NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answe, Exams of Nursing

Download NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answe and more Exams Nursing in PDF only on Docsity! NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. Process 2103 (d-i) - Answer 1. The Superintendent may issue a license to any person, firm or corporation who has complied with the requirements of the Insurance Code, authorizing the licensee to act as agent of any authorized insurer. Every individual applicant for a license under this section and every proposed sub-licensee must be 18 years of age or older at the time of issuance of such license. The person must submit to and pass a written examination required by the Superintendent. Producer Definition (2101(k)) - Answer An insurance producer means an insurance agent, insurance broker, reinsurance intermediary, excess lines broker, or any other person required to be licensed under the insurance laws of this state to sell, solicit or negotiate insurance. Who Should be Licensed (2101(k)(1)) - Answer 1. The term "insurance producer" does not include: An officer, director or employee of a licensed insurer, fraternal benefit society or NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. health maintenance organization or of a licensed insurance producer, provided that the officer, director or employee does not receive any commission on policies written or sold to insure risks residing, located or to be performed in this state and: (a) the officer, director or employee's activities are executive, administrative, managerial, clerical or a combination of these, and are only indirectly related to the sale, solicitation or negotiation of insurance; (b) the officer, director or employee's function relates to underwriting, loss control, Inspection or the processing, adjusting, investigating or settling of a claim on a contract of Insurance; or (c) the officer, director or employee is acting in the capacity of a special agent or agency supervisor assisting licensed insurance producers where the person's activities are limited to providing technical advice and assistance to licensed insurance producers and do not include the sale, solicitation or negotiation of insurance. NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. Agent 2101(k) - Answer insurance producer means an insurance agent, insurance broker, reinsurance intermediary, excess lines broker, or any other person required to be licensed under the insurance laws of this state to sell, solicit or negotiate insurance. The applicant must be at least 18 years of age at the time of license issuance. An examination is required for each applicant, except where noted for applicants with a change in residency moving to New York (see code 2103 below). Brokers 2101(c) - Answer a licensed insurance representative who does not represent a specific insurance company, but places business among various companies. Legally, the broker is usually regarded as a representative of the insured rather than the insuring company. NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. Brokers 2101(h) - Answer any licensed attorney at law of this state. Consultants (2107) - Answer The Superintendent may issue an insurance consultant's license to any person, firm, association or corporation who or which has complied with the requirements of this chapter with respect to either: life insurance, meaning all of those kinds of insurance authorized. Any such license issued to a firm or association shall authorize only the members of such firm or association named in such license as sub-licensees to act individually as consultants there under, and any such license issued to a corporation shall authorize only the officers and directors thereof named in such license as sub-licensees to act individually as consultants there under. NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. Adjuster 2101(g) - Answer The Superintendent may, in his discretion require an applicant for a license under this section to present evidence, in such form as he prescribes, that such applicant has been employed, for a period which he deems reasonable, by an insurer, an independent adjuster or a public adjuster, in the performance of duties which in his opinion would provide the applicant with a satisfactory preliminary training for the duties and responsibilities which would evolve upon him as a licensee under this section. The term independent adjuster means any person, firm, association or corporation who for money, commission or any other thing of value, acts in this state on behalf of an insurer in the work of investigating and adjusting claims arising under insurance contracts issued by such insurer and who performs such duties required by such insurer as are incidental to such claims and also includes any person who for compensation or anything of value investigates and adjusts claims on behalf of any independent adjuster. NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. licensed for the same line or lines of authority in another state, provided, however, that the applicant's home state grants non- resident licenses to residents of this state on the same basis. Such individual shall also not be required to complete any prelicensing education. This exemption is only available if the person is currently licensed in that state or if the application is received within 90 days of the date of cancellation of the applicant's previous license and if the prior state issues a certification that, at the time of cancellation, the applicant was in good standing in that state or the state's producer database records, maintained by the National Association of Insurance Commissioners, its affiliates or subsidiaries indicate that the producer is or was licensed in good standing for the line of authority requested. An individual or entity licensed in another state that moves to this state must make an application within 90 days of establishing legal residence to become a resident licensee. No prelicensing education or examination will be required of that person to obtain any line of authority NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. previously held in the prior state except where the Superintendent determines otherwise by regulation. Nonresident 2136 - Reciprocity - Answer The Superintendent shall waive any requirements for a nonresident license applicant otherwise applicable under this chapter if: (a) the applicant has a current and valid license in his or her home state and is in good standing in his or her home state; (b) the applicant has submitted a completed application in the form prescribed by the Superintendent or