Insurance Test Cheat Sheet Variable Life Type of Life Insurance that allows the policyowner to have level premiums and to also choose from a selection of INVESTMENT options. Qualified profit-sharing plan Allows employees to participate in the profits of the company. (Designed to distribute a portion of company warnings to its employees) Association Plans that are designed to provide health benefits to their members are regulated by the state because: The Association Plans must be fully insured by an authorized insurer Insurers are required to report receipt of cash payments in excess of $10,000 under: The USA Patriot Act The amount of days from the reinstatement application date the insurance company has to notify someone of the denial before the policy will be automatically be placed back in force is: 45 days A Life Insurance policy's grace period entitles the insured a period of No LESS than: 30 days, to make premium payment A pension deficiency if the key employee dies is NOT a reason for a business to buy: Key Person Life Insurance Why is an applicant's signature required on a Life Insurance application? To attest that the statements on the application are accurate. to the best of the applicant's knowledge If an employee injures him/herself while not on the work premises Her group health plan, if the employer has more than 20 employand is covered under a group health plan what Insurance plan ees, the group health plan generally pays first. would be considered the primary? Employees that share the cost of insurance are a part of a: Contributory Group Life Plan An IRREVOCABLE beneficiary MAY not be changed without: The written consent of the beneficiary A term coverage that allows the continuation of coverage after expiration of the initial policy period is a: Renewable (term coverage) Agent selling medicare supplement policies MUST provide every applicant with a: Sustainability Form The Health Insurance Portability and Accountability Act (HIPAA) provides PRIVACY protection for: Health Information The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers (and their families) whose employment was terminated the right to continue: Group Health Benefits A LIMITED pay life policy has premium payments limited to: A specified number of years Adjustable Rates for Life policy loans in Florida are based on: MOODY'S Corporate Index Past due premiums are NOT waived during: A policy's grace period An agent making a mistake while filling out an insurance applicaCorrect the information and have the prospect initial the change tion MUST: A _________ is authorized to assign a Life Insurance policy for as collateral for a loan: Policyowner Group Life Insurance policies are generally written as an: Annually Renewable Term Coverage for a NON-MEDICAL insurance to take effect the same day, the producer MUST collect a signed application and: The initial premium Under a MASTER Group Health policy who is eligible for coverALL employees, REGARDLESS of their individual health history. age? In order to qualify for Long Term Care health benefits an individual must be UNABLE to perform: 2 activities of Daily Living Comprehensive Major Medical policies usually combine: Major Medical with Basic Hospital/Surgical Coverage What is the elimination period of an individual disability policy? The amount of time a disabled person must WAIT before benefits are paid Reimbursement 1/8 What type of policy pays benefits to a policyholder covered under a Hospital Expense policy? The reason for a business having a Business Overhead Expense Fixed business expenses; this covers fixed business costs in the Disability Plan is to cover: event the owner becomes disabled An employer that offers a qualified retirement plan to its employees is eligible to: Make tax-deductible contributions to the plan Florida's 14-day free-look period for life insurance policies begins at the: Date of DELIVERY Health Insurance program that is administered by each. state and funded by both the federal and state governments is called: Medicaid A Disability Buy-Sell Contract permits: The remaining partners to buy-out the interest of a disabled business partner A 401(k) plan normally provides participants: Salary Deferral Contributions A Fixed Deferred Annuity pays out: A fixed amount for life STARTING at a future date Additional coverage can be added to a Whole Life policy by adding a(n): Decreasing Term Rider (coverage decreases over time) Life and Health Insurance Policies are: Unilateral Contracts If someone travels overseas and is unable to work for 3 months, what kind of policy would cover the loss of income? Disability Income The USA Patriot Act was enacted in: 2001 Prescription Drugs are an allowable expense when paid for by: A medical flexible spending account Eligibility for coverage under the Florida Healthy Kids Corporation requires a family to be within what percent of the federal poverty level? 200% What Nonforfeiture Option continues a build-up of cash value? Reduced Paid-Up Under a Basic hospital/surgical expense policy the amount of the patients claim payment will be based on: The terms of the policy How long does an individual have to "rollover" funds from an IRA or qualified plan? 60 days An example of sliding would be: charging for an additional product without the applicant's consent. Sliding involves selling additional coverage to an insurance applicant who doesn't want or need it. (An agent will often "slide" this additional coverage in without the customers knowledge or consent). IF a question says, "triple indemnity" how much is added tot he value? 