Alabama Life & Health Insurance Exam, Exams of Advanced Education

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Alabama Life & Health Insurance Exam

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Conditional - Insurance Company hinges on certain acts of the policyowner, the beneficiary, or both. Which of the following situations constitutes an insurable interest? - The policyowner must expect to suffer a loss when the insured dies or becomes disabled. Term Life Insurance - Not based on the waiver of premium rider Loaded Premium - The gross premium Twisting - Making misrepresentations to induce a policyowner to lapse or surrender a policy. Time of Payment of Claims Provision - Requires that claims must be paid immediately after the insurer receives a written proof of loss. Commissioner of Insurance Responsibilities - Enforced all laws that relate to insurance in Alabama. Issuing license to insurers and agents and may conduct hearings and investigations. How often must the Commissioner examine domestic insurers? - At least every 5 years fixed-amount option - Provides for the payment of a policy's death benefit in specific amounts at regular intervals What is the maximum number of days of skilled nursing facility care for which Medicare will pay benefits? - 100 days What elements of an adjustable life policy are adjustable? - Cash Value / Face Amount / Premium What is Medicare designed to pay for? - A large portion of the health care bill for eligible persons. The guaranteed insurability option provides the ability to purchase additional insurance when?

• At 3-year intervals between ages 25 and 40. What are the 3 examples of unfair trade practice? - Circulating false statements about another insurer / inflating dividend amounts / and rebating premiums.

Who must initial the corrections on an insurance application? - The Applicant Name the 3 distinct categories of basic health coverage - Medical Expense, Disability Income, and Accident-Only. What happens if a claim arises during the grace period of an individual life insurance policy? - Benefits will be paid, but unpaid premiums can be deducted from the policy proceeds. What are the premiums like for a modified whole life policy? - Premiums are generally lower in the first years of the policy and higher in later years. What policies are not covered by the Alabama Life and Disability Insurance Guaranty Association? - Policies issued by a fraternal benefit society. Can a spouse maintain coverage after a divorce? - Yes, for up to 3 years. provided she notifies the employer within 30 days. She must pay up to 102% of the applicable premium. For a beneficiary to receive accidental death benefits, the death of the insured generally must occur within how many days following the accident? - 90 days Noncancealable health insurance policies prevent what? - The insurer from changing the premium or modifying the coverage in any way. All medicare supplement policies delivered in Alabama must meet what certain minimum benefit standards? - policies must be guaranteed renewable. The Insurance Commissioner may conduct hearings regarding unfair trade practices by giving how many days' notice to the parties involved? - 10 days Unilateral - only one party, the insurer, makes any kind of enforceable promise. Who must sign endorsements, modifications, or any other changes to a life insurance contract?

• An executive officer of the company. What are the 2 types of buy-sell agreements in a Cross-purchase plan? - Each partner owns a policy on the lives of the other partners, and the surviving owners purchase the deceased owner's interest in the business. Reciprocal insurers - unincorporated groups of people called subscribers that agree to insure each other's losses under a contract. Guaranteed Renewable - ensure renewability up to a specific age of the insured, although the insurer reserves the right to change the premium rate on a class basis.

Per Cause Deductible - Separate deductibles must be satisfied every time a claim is submitted to the insurer. What is another name for an entity plan? - a stock redemption plan. The corporation is actually redeeming the deceased owner's stock. Under an executive bonus plan, the amount of premiums paid is taxable to who? - The business and the employee. 3 requirements for Social Security disability benefits? - be totally and permanently disabled for at least 5 months / the disability must be expected to last for at least 12 months or end in death / the person must be fully insured and disability insured. Double Indemnity Provision - The policy beneficiary would receive double the face amount in the event of a fatal accidental injury. Commercial Insurers - Function on the reimbursement approach. Risk Retention Group - Formed to provide only liability insurance to its policyholders. Assumes and spreads the liability exposure for any of its group members. Multiple Employer Trust (MET) - A group of employers engage in the same or similar types of industries. Mutual Insurance Companies - Are organized and incorporated under state laws but have no stockholders. 4 Factors used to determine the amount of an annuity payment - Starting principal / assumed rate of interest / length of the income guarantee period / and the annuitants age and gender. Stop-loss provision - the insurer pays 100% of covered expenses after the insured's out-of- pocket payments for eligible expenses reach a specified level. Paid-up dividends are based on what 2 things? - The insured's underwriting status when the policy was issued / the amount of the addition is based on the insured's attained age when the dividend is declared. What is an insurer's license to do business in Alabama called? - Certificate of Authority Medicaid provides what? - Funds to states to assist their medical public assistance programs Insuring Clause - Sets forth the insurer's basic promise to pay benefits upon the insured's death.