submitted the application for licensure submitted to his or her home state; (c) the applicant has paid the fees required by this chapter; and (d) the applicant's home state awards nonresident insurance producer licenses to residents of this state on the same basis as provided in this subsection. NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. Business Entities 2101(p) - Answer A business entity means a corporation, association, partnership, limited liability company, limited liability partnership or other legal entity. Business Entities 2103(e) - Answer Before any original insurance agent's license is issued to a business entity, there must be on file in the office of the Superintendent an application by the prospective licensee in such form or forms and supplements, and containing information the Superintendent prescribes and for each business entity, the sub-licensee or sub-licensees named in the application must be designated responsible for the business entity's compliance with the insurance laws, rules and regulations of this state. Temporary License (2109; Regs. 9, 18, 29, Part 20.1) - Answer A temporary license may be issued in the case of death, service in armed forces or disability. The Superintendent may issue a temporary insurance agent's or insurance broker's license, or NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. The Superintendent may issue renewal licenses for an additional term or terms of 90 days each exceeding the aggregate period of 15 months when in his judgment it will best serve the interests of any person serving in the armed forces of the United States. No person holding a temporary license is permitted to solicit new business under the temporary license. Renewal (2103(j); Reg. 5, Part 21.2) - Answer All individual insurance agent licenses must be renewed every two years. Individual licenses are issued with an expiration date determined by the date of birth: The license of an agent born in an even numbered year will expire on the agent's birthday in an even numbered year. The license of an agent born in an odd numbered year will expire on the agent's birthday in an odd numbered year NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. Adjuster licenses are not determined on a birth date renewal. Adjuster licenses expire on December 31st of even-numbered years. Resident Licensees - Answer All licensed agents, brokers, consultants and public adjusters must complete continuing education (CE) requirements as a condition of renewing these licenses. Licensees must complete 15 credits of approved continuing education during each biennial licensing period. After your license has been renewed the first time, continuing education (CE) will always be required upon subsequent renewal or relicensing applications. Credits must be accumulated during the renewal period, which begins with the effective date of the license and ends with the expiration date. NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. CE must be completed before processing the renewal or relicensing application. Assumed Names (2102(f)) - Answer Licensees must notify the Superintendent upon changing his, her or its legal name. Except for an individual licensee's own legal name, no licensee may use any name, in conducting a business regulated by this article that has not been previously approved by the Superintendent. Change of Address (All Addresses, including Email) - (2134; Reg. 5, Part 21.4; Reg. 6, Part 22.3; Reg. 7, Part 23.4) - Answer Licensees must inform the Superintendent by a means acceptable to the Superintendent of a change of business or residence address within 30 days of the change. This also includes e-mail addresses. NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. Commissioner, or has violated any law in the course of his dealings in such capacity; 2. provided materially incorrect, materially misleading, materially incomplete or materially untrue information in the license application; 3. obtained or attempted to obtain a license through misrepresentation or fraud; 4. has used fraudulent, coercive or dishonest practices, demonstrated incompetence, demonstrated untrustworthiness, or demonstrated financial irresponsibility in the conduct of business in this state or elsewhere; 5. improperly withheld, misappropriated or converted any monies or properties received in the course of business in this state or elsewhere; 6. intentionally misrepresented the terms of an actual or proposed insurance contract or application for insurance; 7. has been convicted of a felony; NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. 8. admitted or been found to have committed any insurance unfair trade practice or fraud; 9. had an insurance producer license, or its equivalent, denied, suspended or revoked in any other state, province, district or territory; 10. forged another's name to an application for insurance or to any document related to an insurance transaction; 11. improperly used notes or any other reference material to complete an examination for an insurance license; 12. knowingly accepted insurance business from an individual who is not licensed; 13. failed to comply with an administrative or court order imposing a child support obligation; or 14. failing to pay state income tax or comply with any administrative or court order directing payment of state income tax. NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. Before revoking or suspending the license of any insurance producer or other licensee pursuant to the provisions of this article, the Superintendent will give notice to the licensee and to every sublicensee and will hold, or cause to be held, a hearing not less than 10 days after giving notice. If an insurance producer's license or other licensee's license pursuant to the provisions of this article is revoked or suspended by the Superintendent, the Superintendent will give notice to the licensee. No individual, corporation, firm or association whose license as an insurance producer or other licensee has been revoked, and no firm or association of which such individual is a member, will be entitled to obtain any license under the provisions of this chapter for a period of one year after such revocation, or, if such revocation be judicially reviewed, for one year after the final determination affirming the action of the Superintendent in revoking such license. NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. Examine and investigate into the affairs of any person in order to determine whether the person has violated or is violating the insurance and regulations of this state. Responses to requests for information by the Superintendent should be