3, an example would be if a question said the "triple indemnity" of $100,000, the answer would be $300,000 If both the insured and primary beneficiary are killed in the same The insured died LAST; the proceeds will be paid to the secondary accident and there is insufficient evidence to show who died first, (contingent) beneficiary. policy proceeds will be paid as if: Major Medical Policies typically: Contain a deductible and coinsurance Churning can be defined as: Using the contract values of an existing policy to purchase a new policy with an existing insurer. How does an indexed annuity differ from a fixed annuity? Indexed annuity owners may receive credited interest tied to the fluctuations of the linked index. Quarterly premium payments increase. the annual cost of insur- Interest to the insurer is decreased while the administrative costs ance because: are increased. Within how many days must a licensee notify the Department of Financial Services of a change in address? 30 days An agents commission is NOT listed under the: 4 principal areas of Florida insurance law What is the best description of an insurer? ANY person, corporation, association, or society that writes insurance contracts 2/8 The advantage of reinstating an original life policy is: The premiums are based on a younger age A variable life insurance agent must be licensed and appointed as a life and variable contract agent as well as a(n): Broker Dealer Post-tax dollar contributions are found in: Roth IRA Investments The Notice of Claims provision requires a policyowner to: Notify an insurer of a claim within a specified time Whole life insurance is sometimes referred to as "Straight Life". What does the word "Straight" indicate when using this phrase? The duration of premium payments The mode of premium provision permits: An insured to pay premiums more than once every year Which BEST describes a Hospital Indemnity policy? Coverage that pays a stated amount er day of a covered hospitalization This percent of personal life insurance premiums are usually deductible for federal income tax purposes. 0% A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid a: Mandatory income tax withholding on the transfer amount The BEST way to describe a short-term medical expense policy is that it's: Nonrenewable What is not a typical characteristic to describe the nature of an insurance contract? Bilateral An employee with $25,000 group term life coverage was recently fired. This employee's group coverage may be converted to a: $25,000 individual whole life policy The policyowner controls where the investment will go and selects the amount of the premium payment in a: Variable Universal Life Policy According to Florida law, a Group Life insurance policy requires a minimum of how many insureds? No minimum The premium schedule that results in the lowest cost to the policyowner is: Annual Which department oversees 'Market Conduct Examinations' in Florida? The Office of Insurance Regulation A TRUE statement regarding a Variable Whole Life policy is: A minimum guaranteed Death benefit is provided The incontestable period begins when: The insurer dates the policy In a Payment of Claims provision the insured and insurance company: Share the cost of covered losses What MUST be included in a Medicare Supplement Policy's Outline of Coverage? The policy's limitations and exceptions A Basic Hospital Policy pays: Hospital room and board Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary? Life Income A Medicare Supplement policy would provide the subscriber the best coverage for: Excess Charges (and hospital stays) Under a Graded Premium Whole Life Policy: The premium increases each year during the early years of the contract and remains the same after that time. What type of contract liquidates an estate through recurrent payments? Annuity, a contract that provides liquidation for all or part of an estate Equity Index Insurance Yields greater gains than bonds but will still protect the principal with a minimum of risk Insurers may request a hearing within 20 days if their policy is: Rejected Extended Term Insurance is often the default nonforfeiture option in the event of: Nonpayment of premiums The waiting period for a pre-existing condition under a Medicare Supplement policy may not go beyond: 6 Months 3/8 According to Florida Law, when must an agent deliver the Outline of Coverage to a Medicare Supplement Applicant? At the time of application Major Medical policies have a _____ day grace period 10 An accident policy would most likely pay a benefit for an: Off-the-job accident How long is the typical free look period for Long Term care insurance policies? 30 days Life Income is NOT an example of a: Nonforfeiture Option Basic Medical Insurance has: Lower limits than Major Medical Insurance A "term" rider may be used to include coverage for: Children under their parents' life insurance policy. Quarterly premium payments increase the annual cost of insur- Interest to the insurer is decreases while the administrative costs ance because: are increased 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% A life policy with a death benefit and cash value that can fluctuate according to the performance of its underlying investment portfolio is referred to as: Variable Life Which of the following actions is required by an insured who leaves the primary area of medical coverage and seeks medical care? Obtain prior approval from the insurer for the medical service The provision in a Group Health policy that allows the insurer to postpone coverage for a covered illness 30 after the policy's effective date is referred to as the: Waiting Period An Individual who purchases a Life annuity is given protection against: The risk of living longer than expected What requires a policyowner to provide proof of insurability in an Adjustable Life policy? Increase face amount The amount of coverage on a group credit life policy is limited to: The insured's total loan value Under a Health Reimbursement Arrangement, reimbursements may be: Tax Free What BEST describes a Hospital Indemnity policy? Coverage that [ays a stated amount per day of a covered hospitalization What is designed to provide flexible premiums and an adjustable death benefit? Universal