Common Exclusions and Requirements in Insurance Policies, Exams of Law

Download Common Exclusions and Requirements in Insurance Policies and more Exams Law in PDF only on Docsity! PSI New York Life Accident and Health Practice Exam All 150 Questions with 100% Correct Answers Updated 2023-2024 Under the misstatement of age or gender provision, what happens if it is determined at death that the insured's age or gender was misstated on a life insurance policy application? -------- Correct Answer -------- Benefits are adjusted to an amount that the premium would have purchased at the correct age or gender. Which of the following must be given to the insurer within 20 days after occurrence or commencement of any loss covered by the policy, or as thereafter as is reasonably possible? -------- Correct Answer -------- Notice of claim. When will a policy pay on a UCR basis? -------- Correct Answer -------- When particular benefits are not listed on a payment schedule. All of the following are non-forfeiture options EXCEPT -------- Correct Answer -------- Cash dividend option. What happens when the lifetime maximum benefit limit has been reached? -------- Correct Answer -------- The insured will pay all of the remaining medial costs for as long as the policy is in force. Whose responsibility is it to make sure that the company is notified of a death claim at the earliest possible opportunity (in most cases)? -------- Correct Answer -------- The producer. What is the waiver of premium provision? -------- Correct Answer -------- In a long term care contract, the premium is waived after the insured has been confined for a specific period of time. All of the following are common exclusions from loss found in disability income policies EXCEPT for that incurred while? -------- Correct Answer -------- Committing a misdemeanor Which is a disadvantage to a flexible premium annuity? -------- Correct Answer -------- The actual amount of the annuity benefit cannot be determined in advance. What does coninsurance mean? -------- Correct Answer -------- The insurer and the insured share expenses over the deductible. Under normal conditions which of the following is TRUE for proof of loss when a single loss is claimed? -------- Correct Answer -------- The insured has 90 days from the date of loss to provide proof of loss. Which one of the following represents an advantage of obtaining a policy loan versus a withdrawal? -------- Correct Answer -------- The loan is not taxed while a withdrawal is taxed for amounts above the contract cost basis. All of the following statements define preexisting conditions EXCEPT? -------- Correct Answer -------- Any chronic health condition that presents symptoms and which was unknown at the time of application. Which is the difference between participating and non-participating? -------- Correct Answer -------- Participating policies pay dividends while non-participating policies do not. How does the per captia rule apply to proceeds from a life insurance policy? -------- Correct Answer -------- The proceeds are divided equally among living primary beneficiaries. How does a noncancelable policy differ from a guaranteed renewable policy? -------- Correct Answer -------- With the noncancelable policy the insurer may increase premiums only based on the terms of the policy. Which of the following refers to how often a premium is paid? -------- Correct Answer ---- ---- Mode What is the return of premium rider? -------- Correct Answer -------- An increasing amount of term insurance that always equals the total of premiums paid up to the current point. What does first dollar coverage mean? -------- Correct Answer -------- As soon as covered medical expenses are incurred, the policy begins to pay. When the suicide clause is inserted in a life insurance contract, death by suicide is not covered during the policy's initial: -------- Correct Answer -------- 2 year period All of the following are required signatures on a life insurance application EXCEPT? ----- --- Correct Answer -------- The minor in a juvenile policy. What is the purpose of Stranger-originated life insurance (STOLI)? -------- Correct Answer -------- The policy is originated primarily or solely for the purpose of resale. What procedure is used by an insurer to protect itself in the event a dispute arises and the applicant and the agent do not recall the changes that were made in a completed State generally define a true "Group" for insurance as requiring a minimum of how many participants? -------- Correct Answer -------- 10 Which of the following policy types is considered double indemnity? -------- Correct Answer -------- Accidental death Which of the following is true about a decreasing term life policy? -------- Correct Answer -------- The face amount reached zero at policy expiration. Which of the following lists the three common types of permanent individual life insurance? -------- Correct Answer -------- Variable Life, Whole Life, Universal Life Which types of life policy can be continued year after year without a required medical examination but rates are dependent on the insured's current age? -------- Correct Answer -------- Renewable term Which of the following coverage types pays a monthly cash benefit following the elimination period for total disability due to accident or sickness? -------- Correct Answer -------- Disability income insurance Which of the following is TRUE of an equity-indexed annuity? -------- Correct Answer ---- ---- It has a guaranteed minimum interest rate. Compared to basic hospital, medical and surgical policies, which type of insurance provides broader coverage, fewer gaps, higher individual benefits, and higher policy maximums? -------- Correct Answer -------- Major medical insurance. Which of the following is the most common method to supplement Medicare coverage? -------- Correct