Insurance Fundamentals: Underwriting, Medicare, Contracts, Annuities, Disability, Medical,, Exams of Nursing

Download Insurance Fundamentals: Underwriting, Medicare, Contracts, Annuities, Disability, Medical, and more Exams Nursing in PDF only on Docsity! California Life, Accident, and Health Licensing Exam Questions and Answers Latest Update 2024.. Co-insurance - ☑☑️T️he policy provision which requires the insurer and the insured to share in the cost of services rendered Exclusion ratio - ☑☑️T️he formula which is used by the IRS to determine how much is taxable to an annuitant during the pay out period. Occupational policy - ☑☑️W️hen a disability income policy provides coverage for injuries which occur on and off the job Most disability income policies are non occupational, meaning - ☑☑️T️hey only cover the insured if they become disabled while away from work. Self employed individuals doesn't have - ☑☑️w️orkers compensation coverage. They need coverage both on and off the job (occupational). A life agent who offers for sale or sells any financial product on the basis of its treatment under the MediCal Program must provide - ☑☑️T️he Notice Regarding Standards for Medi-Cal Eligibility. Must be signed by applicant. A widow or widower without any children is eligible for social security survivors benefits at age - ☑☑️6️0 A surviving spouse is eligible for social security survivor's benefits at age - ☑☑️6️0 An authorized, or admitted carrier (insurer) - ☑☑️o️ne which is under compliance with the California Insurance Code (CIC) and can operate legally in California Which type of life insurance utilizes the "level premium concept" - ☑☑️T️raditional whole life Disability income policy proceeds must be paid out at least - ☑☑️m️onthly 1 What life insurance rider will pay a monthly benefit to the insured when they become disabled - ☑☑️T️he disability income rider. It is a type of health (disability) insurance Dread (Specified) Disease policies, such as cancer insurance, covers - ☑☑️T️reatment for one specific disease The benefit paid out for a residual disability in a disability income policy is based upon - ☑☑️a️ loss of a minimum of 20% of income Agent may be either - ☑☑️C️aptive (Exclusive) or independent Captive agents - ☑☑️a️gents who agree by contract to represent only one insurer in the sale of insurance Independent agents - ☑☑️u️sually self-employed and often represent several insurance companies Under state law, agents must have at least - ☑☑️o️ne appointment in order to keep their license active Agents are prohibited from engaging in any of the following activities - ☑☑️1️. using a business name that implies that they are an insurer 2. advertising on behalf of a non-admitted insurer 3. offering free insurance as an inducement to purchase or sale Under a group insurance plan a certificate of insurance is issued to - ☑☑️t️he participants, usually employees. The policy owner, usually employer, gets the master policy Domestic insurer - ☑☑️o️ne that domiciled (organized) in this state Foreign insurer - ☑☑️o️ne that organized in another state 2 Insurance underwriters are responsible for - ☑☑️r️isk selection and classification. The goal of the underwriter is to make sure that - ☑☑️t️he insurer makes a reasonable underwriting profit at the premium rate charged for the risk accepted Long Term Care insurance include - ☑☑️S️killed nursing, custodial care, home health care but not convalescent care Medicare claim, the first step in the process is - ☑☑️t️he individual's provider files the claim with a local Medicare carrier In the original Medicare program, it is the provider which is responsible for - ☑☑️s️ubmitting the claim 403(b) are available to - ☑☑️e️mployees of public educational institutions and certain non-profit charitable or religious organizations. Contributions are made in before tax dollars on a payroll deduction basis Renewable term has a level death benefit and - ☑☑️i️ncreasing premium. Each time the policy renews, the premium will go up The automatic premium loan rider will go into effect at the end of - ☑☑️t️he grace period. It can only be added to a cash value policy and was created to keep the policy in force if the insured forgets to pay their premium HMOs are required to cover all of the following - ☑☑️p️reventive services, physician services, emergency services. Except prescription drugs Insurance contracts must identify 6 required specifications - ☑☑️1️) the parties between whom the contract is made 2) the property or life insured 5 3) the interest of the insured in the property insured 4) the risks (perils) insured against 5) the policy period 6) the premium Primary (also known as "ceding") insurers who elect to offer insurance coverage for high risk exposures, such as earthquake, often buy reinsurance from