Insurance Policies and Contracts: Key Features and Provisions, Exams of Insurance law

Download Insurance Policies and Contracts: Key Features and Provisions and more Exams Insurance law in PDF only on Docsity! Life and Health Insurance Exam (Missouri)Questions 100% Aswered! Insurance policies are considered aleatory contracts because: 1)they are take it or leave it contracts 2)both parties consent to the contract 3)performance is conditioned upon a future occurence 4)the contract is voidable upon proof of fraud -ANSWER Performance is conditioned upon a future occurence, because there is an element of chance and potential for unequal exchange of value K failed to pay a renewal premium within the time granted by the insurer. K then sends in a payment which the insurer subsequently accepts. Which policy provision specifies that coverage may be restored in this situation? 1)free-look 2)reinstatement 3)grace period 4)consideration -ANSWER Reinstatement What type of contract liquidates an estate through recurrent payments? 1)Universal life insurance 2)Whole life insurance 3)Annuity 4)401k -ANSWER Annuity An insured pays premiums on an annual basis for an individual health insurance policy. What is the MINIMUM number of days for the Grace Period provision? 1)7 2)10 3)20 4)31 -ANSWER The grace period is a minimum of 31 days for policies hat are paid for on an annual basis. Making an unfair comparison of two policies is defined as -ANSWER misrepresentation Nursing home benefits must be provided for at least 12 consecutive months in which of the following types of policies? 1)blanket custodial 2)long term care 3)critical illness 4)Medicare supplements -ANSWER long term care T would like to be assured $10,000 is available in 10 years to replace a roof on his house. What kind of $10,000 policy should T purchase? 1)Interest Sensitive Whole Life 2)Ten Year Endowment 3)Variable Universal Life 4)Ten Year Renewable Term -ANSWER Ten Year Endowment An insured recently took out a cancer insurance policy. The time limit on certain defenses provision in this policy allows the insurer to 1)to cancel a policy for any reason for up to 5 years 2)to reduce the benefit for a loss occurring after two years due to misstatements 3)to deny the amount of a claim for statements on the application 4)to deny the amount of a claim for misstatements occurring prior to the expiration of the first 2 policy years -ANSWER To deny the amount of a claim for missstatements occurring prior to the expiration of the first 2 policy years Elimination Period -ANSWER The time between the onset of a disability, and when you are eligible for benefits. Medicare Part B does not cover 1)occupational therapy 2)inpatient hospital services 3)physician and surgeon services 4)medical equipment rental -ANSWER inpatient hospital services All of the following statements about traditional individual retirement accounts are false EXCEPT 1)10% penalty is applied to withdrawals after age 59 1/2 2)withdrawals are normally tax free to the recipient 3)10% penalty is applied to withdrawals before age 59 1/2 4)Contributions are not tax deductible -ANSWER 10% penalty is applied to withdrawls before age 59 1/2 What is Old Age and Survivors Health Insurance (OASDHI) also known as? -ANSWER social security Which of the following dividend options results in taxable income to the policy owner? 1)paid up additions 2)cash 3)accumulation of interest 4)reduced premium -ANSWER Accumulation of interest because while policy dividends are not taxable, any interest paid on them is taxable income in the year the interest is credited to the policy Which of the following may not be issued after the director of insurance finds an insurance code violation committed by a licensee? A 55 year old recently received a $30,000 distribution from a previous employer's 401k plan, minus $6,000 withholding. Which federal taxes apply if none of the funds were rolled over? -ANSWER Income taxes plus a 10% penalty tax on $30,000 Prior to a producer's license being revoked, a hearing must be held. Prior to this hearing, the Director of Insurance is required to give what kind of notice? -ANSWER Written notice to the producer Which of the following best describes how pre-admission certifications are used? - ANSWER Used to prevent nonessential medical costs In Missouri, an A&H policy that is paid on a monthly basis requires a grace period of at LEAST -ANSWER Ten days Which of these statements concerning an individual disability income policy is true? - ANSWER Normally includes an Elimination period Whose interest is being protected by the enactment of "The Replacement of Life Insurance and Annuities" regulation? -ANSWER Policyowner What is the purpose of the USA Patriot Act? -ANSWER detect and deter terrorism Which of the following characteristics is CORRECT about Interest Sensitive Whole Life? -ANSWER There is a flexible premium payment Under the USA Patriot Act, insurers are required to report receipt of cash payments in excess of -ANSWER 10,000 Which of the following organizations would make reimbursement payments directly to the insured individual for covered medical expenditures? 