Life The Florida Office of Financial Regulation (OFR) was created in the year: 2003 Any violations of the Florida financial institutions code may be investigated by the: Department of Financial Services Hospice benefits are included in: Managed Care plans The 2 year contestability period an insurance company has on an accident and health policy has begins when the: Insurer dates the policy Credit Life Insurance is: Issues in an amount not to exceed the amount of the loan Life Insurance may NOT be rejected based on: Gender In Florida, an element of an insurance transaction would be: Issuing an insurance contract A Whole Life Insurance policyowner does NOT have the right to: Change the grace period According to the Mandatory Uniform Policy Provisions, what is the maximum amount of time after the premium due date during which the policy remains in force even though the premium has not been paid? 31 Days What actions require a policyowner to provide proof of insurability in an Adjustable Life policy? Increase Face Amount 4/8 The gross premium is higher on a ________ as compared to being paid annually Monthly payment mode A(n) ______ of benefits of a Health Policy transfers payments to someone other than the policyowner Asssignment A level premium indicates: The premium is fixed for the entire duration of the contract How are policyowner dividends treated in regards to income tax? Interest on accumulations is taxed In Florida, which agency is responsible for the rehabilitation or liquidation of insurers? The Department of Financial Services An incomplete life insurance application submitted to an insurer will result in what action? Application will be returned to the writing agnet a 10 year Convertible Term contains what feature? Renewability Distributions from a traditional IRA must be made by: April 1st following the year the participant turns age 70 1/2 or an excise tax will be assessed The insured must wait ______ after written proof of loss before legal action can be brought against the company 60 days If an insurer accepts an application that contains ___________ and makes it part of the life contract the company has waived one its legal rights Unanswered Questions A conditional receipt indicates that certain conditions must be in order for: The insurance coverage to go into effect A Universal Life policy is sometimes referred to as an unbundled Life Policy because the owner can see the interest earned, expense charges, and the: Cost of Insurance At what point does a Whole Life policy endow? When the cash value equals the death benefit A ______ day notice to the policyholder is required for any health insurer that wishes to cancel a health insurance policy 45 An insurer may normally delay the payment of a cash value loan or surrender value for up to: 6 months A Limited-Pay Life policy has: premium payments limited to a specified number of years What does the ownership clause in a life insurance policy state? Who the policyowner is and what rights the policyowner is entitled to A unilateral contract means: Only one party (the insurer) makes any kind of enforceable promise If suicide occurs outside the Suicide Clause period (normally 1-2 years) the face amount will be: Paid Annuity payments no less than $250 quarterly is an example of a(n): Flexible Installment Deferred Annuity The act of an insurance company publishing misleading information about its policy's provisions is called: False Advertising Premature IRA distributions are assessed a penalty tax of: 10% An agent that sells _______ Life insurance MUST be registered with the Financial Industry Regulatory Authority (FINRA) Variable What is considered a valid reason for small businesses to insure the lives of its major shareholders? To fund a Buy-Sell agreement A stock insurance company is owned exclusively by: Its shareholders The option that provides an additional death benefit for a limited amount of time at the lowest possible cost is called a(n): Accidental Death and Dismemberment (AD&D) rider An individual Disability Income insurance applicant may be required to submit all of the following information EXCEPT: Their Spouse's occupation Who is normally considered to be the owner of a 403(b) tax-sheltered annuity? The employee 5/8 The insured and insurance company will share the cost of covered losses under which health policy feature? The Payment of Claims provision A mutual insurance company is owned by: Its policyholders One becomes eligible for Social Security disability benefits after having been disabled for: 5 months An applicant's medical information received from the Medical Information Bureau (MIB) may be furnished to the: Applicant's Physician A __________ option is a method of distributing a Life Insurance policy's death benefit OTHER than a lump sum payment. Settlement What product would serve an individual looking to invest a lump sum of money through an insurance company? Annuity With a medical discount plan, how often would a person generally pay a fee to get discounts on specific services? Monthly What is a prepaid health plan, where members pay in advance for the services of participating physicians and hospitals that have agreements? Health Maintenance Organization (HMO) Under Florida law, what provision is NOT required in a Medicare A limitaton on pre- existing conditions for up to 12 months (There's Supplement policy? only a 6 month limitation on pre-existing conditions) How long does the coverage normally remain on a limited-pay life policy? Age 100 Asset protection can be provided by a long-term care partnership policy if the policyholder qualifies for: Medicaid Within how many days after policy delivery can a Medicare Supplement policy be returned for a 100% premium refund? 