larger reinsurance companies (reinsurers) in an effort to lower their exposure to - ☑☑️c️atastrophic risk. Under the CIC, an insured may cover a child attending an educational institutional as a dependent on their group life insurance policy through - ☑☑️a️ge 24 What does a deferred annuity have that an immediate annuity does not? - ☑☑️a️n accumulation period Standard levels of care provided by LTC insurance does not include - ☑☑️M️edical expenses Part A of Medicare covers - ☑☑️H️ospital services. For example, Hospitalization, Hospice care, home health care Part B of Medicare covers - ☑☑️P️hysician services Life annuity - ☑☑️a️ product that will pay out every year for the rest of a person's life To be considered as disability for social security - ☑☑️a️ person must be total disability Flexible premium variable life - ☑☑️a️lso known as variable universal life. Allows the insured to pay a flexible premium and direct the case value into a varying selection of investments Distributions taken from modified endowment contracts (MECs) are subject to a - ☑☑️1️0% IRS penalty 6 Eligibility of Social Security is based upon - ☑☑️t️he total number of quarters worked. 40 quarters is needed for fully insured status Under a 7 year graded vesting schedule, the IRS requires that employer contributions to the plan be - ☑☑️v️ested (owned by the employee) at least 40% after 4 years, 60% after 5 years, 80% after 6 years and 100% after 7 years Three types of ordinary life insurance - ☑☑️W️ET Whole life Endowment Term A disability recurs within 90 days, the insurer will waive waiting (elimination) period. Nonetheless, since the disability recurs 6 months later, a new - ☑☑️e️limination (waiting) period and benefit period will apply. A new policy need not be written If an employee is receiving benefits under a policy and still able to work, they have a - ☑☑️p️artial disability A guaranteed renewable disability policy is one where the insurer - ☑☑️h️as the right to change the premiums, but may not change any of the policy terms Accidental death benefit rider - ☑☑️D️ouble indemnity If the owner of the policy has named on irrevocable beneficiary, they cannot - ☑☑️a️ssign the policy without their consent underwriting risk classification - ☑☑️p️referred, standard, non-standard Frequency pricing principle - ☑☑️D️etermining how frequently or how often a loss will occur within a group of individuals, how these loses will effect rates 7 Coordination of benefits - ☑☑️t️he provision that applies in group insurance when an insured has coverage under multiple plans at one time Industrial life insurance has a face amount of - ☑☑️2️000 or less Industrial life is sold by - ☑☑️d️ebit insurance agents who call the clients in person on a weekly basis. Policies accrue a cash value. Premiums are paid weekly, the grace period is 28 days a supplementary benefit in a dread disease policy - ☑☑️T️reatment, travel and lodging expenses when treatment is far from home, and normal living expenses such as a car payment, mortgage/rent and utility bills Medicare Supplement insurance policies - ☑☑️I️nsurers may offer plans that contain only the "core" benefits. (Plan A) There are 12 standardized Medicare Supplement policies, identified as - ☑☑️P️lans A through L Medicare Supplements are sold by private insurers to supplement Medicare, which is generally only available to those who are at least age - ☑☑️6️5 In disability income insurance in order for bodily injury to be classife3d as accidental - ☑☑️t️he cause may be intentional but the result must be accidental Which of the following best illustrates the Principle of Indemnity - ☑☑️I️nsurable Interest Factors used to underwrite group medical expense insurance policies - ☑☑️t️he location of the group, term of the probationary period, the age and gender of those making up the group morbidity - ☑☑️t️he likelihood of illness or injury The minimum number of employees which must be covered in a group life insurance plan in California is - ☑☑️2️ 10 Persistency - ☑☑️t️he continued existence of a policy being in force. At what point in time may a representation be altered or withdrawn - ☑☑️P️rior to the insurance going into effect only During the waiting (elimination period) - ☑☑️t️he insured is not eligible for benefits. They have to wait after becoming totally disabled before receiving any benefits Concealment - ☑☑️T️he failure to disclose a material fact that a party knows and ought to communicate Concealment, whether intentional or not, entitles - ☑☑️t️he injured party to rescind (void) the contract A material fact is on that is important to the - ☑☑️u️nderwriter Fraud - ☑☑️1️) claims forms must contain a warning that false representations are subject to a penalty of perjury 2) requires the intent to deceive 3) every admitted insurer must maintain a fraud unit to investigate possible fraudulent claims An agent can only provide this statement during a tax qualified Long Tern Care insurance policy presentation - ☑☑️T️he plan may receive federal and state tax advantages The Doctrine of Utmost Good Faith - ☑☑️A️ll parties, including the insurer, the agent and the insured, are honest and acting in good faith. The Doctrine of Adhesion - ☑☑️s️ince the insurer wrote the contract, any vague language will be construed in favor of the insured, since they had no choice when they bought it. The Doctrine of Reasonable Expectations reinforces - ☑☑️t️he Doctrine of Adhesion. 