made not less than 15 business days. The Superintendent is authorized, after notice and hearing, to levy a civil penalty against such person in an amount not to exceed $500 per day for each day beyond the date specified by the Superintendent for response, but in no event will such penalty exceed $10,000. In the event the Superintendent levies five separate civil penalties against any one person within five years for failure to comply with this section, the Superintendent is authorized, after notice and hearing, to levy an additional civil penalty against not to exceed $50,000. The Superintendent is also authorized to levy additional civil penalties not to exceed $50,000, after notice and hearing, against such person for every five subsequent violations of this NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. section within a five year period. Any licensee may surrender his or her license in lieu of payment of any civil penalty imposed by the Superintendent. Certificate of Authority (1102) - Answer The certificate of authority is an insurer's license to transact insurance in this state as an authorized insurer. Solvency (307) - Answer It is required that each insurer file annual financial statements for review by the Superintendent to determine the continued solvency of the insurer. Unfair Claim Settlement Practices (2601; Reg. 64, Part 216.3- 216.6) - Answer Unfair settlement practices include: Knowingly misrepresenting to a claimant pertinent facts or policy provisions related to the coverages at issue. Failing to NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. acknowledge within reasonable time, communications with respect to claims arising out of its policies. Failing to adopt and implement reasonable standards of prompt investigation of claims arising out of an insurer's policies. Claims must be promptly investigated to determine liability. Not attempting in good faith to effectuate prompt, fair and equitable settlements of claims submitted in which liability has become reasonable clear. Compelling policyholders to institute suit to recover amounts due under its policies by offering less than the amounts ultimately recovered in suit brought by them Appointment of Agent - Answer The appointment must be made 15 days from the date an agency contract is executed, or the first application is submitted NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. Rebating (2324, 4224) - Answer Rebating occurs if the buyer of an insurance policy receives any part of the agent's commission or anything of significant value as an inducement to purchase a policy. State regulations are very strict in this respect and are designed to prohibit discrimination in favor of, or against, policyowners. In this state, the practice of rebating is illegal and the following are defined as illegal inducements: Offering, paying or allowing any rebate or other inducement not specified in the policy or any special favor or advantage concerning the dividends or other benefits that will accrue, in order to place, negotiate or renew the policy. Offering, selling or purchasing anything of value not specified in the policy. Offering, paying or allowing any rebate of any premium on any insurance policy or annuity contract. NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. Controlled Business (2103(i)) - Answer The Superintendent may refuse to issue, suspend, or revoke a license if an applicant receives more than 10% of the aggregate net commissions during a 12- month period from insurance sold to a licensee's spouse or other family members or business associates or their immediate family. Sharing Commissions (2121, 2128) - Answer The sharing of commissions with an unlicensed person or entity is prohibited. Fiduciary Responsibility - Answer When someone has a fiduciary duty to someone else, the person with the duty must act in a way that will benefit someone else, usually financially. The person who has a fiduciary duty is called the fiduciary, and the person to whom the duty is owed is called the principal or the beneficiary. NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. License display - Answer an insurance agent or broker must prominently display the license or licenses of the supervising person or persons responsible for that office. While the Insurance Law and regulations promulgated thereunder do not require other insurance agents or brokers in an office to display their licenses, the Department is of the view that it is a good practice for each licensee to do so. Commissions and compensation - Answer A sales commission is a sum of money paid to an employee upon completion of a task, usually selling a certain amount of goods or services. Employers sometimes use sales commissions as incentives to increase worker productivity. A commission may be paid in addition to a salary or instead of a salary. Termination responsibilities of producer - Answer https://www.nysenate.gov/legislation/laws/ISC/2112 NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. regulated entity's cybersecurity program must ensure the safety and soundness of the institution and protect its customers. Fair Credit Reporting Act (FCRA) - Answer federal law that regulates the collection of consumers' credit information and access to their credit reports. It was passed in 1970 to address the fairness, accuracy, and privacy of the personal information contained in the files of the credit reporting agencies. Workers Compensation - Answer Eligibility - All work injuries that occur during the course of work are covered under New York workers' compensation law. New York, like most states, also covers occupational diseases, which are illnesses that arise during the course of employment. Typical occupational diseases include asbestosis and hearing loss. Industrial (work-related) injuries can include bone fractures, sprains, burns, cuts, amputations, and other injuries that cause NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. immediate harm. If your injury requires more than simple first aid, and it occurred in the course of your employment, you likely have a workers' compensation claim. Activities that happen outside the scope of your employment, such as commuting to and from work, are not covered. In other words, injuries or diseases arises from these activities do not give rise to a workers' compensation claim. Benefits - If you have an allowed workers' compensation claim, you will begin receiving workers' compensation benefits immediately. Your employer's workers compensation insurance carrier will pay medical bills for treatment related to your industrial injury. If you are unable to work due to your work-related