How many days from the date of loss does the insured have to submit a completed claim form to the insurer? - 90 days, All health insurance policies must include a proof of loss provision. When must an insurer provide a buyer's guide and a policy summary to a prospective life insurance purchaser? - No later than at the policy deliver. The Blackout Period timeframe - begins when the youngest child reaches 16 and continues until the surviving parent reaches the earliest retirement age at 60. Nonqualified Plan - Company can pick and choose which employees and owners can participate in the plan without regard to years of service, salary levels, or any other criteria. Alabama Health Care Plan purpose - Provides health insurance coverage specifically to people who cannot get coverage from insurance companies. Insurance Policy Dividends - are not considered taxable income First-dollar coverage - does not have a deductible Requirements to ensure that a Certificate of Authority remains in effect. - Submit proper filing fee and annual statement for the preceding year by March 1. Captive Agent - May only represent one insurer. Whole Life Payout - as a lump sum at the policyowner's death. Social Insurance Supplement Rider - Pays monthly benefits to an insured while the insured remains disables. Spendthrift Provision - prohibits the beneficiary from exchanging, surrendering, and borrowing against the policy. The policy will also specify that the proceeds be paid to the beneficiary in equal installments. Universal Live Policy withdrawals - Do not require repayment. Agency - works for another person or entity, with regard to contractual arrangements with third parties. Accumulation Units - Premiums paid into a variable annuity are used regularly to purchase accumulation units. Executive Bonus Plan - Employee has access to the policy's living benefits. Lapsed life insurance policies can be reinstated within how many years? - 3 years.

Unfair Claims Settlement Practices - Refusing to pay claims / Compelling an insured to accept less than the amount due / Compelling an insured to employ attorneys to receive the amount due. PPOs operate on what basis? - Fee-for-service basis Interest-Sensitive Whole Life Insurance - The cash value fluctuates in accordance with interest rates. Who is exempt from the prelicensing education requirement? - Credit Life or Credit Health and Accident Insurance licenses. Medicare Supplement Plan A - Provides the least coverage and is referred to as the core plan. HMOs operate on what basis? - Prepaid Basis. Free-look period for Medicare Supplements and LTC Insurance - 30 Days Concurrent View - Providers review cases on an ongoing basis and assess the best course of action. Grace Period - Provides additional time in which the policyowner can pay the premium. Usually 31 days after the premium due date for fixed premium life policies and 61 days for flexible premium policies. Nonrenewable policies - less expensive than renewable policies, all other things being equal. HMO providers - limited choice Subscribers must choose a physician or provider that is under contract with the HMO. Lifetime Reserve of Hospital Coverage for Medicare - The reserve is a one time benefit / is an additional 60 days on top of the 90-day benefit period Medicare provides for hospitalization. Guaranteed Insurability Rider, Option not exercised - the option for that particular age expires automatically. Difference between SEP and IRA - a much larger amount can be contributed each year to a SEP. Basic source of information for life insurance - The application.

If a business entity purchases disability insurance on the lives of the business-owners to fund a disability buyout, - The business can take a full deduction for the premiums paid. Insurance with Other Insurers - If the insured has other valid coverage providing benefits for the same loss on an expense-incurred basis and the insurer was not given written notice prior to the loss, each insurer is only liable for the proportionate share of the loss, and the insurer will return the premiums on a pro rata basis. Participating Policies - Policies that pay dividends. Nonparticipating Policies - Policies that do not pay dividends. For Life and Health insurance policies, when is an insurable interest required? - Only when the contract is issued. If the creditor requires credit life or health insurance as additional security, the debtor must... - Have the option of getting required coverage from existing coverage or from any authorized insurer. Facility-of-Payment Clause - Authorizes the insurer to designate the payee of the life insurance death benefits if the designated beneficiary cannot be located. Medicare Part A - Provides for hospital stays, skilled nursing, and home health care visits. Whole Life Insurance Policies, applying dividends - To pay up a policy earlier than expected, to buy paid-up permanent life insurance, to buy 1-year term insurance, or to reduce future premium payments. With respect to pre-existing conditions, the Alabama Health Insurance Plan: - Does not impose a waiting period. Conversion of a policy - Must be made before the term policy expires. Service Providers - HMOs, PPOs, BCBS Consideration Clause - Specifies the amount and frequency of premium payments that the policyowner must make to keep the insurance in force. What happens to the information gathered during an investigation for a hearing? - It remains confidential Fraternal Benefit Society - Any incorporate of unincorporated society, order, or lodge that operates solely for the benefit of its members and their beneficiaries, and must be nonprofit and operate on the lodge system with a representative for of government.

