to work full time, but can work on a part-time basis. Which of these features would allow D to continue receiving benefits? Residual Benefit clause What type of insurance offers permanent life coverage with premiums that are payable for life Whole life In Nevada, an insurer that is incorporated in Arizona and conducts business in Nevada is called a(n) foreign insurer Which of these is considered a true statement regarding Medicaid? funded by both state and federal governments B the producer sold an insurance contract to a client. B has engaged in transacting insurance D was actively serving in the Marines when he was killed in an automobile accident while on leave. His $100,000 Whole life policy contains a War Exclusion clause. How much will D's beneficiary's receive? the full face amount What must be signed by both the producer and applicant when an existing life insurance policy is being reissued with a reduction in cash value? Notice regarding replacement XYZ Company pays the entire premium for its group health plan. The MINIMUM percentage of eligible employees that must be covered is 100% Nevada's 10-day free-look period for life insurance policies begins at the date of delivery An example of an unfair claims practice would be misrepresenting insurance policy provisions affecting a loss Any criminal charges taken against a producer must be reported to the Commissioner of Insurance by the producer within how many days of the final disposition? 30 4/8 Which of the following statements does NOT accurately describe the tax treatment of premiums and benefits of individual Accident and Health insurance? Disability income policy premiums are tax-deductible M has a Major Medical insurance policy with a $200 flat deductible and an 80% Coinsurance clause. If M incurs a $2,200 claim for an eligible medical expense, how much will M receive in payment for this claim? $1,600 Life insurance replacement regulation protects the interest of the policyowner What type of renewability guarantees premium rates and renewability? Noncancellable Under federal tax laws, what is the tax treatment for an employer providing $50,000 of a contributory group Term Life plan to all its eligible employees? Portion of the premiums paid for by the employer may be a tax deduction Insurance contracts maybe sold, solicited ,or negotiated by an insurance producer ONLY upon becoming an appointed producer of an insurer A hearing must be held before a producer's license can be suspended or revoked. Prior to this hearing, the Commissioner is required to give written notice to the producer Medicaid was designed to assist individuals who are below a specific income limit Variable Whole Life Insurance can be described as both an insurance and securities product Which of the following MUST be delivered with a Medicare Supplement policy? Outline of Coverage A Limited-Pay Life policy premium payments limited to a specified number of years Dental care coverage is designed to cover the costs of: all of the above (orthodontia, oral surgery, and root canal therapy) S wants to open a tax-exempt Health Savings Account. To qualify for this type of account, Federal law dictates that S must be enrolled in a High-deductible health plan All of these are considered to be a benefit under Social Security, EXCEPT for: unemployment A credit life insurance policy covers the life of the debtor An example of Life insurance policy replacement would be which cash surrender an existing life policy and purchasing a new life of the following? policy A disability elimination period is best described as a: time deductible J is a subscriber to a plan which contracts with doctors and hospitals to provide medical benefits at a preset price. What type of plan does J belong to? Health Maintenance Organization A policyowner is allowed to pay premiums more than once a year under which provision mode of premium T purchased a life insurance policy. T is entitled to review the policy and return it for a full refund. within 10 days after delivery of the policy 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 determine if the applicant is an acceptable risk by completing standard underwriting procedures P purchases a $50,000 whole life insurance policy in 2005. One of the questions on the application asks if P engages in scuba diving, to which P answers "No". The policy is then issued with no scuba exclusions. In 2010, P takes up scuba diving and dies in a scuba-related accident in 2011. What will the insurer pay to P's beneficiary? $50,000 minus any outstanding policy loans - past the incontestable period A(n) ____ is a consideration or payment for insurance coverage premium Proceeds will go to the contingent beeficiary 5/8 A primary beneficiary has died before the insured in a life insurance policy. A contingent beneficiary is also named in the policy. Which of the following will occur when the insured dies? In Nevada, health insurers must provide benefits of up to ___ per calendar year for inpatient alcohol treatment $9,000 A Family Income Policy is a combination of Whole Life and Decreasing Term insurance Which parts of a life insurance policy are guaranteed to be true? warranty J the producer makes false statements to a prospective client about the projected dividends for a policy. J may be found guilty of misrepresentation Which action will a life insurance company most likely take id an insured dies and it is discovered that the insured's age was misstated on the application? Pay an amount the premiums would have purchased at the insured's actual age J let her life insurance policy lapse 8 months ago due to nonpayment. She can reestablish coverage under which of the following provisions? Reinstatement provision How does indexed annuity differ from a fixed annuity? Indexed annuity owners receive credited interest tied to the