injury or occupational disease for more than seven days, your employer's workers' compensation insurance carrier will begin payment of cash benefits to compensate for your lost wages. These temporary disability benefits equal two-thirds of your average NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. weekly wage, multiplied by the percentage of your disability. Cash benefits are subject to a weekly maximum established by the state each year. As of July 1, 2017, the maximum benefit is $870.61 per week. These payments are usually paid every other week. The insurance carrier will continue to make these payments to you until your workers' compensation claim is closed or you are able to return to work, whichever occurs first. If your doctor finds that your injury has caused a permanent impairment, you may also be entitled to a permanent disability award. When a work injury results in death, the worker's family members can receive weekly death benefits and reimbursement for funeral expenses. Death Benefit (face amount/face value/coverage) - Answer The amount paid to beneficiaries when a policyholder dies. NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. You can also adjust the death benefit within limits outlined in your policy. Increasing it may subject you to further underwriting, while there may be fees to decrease it. If your financial situation changes, the ability to change the death benefit amount within your policy is appealing. While this can be done with term life insurance policies, this feature is one of the main selling points of a universal policy. Variable Life Insurance - Answer similar to whole life insurance in that they both have a cash value, but the functions of the cash values are quite different. With a whole life insurance policy, the cash value component is a savings account. That's why, although the growth might be small compared to other investment options, there is a guaranteed minimum rate. It also includes dividend payments from the life insurance company. NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. A variable life insurance cash value, though, is more akin to investing. The money paid into it goes into a series of mutual fund-like sub-accounts where you can get some decent growth, but you can also lose money depending on the market. The cash value is more or less placed in the stock market. While this makes variable life insurance policies a better investment option than whole life insurance policies - the potential for higher, tax-deferred growth makes it a "super-IRA" - you can only invest in the sub-accounts available through your policy. That means you don't get to choose from the wide variety of mutual funds that are available on the open market. As an investment vehicle, variable life insurance policies provide tax-free money to beneficiaries during the time that the policyholder is alive. Once that person dies, however, that money is retained by the insurance company. Like other types of life insurance, a variable policy can help cover funeral and end-of-life expenses. NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. Variable universal life insurance - Answer If you think variable universal life insurance is just some aspects of universal and variable life insurance policies mashed together...well, you're mostly right. A variable universal life insurance policy takes the best (or worst, depending on how you look at it) of the other two policies: you can adjust the premium and death benefit amount while investing the cash value in the policy's cash value. But variable universal life insurance also comes with many of the same elements as the other two. Again, this policy is more complicated than most people need, and it isn't your best investment or insurance option. Simplified issue life insurance - Answer Typically when you apply for life insurance, you go through a paramedical exam as part of the underwriting process so the insurer can find out how risky you are to insure. Ultimately, it helps them set your premium rate. NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. would provide means that you're going to be paying more for coverage. Final expense insurance - Answer Final expense insurance is a unique type of policy. It covers the cost of anything associated with your death, whether its medical costs, a funeral, or cremation - whatever your literal final expenses are. It's usually only issued to people of a certain age and the policy is valid up to a certain age. Like other permanent life insurance policies, there's a cash value that can grow over time. Final expense insurance is a simplified issue policy in most cases, but if you don't pass the health questionnaire you'll be placed in a guaranteed issue policy instead. Final expense insurance is usually attractive to older people who don't have other life insurance coverage (maybe they outgrew their term life policy) and don't have enough savings to pay for their own funeral, which can cost upwards of NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. $8,000.Coverage is usually for small amounts, from $5,000 to $25,000, to cover those expenses. It's good if you don't have another way to pay for your funeral and don't want to burden your family with the costs. However, it has the same drawbacks as guaranteed issue life insurance: higher life insurance premiums for relatively low coverage amount. If you or your family are able to pay for a funeral through other means, that's your best bet. Term Life Insurance - Answer Term life insurance lasts for a set number of years before it expires. If you die before the term is up, a set amount of money, known as the death benefit, is paid to your designated beneficiary. Term life is considered the simplest, most accessible insurance policy. When you make your payments (known as your premium), you're simply paying for the death benefit that goes to your beneficiaries in the event of your death. The death benefit can be paid out as a NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. lump sum, a monthly payment, or an annuity. Most people elect to receive their death benefit as a lump sum. Term life insurance policies are more affordable than other types of life insurance policies, usually costing between $30-40 a month for a 30-year, $500,000 policy for healthy people in their 20s and 30s. They expire at the end of the term, which can last up to 30 years. Level Term Life Insurance - Answer A term life policy guaranteed to have the premium remain the same for the duration of the contract. This is what most people refer to as term life. Purchased for a set number of years (5, 10, 30 years, for example), the