Answer -------- Coverage offered by private insurers. Which of the following is defined as the dollar amount beyond which the insured no longer participates in payment of medical expenses? -------- Correct Answer -------- Stop Loss Limit A basic vision care package includes all of the following EXCEPT? -------- Correct Answer -------- Safety glasses In which of the following does a covered employee agree to a reduction in compensation so the amount can be used to cover medical expenses? -------- Correct Answer -------- Flexible Spending Account (FSA) Current assumption whole life policies are sensitive to which of the following? -------- Correct Answer -------- Interest rates A group conversion option may be used in all the following instances EXCEPT? -------- Correct Answer -------- A life-changing event, such as marriage, divorce, or childbirth. Why is relying solely on employer group life insurance generally considered inadequate for most individual's needs? -------- Correct Answer -------- It is financially insufficient to cover end of life expenses. In a home healthcare benefit, all of the following are eligible expenses EXCEPT? -------- Correct Answer -------- Blood Transfusions Which of the following amends the Social Security Act to make Medicare secondary to group health plans? -------- Correct Answer -------- TEFRA All of the following are requirements to qualify for Social Security disability benefits EXCEPT when -------- Correct Answer -------- Unable to work in occupation on which the worker was trained or educated. How long after being entitled to disability benefits will an individual be eligible to receive Medicare benefits? -------- Correct Answer -------- 2 years Which of the following is TRUE for a flexible premium annuity? -------- Correct Answer -- ------ The purchaser has the option to vary the amount of each premium payment falling between a minimum and maximum amount. All of the following are characteristics of COBRA EXCEPT? -------- Correct Answer ------- - Change in medical privacy procedures. Which is the primary purpose of Health Reimbursement Accounts (HFAs)? -------- Correct Answer -------- To assist covered employees with the payment of medical expenses on a high deductible plan funded through pre-tax. Which type of annuity covers two or more annuitants and provides monthly income only until the first annuitant dies? -------- Correct Answer -------- Joint Life Annuity All of the following are characteristics of variable whole life EXCEPT? -------- Correct Answer -------- There is no guaranteed minimum death benefit. Which problem was Universal Life insurance designed to address? -------- Correct Answer -------- Low interest rates during periods of high inflation. Which of the following is covered by a dread disease policy? -------- Correct Answer ----- --- Illnesses that do not occur frequently but incur significant costs when they do occur. Which policy provision permits the policy owner to take a specified number of days to examine the contract, and allows for cancellation and a full refund if the policy owner rejects the terms or costs? ------- Correct Answer ---------- Free Look When will a policy pay on a UCR basis? ------- Correct Answer ---------- When particular benefits are not listed on a payment schedule Which type of rider reimburses health and social service expenses incurred in a convalescent or nursing home facility? ------- Correct Answer ---------- long term care rider Which of the following is exempted from the incontestability provision in insurance policies? ------- Correct Answer ---------- Fraudulent misstatements What does first dollar coverage mean? ------- Correct Answer ---------- As soon as covered medical expenses are incurred, the policy begins to pay What is the waiver of premium provision? ------- Correct Answer ---------- In a long term care contract, the premium is waived after the insured has been confined for a specific period of time According to the Time Payment of Claims provision, the insurer must make the payment immediately after receiving proof of loss EXCEPT ------- Correct Answer ---------- for claims involving periodic payments Which is a disadvantage to a flexible premium annuity? ------- Correct Answer ---------- the actual amount of the annuity benefit cannot be determined in advance When a policy or certificate containing an accelerated benefit provision is applied for or delivered, the producer is responsible for providing that applicant a summary of coverage that includes all of the following EXCEPT ------- Correct Answer ---------- a detailed and comprehensive summary of the accelerated benefit which one of the following represents an advantage of obtaining a policy loan versus a withdrawal? ------- Correct Answer ---------- the loan is not taxed while a withdrawal is taxed for amounts above the contract cost basis How does a noncancelable policy differ from a guaranteed renewable policy? ------- Correct Answer ---------- with the non cancelable policy the insurer may increase premiums only based on the terms of the policy What does it mean if a health policy is conditionally renewable? ------- Correct Answer -- -------- Insurer may elect NOT to renew only under the conditions specified in the policy When the suicide clause is inserted in a life insurance contract, death by suicide is not covered during the policy's initial: ------- Correct Answer ---------- 2 year period What does coinsurance mean? ------- Correct Answer ---------- The insurer and the insured share expenses over the deductible. Why is relying solely on employer group life insurance generally considered inadequate for most individual's needs? ------- Correct Answer ---------- It is financially insufficient to cover end of life expenses. For an individual long-term care policy there is an annual dollar limit for tax deductions