fluctuations of the linked index Which of the following policy features allows an insured to defer current health charges to the following year's deductible instead of the current year's deductible? carryover provision What is the maximum fine that can be imposed by the Commissioner to a producer who violates an insurance law? $500 per violaton All of these are considered a producer's breach of fiduciary duty EXCEPT allowing premiums to be submitted electronically All students attending a large university could be covered by a blanket policy With a Basic Medical Expense policy, what does the hospitalization expense cover? hospital room and board W is a 39-year old female who just purchased an annuity to provide income for life starting at age 60. All of these would be acceptable annuity choices EXCEPT a(n) Immediate Annuity - which provides payments within 30 days All of these are unfair trade practices EXCEPT Reinsurance An insurance producer's license MUST be renewed every three years T is an employee covered under a Group Life policy. If T's employment is terminated, the conversion privilege gives T the right to convert to an individual policy upon employment termination What type of life policy covers two people and pays upon death of the last insured? Survivorship The Universal Life Policy is called an unbundled Life Policy because the policy holder can see the expense charges, the interest earned, and the: cost of insurance Which of the following reimburses its insureds for covered medical expenses? Commercial Insurers L, aged 50, and L's spouse, 48, have one natural child and one adopted child. They purchase a Family Policy that covers L's spouse to age 65. A death benefit will NOT be paid in which of the following circumstances? L's spouse dies at age 66 A young, married teacher has two children and owns a Whole Life policy. If the teacher wants an increase Death Benefit to protect against inflation, the teacher should select which of the following dividend options? Paid-Up additional insurance Which of the following best describes a contingent beneficiary? Person designated by the insured to receive policy proceeds in the event that the primary beneficiary dies before the insured What is the purpose of the U.S.A. Patriot Act? detect and deter terrorism 6/8 N purchases an annuity by making payments in an amount no less than $100 quarterly. This describes which of the following annuities? Flexible Installment Deferred Generally, how long is a benefit period for a Major Medical Expense Plan? One year The Common Disaster clause provides that if both the sole named This clause provides the payment of proceeds to the insured's beneficiary were to die in a common accident, which of the followestate ing is true? A(n) ___ is a person or company that underwrites insurance risk and issues an insurance contract insurer All of the following statements regarding group health insurance is true, EXCEPT: An individual policy is given to each member. P and Q are married and have three children. P is the primary beneficiary on Q's Accidental Death and Dismemberment (AD&D) policy and Q's sister R is the contingent beneficiary. P, Q, and R are involved in a car accident and Q and R are killed instantly. The Accidental Death benefits will be paid to P only Which of the following Dividend options results in taxable income to the policyowner? accumulation of interest Which Unfair Trade Practice involves a producer suggesting that an insurance policy is like a share of stock? Misrepresentation Agent J takes an application and initial premium from an applicant and sends the application and premium check to the insurance Return to the customer, collect a new check made out to the company. The insurance company returns the check back to J insurance company, and send out the new check to the insurance because the check is made out to J instead of the insurance company company. What action should J take? P is a forty year old woman and would like to purchase an annuity that will provide a lifetime income stream beginning at age sixty. Which of the following did she NOT buy? An immediate annuity The provision in a health insurance policy that suspends premiums being paid to the insurer while the insured is disabled is called the waiver of premium Which of these statements regarding health coverage for physi- The dependent must have been over twelve years of age when the cally handicapped dependents is FALSE? handicap was incurred Which requirement must be met for an association to be eligible for a group life plan? Group was formed for a purpose other than acquiring insurance Which of the following services is NOT covered under a hospitalization expense policy? surgeon's fees Who makes the legally enforceable promises in a unilateral insurance policy? Insurance company Which contract permits the remaining partners to buy-out the interest of a disabled business partner? Disability Buy-Sell How often must the Commissioner examine each domestic company? every 5 years A comprehensive major medical health insurance policy contains an Eligible Expenses provision which identifies the types of health care services that are covered. All of the following health care services are typically covered, EXCEPT for: experimental and investigative services Which plan is intended to be used by a sole proprietor and the employees of that business? Keogh Plan How does a typical Variable Life Policy investment account grow? through mutual funds, stocks, and bonds A Business Overhead Expense policy would cover which of the following if a business owner becomes disabled? Utilities and office rent 7/8 In Nevada, an insurer licensed to conduct business in Nevada, but domiciled in California, is called a(n) foreign company Which mode of payment is NOT used by health insurance policies? Single premium 8/8