11 Waiver and Estoppel are legal doctrines that state - ☑☑️o️nce an insurer gives up the right to deny a claim (a waiver), they can no longer deny it (estoppel) An insurer who provides for all of its liabilities and purchases reinsurance on all of its outstanding risks is considered to be - ☑☑️I️nsolvent On a fully contributory group disability income policy, the benefits payable to disabled employees are - ☑☑️n️ot taxable On what type of Life insurance is the beneficiary also the policyholder - ☑☑️C️redit Life Survivorship life - ☑☑️P️olicies pays a death benefit when the second insured person dies Equity Indexed Annuity - ☑☑️a️n annuity with a fixed minimum rate of return with the potential for excess stock market like returns Required duties regarding the organizational license of a co-partnership whose membership has changed - ☑☑️1️) pay the required fees 2) must file within 30 days an application for registering the change in membership signed by a general partner 3) at least one person authorized to exercise the agency powers of the original partnership must continue with the surviving partnership When membership has changed in a co-partnership for the organizational license - ☑☑️t️hey do not need to return the old license with the signatures of all the original member to the co-partnership to the commissioner Joint Life - ☑☑️P️olicies pays a death benefit when the first insured person dies Incontestability - ☑☑️t️he provision which keeps a policy which has been in force for two years from being rescinded by the insurer 12 The guaranteed insurability rider - ☑☑️a️llows the insured to purchase additional amounts of life insurance at specific points in the future without having to prove insurability Under the CIC an insured may cover an unmarried child as a dependent on their group life insurance policy up to - ☑☑️a️ge 21 Variable annuity premiums may be invested in - ☑☑️m️utual funds, money markets, fixed income investments Worker Compensation - ☑☑️1️) it covers occupational injury or sickness 2) it requires that employers be responsible for their employees 3) there are no time or dollar limits on covered expenses Under the California Insurance Code, anyone who diverts or appropriates customer funds while acting in a fiduciary capacity to their own use is guilty of - ☑☑️t️heft Fiduciary - ☑☑️t️he trust that is placed in an agent with regard to the handling of funds in a capable responsible and honest manner Foreign company - ☑☑️A️n insurance company domiciled in another state but transacting business in California A person may not transact insurance without a valid license from the Commissioner. To do so would be - ☑☑️a️ misdemeanor Miscellaneous insurance - ☑☑️i️nsurance written to indemnify the producer of any motion picture, television, theatrical, sporting event or exhibition against loss by reason of interruption, postponement, or cancellation due to death, accidental injury, or sickness that prevents a performer from commencing or continuing their performance or duties. For insurance purposes, it is "unfair" to discriminate - ☑☑️r️ace, religion, national origin, etc. 15 For insurance purposes, it is "fair" to justify rate differentials between - ☑☑️y️oung and old, sick and healthy, male and female Lowest to highest premiums in the early year - ☑☑️M️odified life, Traditional life, single premium life Mortgage redemption - ☑☑️a️ Life insurance policy that will always provide enough protection to pay off your mortgage Medical Information Bureau (MIB) members must report - ☑☑️H️ealth conditions discovered during the underwriting process State Guarantee Fund - ☑☑️1️) Up to certain limits, it protects the customers of insolvent (bankruptcy) insurers 2) Funded by assessments on member insurers 3) All admitted insurers are required to participate Vesting means - ☑☑️o️wnership Insured - ☑☑️T️he person upon whose life a Life insurance policy Probationary period (also known as the preexisting condition clause) - ☑☑️t️here is no coverage if a pre-existing sickness that the insured was treated for during a specified time prior to the new policy's effective date reoccurs within a specified time after the