premium and the death benefit remains the same (level) until the end of the term. Many of these policies can be converted to a permanent policy at the end of the term, or can be canceled at any time. NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. Premium payments often start at a higher level than policies with similar coverage but are ultimately worth more than competitors as policyholders experience increased coverage over time at no additional expense. Terms are usually 10, 15, 20 and 30 years, based on what the policyholder requires. Whole Life Insurance - Answer considered a permanent life insurance policy because if does not expire. It has a death benefit but also a cash value, which is a tax-deferred savings account that is included in the policy. The cash value accrues interest at a predetermined fixed rate. Each month, a certain portion of your premium will go into the cash value of the policy, which offers a guaranteed rate of return (The exact amount that goes into savings is determined by your individual policy). The policy's cash value grows over time. NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. Due to the fees and the extra feature, a whole life insurance policy can cost five to 15 times as much as a term life policy (for the same death benefit amount). Whole life lasts for as long as you pay the premiums. However, the cash value component can make whole life more complex than term life because you have to consider surrender fees, taxes, and interest as well as other stipulations. May be worth it if you need the cash value to cover things like endowments or estate plans, which might benefit from the greater options that a whole life policy provides. Continuous premium (straight life) - Answer Straight life insurance is a type of permanent life insurance that provides a guaranteed death benefit and has fixed premiums. Also known as whole or ordinary life insurance, the policy has a term length that lasts your entire life. This is different from term life insurance which expires after a set number of years. NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. As a form of permanent life insurance, straight life insurance comes with a cash value account that will grow over the life of the plan. The cash value component of a life insurance policy is separate from the death benefit. Each month, part of the premium that you pay for a straight life policy will be added to the cash value account. The rest of the premium goes towards the company's costs for providing insurance limited-payment life insurance - Answer Limited pay life insurance is for an individual who owns a whole life insurance policy but chooses to pay for the total cost of their premiums for a limited number of years. With the limited pay life insurance option, you pay premiums in the first 10, 15, or 20 years of ownership, but the benefits last a lifetime. NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. children. An unemployed person may want to reduce premiums to accommodate a restricted budget. As with other permanent life insurance, adjustable life insurance has a savings component that earns cash value interest. Today, most adjustable life insurance cash value accounts have a guaranteed rate of interest. Universal Life Insurance - Answer permanent life insurance with an investment savings element and low premiums like term life insurance. Most universal life insurance policies contain a flexible premium option. However, some require a single premium (single lump-sum premium) or fixed premiums (scheduled fixed premiums). Policyholders have the flexibility to adjust their premiums and death benefits. Universal life insurance premiums consist of two NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. components: a cost of insurance (COI) amount, and a saving component, known as the cash value. The cost of universal life insurance is the minimum amount of a premium payment required to keep the policy active. can accumulate cash value, which earns interest based on the current market or minimum interest rate. Policyholders may borrow against the accumulated cash value without tax implications. Joint-Life (First to die) - Answer combines life insurance for you and your spouse into one joint policy. Both individuals are listed as insured parties on the policy. When the first person dies, the policy's death benefits will be paid out to the survivor. The policy also terminates at that point, leaving the surviving spouse with no life insurance coverage. NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. Survivorship (Second-to-Die) Life Insurance - Answer Second-to- die insurance is a type of life insurance on two people (usually married) that provides benefits to the beneficiaries only after the last surviving person on the policy dies. This differs from regular life insurance in that the surviving partner doesn't receive any benefits after the spouse dies. Thus, second-to-die insurance is used for estate planning. Life insurance on minors (3207(b)) - Answer A minor above the age of fourteen years and six months shall be deemed competent to enter into a contract for, be the owner of, and exercise all rights relating to, a policy of life insurance upon the life of the minor or upon the life of any person in whom the minor has an insurable interest, but the beneficiary of such policy may be only the minor or the parent, spouse, brother, sister, child or grandparent of the minor. NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. the benefit of the individual members. In most plans, the group policy owner is the employer. Employees receive a certificate of insurance that shows they are insured. A second characteristic is that group insurance usually costs less that comparable insurance purchased individually. Employers usually pay part or all of the cost, which reduces or eliminates premium payments by the employees. In addition, administrative and marketing expenses are reduced as a result of mass distribution methods. Another characteristic is that individual evidence of insurability is usually not required. Group selection of risks is used, not individual selection. The insurer is concerned with the insurability of the group as a whole rather with the insurability of the single member within the group. Term insurance is the most common form of group life insurance. Group term life is typically provided in the form of yearly renewable term insurance. When group term insurance is provided through your employer, the employer usually pays NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. for most (and in some cases all) of the premiums. The amount of your coverage is