Keogh Plan Eligibility - 21 years old / completed 1 or more years of continuous employment with that employer, and have worked at least 1,000 hours in the year. Credit Health Insurance - Provides payments on loans that become due while the debtor is disabled. Credit Life Insurance - Covers the life of a debtor. A Multiple Employer Welfare Arrangement (MEWA) - A plan that is established for the purpose of providing benefits such as health insurance to the employees of two or more employers. Probationary Period - The amount of time a new employee has to wait before she may enroll in a group life insurance plan. Increasing term insurance is almost always sold as a... - Rider. Current Assumption whole life policies are also know as - Interest Sensitive whole life. Grace Period Length - Usually shorter than 30 days. Fully Insured - Status of complete eligibility that provides benefits for retirement, disability, and death. Primary Purpose of the Health Insurance Portability and Accountability Act of 1996? - To expand coverage eligibility to many people that are uninsured. Reinsurer - An insurer of an insurer. Self-Insurance - A legitimate method of insuring loss by establishing one's own reserve of funds. Mode of Premium Payment - Frequency of Premium Payment Partial Disability - A worker is unable to perform all of the duties of their occupation. What factors determine the Needs Approach? - Dependency / preretirement / and retirement periods. Authorized Insurer - An insurance company that is license to do business in Alabama and currently holds a valid certificate of authority. For a waiver of premium rider to become operative, the insured must be... - Totally disabled

What are the 3 nonforfeiture options? - Cash Surrender / Reduced paid-up insurance / Extended term insurance. Three basic factors for computing the premium rate for a life insurance policy? - Mortality / Interest / Expense What nonprofit association in Alabama protects owners of policies issued by insolvent insurers?

• Alabama Life and Disability Insurance Guaranty Association How long can COBRA continue? - Up to 18 months. Nonforfeiture Provision - The privilege of accessing the cash value of an insurance policy if it is surrendered. Stock Insurer are to _____________ as Mutual Insurers are to ________________ - Nonparticipating / Participating Medicare Part D - Prescription Drug Plan (PDP) Makes prescription drug coverage available to people covered by Medicare Part A and Part B. An Accidental Death and Dismemberment policy rider's principal sum is equal to what? - The death benefit on the base life insurance policy. How many days does a certificate holder have to convert an individual policy? - 31 days. Express Authority - Granted by a principal to its agent. Benefit periods for short-term disability... - Typically range from 6 months to 2 years. Medicare Coverage Eligibility - 65 years or older / receiving SS disability benefits for at least the previous 24 months / or having end stage renal disease. Variable Life Insurance - Cannot be proposed in a sales situation unless the proposal is preceded or accompanied by a prospectus. An insurer can can cancel a health insurance policy by... - delivering written notice to the insured 5 days before the effective date of cancellation. Renewal Period Premiums - will be higher because of the insured's advanced age and increased risk.

To enroll in an employers qualified retirement plan... - Employees must be 21 years old and have completed 1 year of service. If the plan provides for 100% vesting upon participation, they may be required to complete 2 years of service before enrolling. Cash Value Loan - A loan from the insurer to the policyowner. A comparable portion of the policy's cash value is used as collateral to secure the loan. Automatic Premium Loan - The cash values will be used to pay the premium if the premium due has not been paid by the end of the grace period. Extended Term Insurance - Default nonforfeiture option. Representation - A statement that is believed to be true, to the best of one's knowledge at the time it is given. Misrepresentation - A representation that is actually false. The correct information would not affect the insurance companies decisino. Material Misrepresentation - Information given that is not true. This information DOES affect the insurers decision. Warranty - A statement that is guaranteed to be true. Concealment - The intentional failure to disclose known facts. Life Insurance Gross Premium - Net single premium plus expense. Medicare Part B - Is voluntary. HMO - Pay a fixed periodic fee in advance for services performed by participating physicians and hospitals. Disability income benefits for partial disability are payable for... - A maximum of 3 to 6 months. Medicare Part A covers how much of the services during Hospitalization? - 100% for the first 60 days. Another name for a Hospital Indemnity Plan - Hospital Income Plan Life insurance policies can be backdated up to... - 6 months. COBRA may be continued for how long? - 36 months for a qualified beneficiary and 18 months for a terminated employee.

Business overhead expense policy - Indemnifies the business for certain expenses incurred when the business owner is disabled. Installment refund annuity - Assumes that the total annuity will be paid to the annuitant, beneficiary, or both. Life only or straight life option - Provides a series of level payments to the beneficiary based on his life expectancy and are guaranteed for life. Pays the largest amount to the beneficiary. Variable Contracts - Regulated separately but in a fairly coordinated fashion between the Department of Insurance, the SEC, and FINRA. Stop-Loss - Limits's the insured's out-of-pocket expenses. Maximum amount the insured must pay toward covered expenses. Cash refund option - Provides a guaranteed income to the annuitant for life and, if the annuitant dies before the annuity is depleted, a lump-sum cash payment to the annuitant's beneficiary. The Policyowner - The party to whom the life insurance policy cash values belong. Graded Premium - Premium increases each year during the early years of the contract, usually for 5 years, and remains constant for the rest of the time. Waiver of Premium rider - Generally included with guaranteed renewable and noncancelable individual disability income policies. HMO features - Managed care, prepaid services, a gatekeeper primary care physician, a limited choice of providers, and a limited service area. Temporary Licesnses remain in effect how long? - 6 months An insurer may terminate a producer's appointment when? - At any time. Dependency Period - The period following the death of a breadwinner during which the children are living at home. If the insured defaults on any premium payment, how long does he have to request the nonforfeiture benefit? - 60 days. Premium Payments can be - Level / Graded / Flexible / Single (LeG-FS) In group health insurance underwriting which criteria reduces the risk of adverse selection. - Flow of members through the group.