1)Administrative services only 2)Commercial insurer 3)PPO 4)HMO -ANSWER Commercial insurer In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What kind of contract is this? -ANSWER unilateral K buys a policy where the premium stays fixed for the first 5 years. The premium then increases in year 6 and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this? -ANSWER Modified Whole Life Which of the following best describes a short term medical expense policy? -ANSWER nonrenewable When must insurable interest exist for a life insurance contract to be valid? -ANSWER Inception of the contract M is insured under a basic Hospital/Surgical Expense policy. A physician performs surgery on M. What determines the claim M is eligible for? -ANSWER Determined by the terms of the policy Why would the Director of Insurance examine the records of an insurance company? - ANSWER To determine the solvency of the company Which of the following types of policies do NOT require that a policy summary be given? -ANSWER Credit life What is the underlying concept regarding level premiums? -ANSWER The early years are charged more than what is needed Which type of policy pays benefits to a policyholder covered under a Hospital Expense policy? 1)Limited 2)Special risk 3)Blanket 4)Reimbursement -ANSWER reimbursement Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it? 1)Modified whole life 2)20-Pay Life 3)Decreasing Term 4)Endowment -ANSWER Decreasing term Which statement regarding the Misstatement of Age provision is considered to be true? -ANSWER Coverage will be adjusted to reflect the insured's true age if a misstatement of age is discovered All of these statements concerning a licensee's responsibility for premiums received are true EXCEPT -ANSWER The licensee must hold them in a separate account before transmitting them to the insurance company. Who signs a Notice Regarding Replacement form when an application is taken for a new life insurance policy that replaces an existing one? -ANSWER Producer and applicant J purchased a Disability Income Policy that ONLY J can terminate and on which the rates will never increase above those illustrated in the policy. Which of the following types of policies did J purchase? 1)Guarenteed renewable 2)Noncancelable 3)Optionally Renewable 4)Conditionally renewable -ANSWER Noncancelable What is being delivered during a policy delivery? -ANSWER Insurance contract to the proposed insured Which of the following would a Medicare supplement policy cover? 1)Long term disabiltiy 2)Allowable amounts under Medicare Part B 3)Loss of income due to disability 4)Services excluded by Medicare -ANSWER Allowable amounts under Medicare Part B Deductibles are used in health policies to lower -ANSWER overuse of medical services Suitability information for an annuity includes -ANSWER Age, annual income, financial experience Which of these is considered a mandatory provision? 1)Payment of Claims 2)Insurance with other insurers 3)misstatement of age 4)change of occupation -ANSWER Payment of Claims is considered a mandatory provision and directs where the claim benefits will go. The others are considered optional provisions. Which of the following provisions specifies how long a policyowner's health coverage will remain in effect if the policyowner doesn't pay the premium when it is due? - ANSWER Grace Period S has a Whole Life policy with a premium payment due soon. Which provision would keep the policy in force if S does not make the required payment and the policy has adequate cash value from which the premium payment can be made? -ANSWER Automatic Policy Loan Which of these types of life insurance allows the policy owner to have level premiums and to also choose from a selection of investment options? -ANSWER Variable Life According to the Time Payment of Claims provision, the insurer must pay Disability Income benefits no less frequently than which of the following options? 1)Annually 2)Semiannually 3)Quarterly 4)Monthly -ANSWER Monthly