30 A Health Reimbursement Arrangement MUST be established by: The employer In Florida, a health policy that is paid on a quarterly basis requires a grace period of: 31 days In life insurance, the needs approach is used mostly to establish: How much life insurance a client should apply for ________ insurance is often the default nonforfeiture option in the event of nonpayment of premiums Extended term What is the purpose of the Time of Payment of Claims provision? Requires delayed claim payments made by the insurer When an employee is only able to do half of the workload after being disabled; this provision pays reduced benefits while the individual is not working at full capacity: Residual Disability After the expiration of COBRA benefits, converting a Group Life policy to an individual whole life, the individual would need to: Provide evidence of insurability What is an element of a Single Premium annuity? Lump-sum payment An underwriter determines that a life insurance applicant's risk should be reclassified due to a health issue. This policy may be issued with a(n): Extra Premium An applicant who pays the initial premium at the time of application is typically given a(n): Conditional Receipt The provision that defines to whom the insurer will pay benefits to is called: Payment of Claims If an annuity is terminated prior to beginning of the income payment period, the contract owner receives: The contract surrender value A major medical policy typically: provides benefits for reasonable and necessary medical expenses, subject to policy limits The amount the insured will pay in premiums is unequal to the amount that the insurer will pay in the event of a loss, this describes what kind of insurance contract: Aleatory 6/8 A fixed level premium is an element of what Life policy? Variable There is no ____ withheld on an IRA transfer Tax The consideration clause in a life insurance contract contains what pertinent information? Amount of premium payments and when they are due What Life insurance policy combines term insurance with an investment element? Universal Life Life paid up at age 70 is considered to be a: Limited-Pay Life policy Church plans are exempt from: ERISA regulations What is the maximum Social Security Disability benefit amount an insured can receive? 100% of the insured's Primary Insurance Amount (PIA) The Time Limit of Certain Defenses provision states that nonfraudulent misstatements first become incontestable two years from: The date the application was signed Ho many days is the grace period for a major medical policy? 10 days Under COBRA, if an employee dies, the dependents may continue their group health coverage for up to ____months 36 Dividends paid from a life insurance policy are: issued by the insurer Group insurance differs from individual insurance by: Having lower premiums A ________ provision will keep a Whole Life policy in force if a required premium payment is not made and there is a sufficient cash value Automatic Policy Loan What does Medicare Parts A and B cover? Part A covers hospitalization; Part B covers doctor's services An employer can have a maximum of 100 employees earning at least $5,000 to be eligible for: A SIMPLE retirement plan In a Key Employee life insurance policy, the third-party owner can NOT be: The Insured The treatment of federal income tax treatment of life insurance does NOT tax: The total cash surrender value; however the interest gained is taxable A sole proprietor may use a _______ plan ONLY if the employees of this business are included. Keogh Pension Plan What is the underlying concept regarding level premiums? The early years are charged more than what is needed The ___________ promises if the annuitant dies before receiving payments equal to the correct value, the payments will be continues to a beneficiary until an amount equal to the contract value has been paid. Installment Refund Annuity Upon policy delivery, a signed good health statement is requested from the applicant. Why would this be necessary? The initial premium was NOT submitted with the application A policy that promises to pay the face amount on the death of first of two lives covered by the policy is called a: Joint Life Policy In a qualified retirement plan, the yearly contributions to an employee's account is: Restricted to maximum levels set by the IRS A ________ contract allows a policyowner to sell a life insurance policy for more than its cash value Life Settlement To qualify for and open a tax-exempt health savings account, one must be enrolled in a: High-deductible health savings account What organization would make reimbursement payments directly to the insured individual for covered medical expenses? Commercial Insurer The Payor Clause on a juvenile life policy provides a waiver of premiums if the payor becomes: Disabled Premature distributions from an IRA are subject to a: 10z% penalty tax 7/8 Purchasing additional amounts of disability income coverage at A guaranteed insurability rider guarantees the insured the option predetermined times without requiring the insured to provide eviof: dence of insurability. Medicare Part B does NOT cover: Inpatient hospital services A _____________ life insurance policy is whole life insurance with a death benefit rider of increasing term insurance equal to the amount of premiums paid Return of Premium In Florida, monthly-premium health insurance policies must provide a grace period of: 10 days How to calculate 80/20 insurance: Ex: Q receives a bill for $10,100 has a Major Medical policy with a $100 deductible and 80/20 coinsurance. How much will Q be responsible for paying on this claim? $10,000 x 20% coinsurance + $100=$2,100 A sole proprietor may use what plan ONLY if the employees of this business are included? Keogh Pension Plan A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid: A mandatory income tax on the transfer amount A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate than in the early years of the policy. Whaat statement made by the producer would be CORRECT? 20-Pay Life accumulates cash value faster than Straight Life 8/8