typically equal to one or two times your annual salary. Group term coverage remains in force until your employment is terminated or until the specific term of coverage ends. You may have the option of converting your group coverage to an individual policy if you leave your employer. However, most people choose not to do this because these conversion premiums tend to be much higher than premiums for comparable policies available to individuals. Typically, only those who are otherwise uninsurable take advantage of this conversion option. Types of Group plan sponsors - Answer a designated party— usually a company or employer—that sets up a healthcare or retirement plan, such as a 401(k), for the benefit of the organization's employees. The responsibilities of the plan NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. sponsor include determining membership parameters, investment choices, and in some cases, providing contribution payments in the form of cash and/or stock. Some companies offer retirement savings plans, pension plans, or health plans to their employees as part of their employee benefits program. These companies are referred to as plan sponsors. Employers are typically plan sponsors, but unions and professional bodies could also be plan sponsors. Credit life insurance - Answer type of life insurance policy designed to pay off a borrower's outstanding debts if the borrower dies. The face value of a credit life insurance policy decreases proportionately with the outstanding loan amount as the loan is paid off over time, until both reach zero value. NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. eligible to receive certain tax benefits, unlike a non-qualified plan. An employer establishes such a retirement plan on behalf of and for the benefit of the company's employees. It is one tool that can help employers attract and retain good employees. defined contribution plan - Answer retirement plan that's typically tax-deferred, like a 401(k) or a 403(b), in which employees contribute a fixed amount or a percentage of their paychecks to an account that is intended to fund their retirements. The sponsor company will, at times match a portion of employee contributions as an added benefit. These plans place restrictions that control when and how each employee can withdraw from these accounts without penalties. Defined contribution (DC) retirement plans allow employees to invest pre-tax dollars in the capital markets where they can grow tax-deferred until retirement withdrawals. NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. 401(k) and 403(b) are two popular defined-contribution plans commonly used by companies and organizations to encourage their employees to save for retirement. DC plans can be contrasted with defined benefit (DB) pensions, whereby retirement income is guaranteed by an employer. With a DC plan, there are no guarantees, and participation is both voluntary and self-directed. Defined Benefit Plan - Answer employer-sponsored retirement plan where employee benefits are computed using a formula that considers several factors, such as length of employment and salary history. The company administers portfolio management and investment risk of the plan. There are also restrictions on when and by what method an employee can withdraw funds without penalties. Benefits paid are typically guaranteed for life and rise slightly to account for the increased cost of living. NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. A defined-benefit plan is an employer-based program that pays benefits based on factors such as length of employment and salary history. Pensions are defined-benefit plans. In contrast to defined-contribution plans, the employer, not the employee, is responsible for all of the planning and investment risk of a defined-benefit plan. Benefits can be distributed as fixed-monthly payments like an annuity or in one lump-sum payment. The surviving spouse is often entitled to the benefits if the employee passes away. 401k - Tax Sheltered Annuities - Answer A 401(k) plan is a tax- advantaged, defined-contribution retirement account offered by many employers to their employees. It is named after a section of the U.S. Internal Revenue Code. Workers can make contributions to their 401(k) accounts through automatic NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. Under a SEP, the employer may make a contribution of up to the lesser of 15% or $30,000 of compensation to IRAs established in each employee's name. Hence, such an arrangement is known as a SEP-IRA. When made, these contributions are owned in their entirety by the employee, and they may be withdrawn and/or transferred by the employee at any time. Contributions to a SEP by the employer are discretionary, but must be deposited into each eligible employee's IRA when made. Because these accounts are IRAs, the amounts therein are subject to all IRA rules regarding transfer, withdrawal and taxation. Savings Incentive Match Plan for Employees (SIMPLE) - Answer Established by the Small Business Protection Act of 1996, a SIMPLE may be set up by employers who have no other retirement plan and who have 100 or fewer employees with at least $5,000 in compensation for the previous year. They may be structured as an IRA or as a 401(k) plan. Employees may NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. defer any percentage of compensation up to $6,500 per year to the SIMPLE, and the employer is required to make a matching contribution of up to 3% of the employee's pay based on that election. The employer may reduce the maximum matching percentage in any two years out of five. Alternatively, the employer may establish a uniform 2% of salary contribution per year for all eligible employees regardless of whether they contribute to the SIMPLE or not. 457 Plan - Answer Non-qualified, deferred compensation plan established by state and local governments for tax-exempt government agencies and tax exempt employees. While governmental 457 plans have special catch-up provisions for those age 50 or older, they enjoy an even greater contribution amount in the three years before retirement. The catch-up provisions three years prior to retirement will amount to double the normal amount for allowable maximum NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. contributions. Until withdrawn, 457 plan contributions and all earnings remain untaxed. The 457 plan assets of tax-exempt employers are subject to the claims of the employer's creditors, but those of plans sponsored by governmental entities are not. Plan distributions may occur at retirement; on separation from employment; as the result of an