that is based on which of the following? ------- Correct Answer ---------- age When can the premiums of an individually owned health insurance policy be deducted from the individual's income tax? ------- Correct Answer ---------- when the taxpayer's medical expenses exceed 7.5% of adjusted gross income during a taxable year In noncontributory plans, which percentage of eligible members must participate? ------- Correct Answer ---------- 100% Short term disability insurance generally only covers injuries due to which of the following? ------- Correct Answer ---------- Non-occupational injuries Managed care plans increase efficiency by all of the following means EXCEPT ------- Correct Answer ---------- transferring the management of costs to the insureds. Under which situation must insurable interest exist between the applicant and insured at the time of application? ------- Correct Answer ---------- When a third-party applicant names themselves beneficiary Which of the following is characteristic of a nonqualified plan? ------- Correct Answer ----- ----- plan does not meet federal guidelines for tax benefits In a home healthcare benefit, all of the following are eligible expenses EXCEPT ------- Correct Answer ---------- blood transfusions All of the following are requirements to qualify for Social Security disability benefits EXCEPT when ------- Correct Answer ---------- unable to work in occupation in which the worker was trained or educated How long after being entitled to disability benefits will an individual be eligible to receive Medicare benefits? ------- Correct Answer ---------- 2 years Which of the following amends the Social Security Act to make Medicare secondary to group health plans? ------- Correct Answer ---------- TEFRA Which of the following is TRUE of a point of service plan? ------- Correct Answer ---------- A patient's care is coordinated by an in-network primary care physician. A group conversion option may be used in all the following instances EXCEPT ------- Correct Answer ---------- a life-changing event, such as marriage, divorce, or childbirth Which problem was universal life insurance designed to address? ------- Correct Answer ---------- low interest rates during periods of high inflation Compared to basic hospital, medical and surgical policies, which type of insurance provides broader coverage, fewer gaps, higher individual benefits, and higher policy maximums? ------- Correct Answer ---------- major medical insurance Current assumption whole life policies are sensitive to which of the following? ------- Correct Answer ---------- interest rates Which is the major reason why long term care insurance is becoming increasingly important? ------- Correct Answer ---------- As life expectancy increases, the chances of needing long term care also increase Which of the following is defined as the dollar amount beyond which the insured no longer participates in payment of medical expenses? ------- Correct Answer ---------- Stop Loss Limit Which is the primary purpose of Health Reimbursement Accounts (HRAs)? ------- Correct Answer ---------- To assist covered employees with the payment of medical expenses on a high deductible plan funded through pre-tax contributions. States generally define a true "group" for insurance as requiring a minimum of how many participants? ------- Correct Answer ---------- 10 When should a buy-sell agreement include a provision for the buy-out of an owner's business interest in the event of a disability? ------- Correct Answer ---------- When there is a buy-sell agreement funded with life insurance to buyout the interest of a deceased owner or partner. Which type of life policy can be continued year after year without a required medical examination but rates are dependent on the insured's current age? ------- Correct Answer ---------- renewable term Which of the following is true about a decreasing term life policy? ------- Correct Answer ---------- The face amount reaches zero at policy expiration. Which of the following is TRUE of the limited pay whole life policy? ------- Correct Answer ---------- Coverage continues after the policy is paid-up. Which of the following is a characteristic of Preferred Provider Organizations (PPOs)? -- ----- Correct Answer ---------- prearranged costs for services rendered All of the following are characteristics of variable whole life EXCEPT ------- Correct Answer ---------- there is no guaranteed minimum death benefit. Which of the following policy types is considered double indemnity? ------- Correct Answer ---------- accidental death Which of the following lists the three common types of permanent individual life insurance? ------- Correct Answer ---------- Variable Life, Whole Life, Universal Life Which of the following is TRUE for a flexible premium annuity? ------- Correct Answer --- ------- The purchaser has the option to vary the amount of each premium payment falling between a minimum and maximum amount. Which type of annuity covers two or more annuitants and provides monthly income only until the first annuitant dies? ------- Correct Answer ---------- Joint Life Annuity Which of the following coverage types pays a monthly cash benefit following the elimination period for total disability due to accident or sickness? ------- Correct Answer - --------- Disability income insurance In which of the following does a covered employee agree to a reduction in compensation so the amount can be used to cover medical expenses? ------- Correct Answer ---------- Flexible Spending Account (FSA) Which of the following is covered by a dread disease policy? ------- Correct Answer ------ ---- illnesses that do not occur frequently but incur significant costs when they do occur Which insurance plans are commonly offered through the worksite (employer sponsored) EXCEPT? ------- Correct Answer ---------- Medicare