When a policyowner decides to stop paying premiums and take a paid-up policy for a reduced amount... - The paid-up policy will be the same kind as the original policy. Optionally renewable policy - The company reserves the right to terminate coverage at any policy anniversary or premium due date only. Change of Occupation Provision - If an insured moves to an occupation that is classified as less hazardous, the insurer will reduce the premium rate accordingly and return the excess pro-rate unearned premium to the insured. Individual certificates for insureds in a group plan... - Must state what coverage is provided / to whom it is payable / and must include a detailed conversion provision. Employers must provide notification statements to individuals eligible for COBRA continuation within how many days? - 14 days Underwriting is a process of... - Selecting / Classifying / and Rating risks. Upon the issuance of a life insurance policy, an insurable interest must exist between... - The Applicant and the Insured. Blanket Insurance - Covers a changing group of people who are classified as members of the group. Exclusion Ratio - Applied to each benefit payment the annuitant receives to determing the amount that is excluded from taxation. (Investment in the contract is equal to Exclusion ratio divided by the expected return) If an insurer is found guilty of violating the Alabama Insurance code, what are possible penalties? - Fine or imprisonment / Revocation of license / Suspension of a certificate of authority. Medicare Part A covers? - 80% of the cost of durable medical equipment. Under an Installment Refund Settlement Option, if the primary beneficiary dies, the secondary beneficiary will receive... - The same income payments until the total amount paid out to both beneficiaries equals the original amount of proceeds. Mortality Factor - Has by far the greatest impact in distinguishing one person's rate from another. Multiple Employer Trusts (METs) - Can provide benefits on a self-funded basis, or they can add benefits through a contract issued by an insurance company.

Exclusions Section of a life insurance policy specifies - The conditions, times, and circumstances under which the insured is not covered by the policy. nonqualified deferred compensation plans - Most are unfunded, an employee cannot rely on guaranteed future benefits. HMO place a special emphasis on? - Preventive Health Care. At what age can minors contract for life insurance on their own lifes? - 15 years. Accident and Health Insurance "Legal Action Provision" states that legal action on a policy can begin... - no sooner than 60 days and no later than 3 year Tax benefits for annuities? - There are no tax-free death benefits. An Investigative Consumer Report is also called - An Inspection Report Apparent Authority - Arises from the reasonable assumption that a third party, such as an insurance prospect, makes on the basis of the actions or statements of the principal. Medicare Part B Covers - Medical Care provided by physicians and other medical services. Total Disability - An insured is unable to perform any duties of the job. Policyowners - The owners of a mutual insurance company. Notice of Claims Provision in a Health Insurance Policy - A claimant must notify the insurance company of loss within 20 days after the loss. The role of the gatekeeper is performed by the insured's? - Primary Physician Tax treatment of individual life insurance - Non-deductibility of premiums, nontaxable death benefit. Limited Pay Policy - Paid up after a specified period of years and endows at age 100. Reduced Paid-up Insurance - Nonforfeiture option that allows a whole life policyowner to convert his insurance to a paid-up policy. Law of Large Numbers - The larger the number of risks combined into one group, the more accurate the prediction of the amount of loss in any given period.

Once the insurance company receives a notice of claim, how many days does it have to send the claim form? - 15 days. Certain Defense Provision - Cannot deny claims on the basis of misinformation given in an application for insurance. After a certain period. HIPPA imposes requirements on health care providers with respect to... - Disclosure of protected health information. The waiting period to qualify for Social Security disability benefits is - 5 months In a conditionally renewable policy, the insurance company can - nonrenew only for reasons in the contract Qualified retirement plan are said to be premature if made before the participant attains age - 59 1/ Pure Risk - An insurable risk After how many days will a policy be considered reinstated if the insurance company takes no action? - 45 days. All statements and descriptions in any application for an insurance policy by an insured are deemed to be - representations and not warranties Preferred Provider Organizations (PPOs) are typically - Open-panel entities Keogh Plan - Allows a sole proprietor to exclude part-time employees. Dividends in a life insurance policy - A refund of divisible surplus to owners of participating policies. When a group disability insurance plan is paid entirely by the employer, benefits paid to disabled employees are - taxable to the employee