unforeseeable emergency; and at death. Distributions may be taken as a lump sum, in annual installments, or as an annuity. In 2002 and later years, proceeds from a governmental 457 plan may be transferred to an IRA or a new employer's 401(k), 403(b) or 457 plan that accepts transfers from an old employer's plan. On withdrawal from an IRA or from the new plan, the distribution will be subject to immediate taxation at ordinary income tax rates. ownership provision - Answer provision that states that a policy may be owned by a different person than the one insured. NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. Reinstatement - Answer Reinstatement is the restoration of a person or thing to a former position. Regarding insurance, reinstatement allows a previously terminated policy to resume effective coverage. In the case of nonpayment, the insurer may require evidence of eligibility, such as an updated medical examination for life insurance, and full payment of outstanding premiums. Reinstatement of a life insurance policy occurs after the end of a grace period and when the contract is no longer in force. Reinstatement requirements may vary among life insurance providers. There is no guarantee by law for reinstatement terms. The reinstatement process may depend on how much time passed since the policy lapse and the type of insurance policy. Sometimes applying for a new policy may be less expensive than reinstating an old policy. NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. After nonpayment of a life insurance premium, a policy enters its grace period. During the grace period, the insurance company remains responsible for paying death benefits on valid death claims. If the insurance company does not receive a premium payment during the grace period, the policy will lapse. At this point, the insurance company is no longer responsible for paying a claim. A life insurance policy may typically be reinstated within 30 days of a lapse without additional paperwork, underwriting, or attestations of health. Insureds often pay a reinstatement premium, which is larger than the original premium. Insurance companies add the additional reinstatement premium to the accumulated cash value of the policy and pay administrative expenses incurred from the lapse. Incontestability - Answer An incontestability clause is a clause in most life insurance policies that prevents the provider from NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. voiding coverage due to a misstatement by the insured after a specific amount of time has passed. A typical incontestability clause specifies that a contract will not be voidable after (usually two) or three years due to a misstatement. Misstatement of age provision - Answer a provision in a life insurance policy that adjusts the amount of insurance when the insured's age was misstated on the application to the amount that the premium would have purchased at the correct age based on the insurer's rates at the date of policy issuance. Exclusion provision - Answer An exclusion is a policy provision that eliminates coverage for some type of risk. Exclusions narrow the scope of coverage provided by the insuring agreement. In many insurance policies, the insuring agreement is very broad. Insurers utilize exclusions to carve away coverage for risks they are unwilling to insure. NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. Insurable for a Price: Some risks are insurable if you are willing to pay an additional premium. An example is a loss caused by theft committed by your employees. Such losses are routinely excluded under commercial property policies. However, you can insure such losses by purchasing employee theft coverage. Proof of Death - Answer The transfer on death designation lets beneficiaries receive assets at the time of the person's death without going through probate. This designation also lets the account holder or security owner specify the percentage of assets each designated beneficiary Beneficiary - Answer any person who gains an advantage and/or profits from something. In the financial world, a beneficiary typically refers to someone eligible to receive distributions from a trust, will, or life insurance policy. NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. Beneficiary Designation Options - Answer Primary beneficiaries are the account owner's first choice for a beneficiary. In the event of death, the first person who can claim the assets is the primary beneficiary. Note that you can have multiple primary beneficiaries in some cases. For example, you could have three primary beneficiaries, all of which receive 33.3% of assets (assuming they are all still living at the time of your death). Contingent beneficiaries are used as a backup. In the event that there are no living primary beneficiaries, the contingent beneficiary claims the asset. Tertiary Beneficiary. Finally, the beneficiary next in line (should you choose to name one), is the tertiary beneficiary. This person or entity will receive the life insurance policy proceeds in the event that both NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. the primary and the secondary beneficiaries are unable to do so. Classes (per stirpes/per capita) - Answer The estate planning terms "per stirpes distributions" and "per capita distributions" are commonly used in last wills and testaments and revocable living trusts. They describe how you want your property to be left to your beneficiaries. Per stirpes indicates that if any of your beneficiaries aren't living at the time of your death, their share of the estate will pass to their descendants. Per capita distributions can only go to the named beneficiaries and in equal shares. The term per stirpes is Latin for "by representation" or "by class." It means that each living beneficiary in a class of beneficiaries will receive an equal share. NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. An irrevocable beneficiary requires the beneficiary to sign off on any policy changes. Therefore, should the policy owner wish to change the beneficiary on a policy where an irrevocable beneficiary exists, both the policy owner and the irrevocable beneficiary must sign off on it. Irrevocable beneficiary designations are often given as part of a separation agreement or a divorce settlement. Because irrevocable beneficiaries have extraordinary powers, it is crucial that the policy owner be made aware of these powers should such a designation be made. Common disaster clause - Answer Provision in most life insurance policies (and some wills) under which the primary beneficiary of the policy (or will) must survive the insured (or NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. testator) by a certain number (usually from 60 to 90) days to qualify to receive the policy's (or will's) benefits. Settlement options - Answer A settlement is the way in which your life insurance policy proceeds are paid out. Fixed Period Option - Answer The fixed amount option, also known as the installment amount option, means your beneficiary will be paid a fixed amount for as long as the settlement proceeds last. Any remaining balance can be passed to a secondary beneficiary if the beneficiary dies before receiving all proceeds. Good for: This option is good for beneficiaries who need to supplement their income. NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. Fixed Amount Option - Answer The fixed amount option, also known as the installment amount option, means your beneficiary will be paid a fixed amount for as long as the settlement proceeds last. Any remaining balance can be passed to a secondary beneficiary if the beneficiary dies before receiving all proceeds. Good for: This option is good for beneficiaries who need to supplement their income. Cash Payment Settlement Option - Answer type of option for which actual physical delivery of the underlying asset or security is not required. The settlement results in a cash payment, instead of settling in stocks, bonds, commodities or any other asset. This type of option avoids the high costs of transport or transaction fees. NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. spendthrift clause life insurance - Answer The spendthrift clause protects life insurance proceeds from creditors. The beneficiary's creditors are prohibited from claiming any of the policy's benefits before the beneficiary is paid. Payments are made to the beneficiary in lieu of receiving the policy proceeds in one lump sum. Policy proceeds are held in trust by the insurance company for the beneficiary's future payments. Policy distributions are not assignable or transferable and cannot be attached. The spendthrift clause prevents the beneficiary from changing the way in which the policy proceeds have been designated for payout. For instance, if the policy state the beneficiary is to receive a certain amount payable over a 15-year period, the beneficiary cannot assign or transfer the proceeds to another party in order to obtain a lump sum payment. NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. Nonforfeiture options - Answer a clause in your policy that allows you to receive full or partial benefits from your life insurance if the policy lapses or you want to cancel the plan. Cash surrender value (net cash value) - Answer This is cashing your policy in. The insurance company will send you a check for the net cash value and then you can do whatever you want with the money. You'll use the cash surrender option if you need the cash. Extended term - Answer You can use the cash value to keep the original life insurance face amount but only for a specific term, or time period. How long the term is depends on the cash value of the policy. Once it's changed to extended term, you won't have to pay premiums anymore but you also won't build any more cash value. NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. Reduced paid-up insurance - Answer You can use the cash value to purchase a whole life policy that is paid for. It will be less than the original face amount and since it is paid up, it won't require premiums. You'll just own that amount of life insurance from that point forward until you die. Policy loans - Answer issued by an insurance company and uses the cash value of a person's life insurance policy as collateral. Sometimes it is referred to as a "life insurance loan." Traditionally, policy loans were issued at a very low-interest rate, but that is no longer universally true. If a borrower fails to repay a policy loan, the money is withdrawn from the insurance death benefit. Automatic premium loans - Answer often associated with a life insurance policy that has a cash value. It is a specific clause, or NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. There may also be additional costs involved when taking a partial surrender or withdrawal, such as processing and / or administrative fees from the life insurance company. Dividend options - Answer varying ways in which insureds may elect to receive dividends under a life insurance policy. Dividends may be received in the form of cash payments, as increases to the policy's cash value, or as paid-up additional insurance. Cash payment Dividend Option - Answer The option to receive the dividend in cash is pretty self-explanatory. Each year the life insurer pays the policyholder the dividend in the form of a check. The payment comes directly to the policyholder who can then use the cash for whatever purpose he or she sees fit. NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. Reduction of premium payments Dividend Option - Answer Choosing to reduce or pay the premium with the dividend means the policyholder chooses to pay a part or all of the premium due with the dividend. If the dividend payment is less than the total premium due, the policyholder will need to pay the rest of the premium either with money out of pocket or with cash values from the whole life policy. It's much more common for the policyholder to pay with out-of-pocket money. Once the dividend payment equals or exceeds the premium due amount, the dividend can pay the entire premium due and the policyholder does not need to make any payment to the policy with any out-of-pocket money. It's fairly common to see older whole life policies using this option as the policyholder can keep his/her death benefit in force without having to pay the premium on the life insurance policy. NY Life, Accident, and Health Insurance Agent/Broker Exam Series 17-55 with Accurate Answers. Paid-up Additions Dividend Option - Answer instructs the insurance company to take the annual dividend and purchase paid-up additions with it. Paid-up additions are mini whole life insurance policies that attach to a main whole life policy. They earn dividends themselves and have immediate cash value. This dividend option will ensure the most bang for the buck in terms of premiums generating cash surrender value. Put another way, if you seek to maximize return on premiums (i.e. the internal rate of return of a whole life policy) then the option to purchase paid-up additions is the dividend option you seek. This dividend option is also how whole life policies accumulate non-guaranteed cash value. The non-guaranteed cash value of a whole life policy is simply the cash value created through paid- up additions.