new policy was issued. Optometrist - ☑☑️i️s not a physician Social Security "black-out" period affect - ☑☑️S️urviving spouse 16 On a Major Medical Expense policy, the purpose of co-insurance is to - ☑☑️r️equire that the insured and the insurer share the claim after the deductible has been paid Currently insured under Social Security means - ☑☑️a️ worker must have at least 6 quarters of coverage paid in out of the last 13-quarter period ending with the quarter resulting in their death, disability or retirement. They only currently insured status, they are eligible for only certain reduced benefits. Fully insured status means - ☑☑️a️ person has paid in 40 quarters of coverage. They are eligible for all Social Security benefits. An application for life insurance become part of the Entire Contract - ☑☑️w️hen attached to the policy at issue Coordination of Benefits (COB) provision - ☑☑️P️rotect against over insurance. COB - ☑☑️I️f you are covered by more than one Group Medical Expense policies, the one that covers you as an employee is primary and the one that covers you as a dependent is excess A license renewal application - ☑☑️f️iled on or before the last day of the current license period entitles the applicant to continue operating for 60 days after expiration Case value Life insurance policies allow the policy owner to select their choice of 3 non-forfeiture options any time the policy lapses - ☑☑️c️ash surrender, reduced paid up, or extended term. The Federal law COBRA applies to employers with a minimum of - ☑☑️2️0 employees The purpose of a 75% participation requirement on a contributory Group Health insurance plan is - ☑☑️t️o prevent adverse selection If non-contributory, meaning the employer pays it all, then - ☑☑️1️00% of those eligible must enroll in the group insurance plan 17 The Rehabilitation Benefit under Disability Income insurance is designed to - ☑☑️p️ay for necessary vocational training to help the insured resume his normal occupation or prepare for a new career Implied authority - ☑☑️t️he authority an agent needs to carry out his duties, even though they are not expressed in the contract Express authority - ☑☑️t️he authority written down in an agent's contract Apparent authority - ☑☑️t️he authority that a customer believes that an agent has, whether they actually have it or not Waiver of premium - ☑☑️L️ife insurance rider that will pay the premium if the insured becomes disabled for a specific period of time Self-fund or self insure for Group Medical Expense works only - ☑☑️L️osses are predictable A life insurance policy which will allow the insured to self direct the case value into different sub-account - ☑☑️V️ariable life California Insurance Guarantee Association (CIGA) does not include - ☑☑️L️ife and annuity. California Life and Health Insurance Guarantee Association covers it. an optional Health coverage that is generally available only to persons age 65 or more - ☑☑️M️edicare part B Life settlements are accomplished through - ☑☑️a️bsolute assignment Multiple Employer Trust (MET) - ☑☑️a️n entity that allows small employers to obtain the advantages of group coverage when they would otherwise not be eligible One unit of life insurance is - ☑☑️1️000 dollars of coverage 20 Retirement benefits under Social Security are based primarily upon - ☑☑️a️verage monthly wages The primary Insurance Amount Term insurance - ☑☑️l️ess expensive than whole life at issue because it is pure protection and has no cash value. Employee Retirement Income Security Act (ERISA) of 1974 was passed to protect - ☑☑️p️lan participants and beneficiaries A deferred compensation plan - ☑☑️a️ non-qualified plan Aleatory means - ☑☑️h️ave an unequal exhange % they are vested right the way in 401 k is - ☑☑️1️00% Which of the Life insurance conversions are permitted - ☑☑️T️erm Life to Whole Life On group coverage, Tax implications of Disability Income insurance - ☑☑️p️remiums are deductible and benefits are taxed On individual disability income insurance, Tax implication is - ☑☑️i️nsured cannot deduct the premiums paid, but benefits are deductible. Non-contributory employee group insurance premiums paid by employers on behalf of their employees - ☑☑️t️ax deductible for the employer and tax free to employee Morbidity table - ☑☑️T️he actuarial table used by insurers to determine product benefits and pricing A dividend option - ☑☑️p️aid-up additions 21 Employers may obtain the coverage of Worker Compensation from - ☑☑️t️he competitive State Compensation Fund, elect to self insure, any insurer admitted to sell it Part A Medicare covers - ☑☑️H️ospital Part B Medicare covers - ☑☑️P️hysicians and related services with additional premium charge Defined benefit - ☑☑️t️ype of qualified retirement plan that tied to length of service and salary level 22