Insurance Policy Provisions and Regulations, Exams of Project Management

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Final Exam FEMA From Renowned Educators Worldwide With Comprehensive Explanations and Solutions From Esteemed Educators Worldwide Expert-Verified Questions and Answers Which of these is considered a true statement regarding Medicaid? - -correct ans- -Funded by both state and federal governments which of these statements concerning an individual disability income policy is true? - - correct ans- -normally includes an elimination When is the face amount of a Whole Life policy paid? - -correct ans- -When the insured dies or at the policy's maturity date, whichever happens first if an insurance producer is engaging in financial planning they must identify - -correct ans- -that they will earn a commission for the sale of an insurance product in addition to a fee for financial planning, if that is the case credit life insurance is - -correct ans- -issued in an amount not to exceed the amount of the loan which of the following health insurance policy provisions specifies the health care services a policy will cover? - -correct ans- -insuring clause J has a Disability Income policy that does NOT provide benefits for losses occurring as the result of his employment. What kind of coverage is this? - -correct ans- -Nonoccupational coverage An agent gives a conditional receipt to a client for an insurance policy after collecting the initial premium. When will the policy become effective? - -correct ans- -When the conditions of the receipt are met P is looking to purchase a life insurance policy that will pay a stated monthly income to his beneficiaries for 20 years after he dies and a lump sum of $20,000 at the end of that 20 year period. What type of policy should P purchase? - -correct ans- -Family Maintenance policy The Free-Look provision of any health policy begins the date - -correct ans- -the policy is delivered to the insured How does group insurance differ from individual insurance? - -correct ans- -Premiums are lower The Commissioner must examine each domestic insurance company AT LEAST every - - correct ans- -three years The definition of a business entity includes - -correct ans- -an association or a limited liability company The Consideration clause of an insurance contract includes - -correct ans- -the schedule and amount of premium payments When an insured has the same disability within a specified time period and the insurance company provides the same benefits without a new waiting period, the second disability is covered under which of the following benefits? - -correct ans- -Recurrent Disability S recently received a $500,000 lump sum retirement buyout from her employer. She would like to buy an annuity that will immediately furnish her with a guaranteed income for life. What type of annuity is best suited for her situation? - -correct ans- -Single Premium If the Commissioner finds that a licensee has violated any Tennessee insurance statute, the Commissioner may suspend the producers license and - -correct ans- -issue a fine of not more than $1,000 for each violation A Hospital/Surgical Expense policy was purchased for a family of four in March of 2013. The policy was issued with a $500 deductible and a limit of four deductibles per calendar year. Two claims were paid in September 2013, each incurring medical expenses in excess of the deductible. Two additional claims were filed in 2014, each in excess of the deductible amount as well. What would be this family's out-of-pocket medical expenses for 2013? - - correct ans- -$1,000 R had received full disability income benefits for 6 months. When he returns to work, he is only able to resume half his normal daily workload. Which provision pays reduced benefits to R while he is not working at full capacity? - -correct ans- -Residual Disability Which of the following BEST describes a Hospital Indemnity policy? - -correct ans- - Coverage that replaces lost income due to hospitalization According to Tennessee insurance law, an "individual" is defined as a "person" and also includes - -correct ans- -an individual's legal representative T is covered by an Accidental Death and Dismemberment (AD&D) policy that has an irrevocable beneficiary. What action will the insurance company take if T requests a change of beneficiary? - -correct ans- -Request of the change will be refused N has a Major Medical policy that only pays a portion of N's medical expenses. N is responsible for paying the remaining balance. This provision is known as - -correct ans- - Coinsurance Long Term Care policies will usually pay for eligible benefits using which of the following methods? - -correct ans- -Expense incurred B has a $100,000 Accidental Death and Dismemberment policy that pays triple indemnity for common carrier death. If B is killed from an accident on a commercial flight, what will the policy pay B's beneficiary? - -correct ans- -$300,000 Which of these is NOT a type of agent authority? - -correct ans- -Principal What determines the full amount of Social Security retirement benefits a qualified individual is entitled to receive? - -correct ans- -Primary Insurance Amount (PIA) Which of the following is the reimbursement of benefits for the treatment of a beneficiary's injuries caused by a third party? - -correct ans- -Subrogation What should an insured do if the insurer does not send claims forms within the time period set forth in a health policy's Claims Forms provision? - -correct ans- -Submit the claim in any form Which type of provider is known for stressing preventative medical care? - -correct ans- - Health Maintenance Organizations (HMO's) Which is an example of unfair discrimination? - -correct ans- -Requiring an adult applicant for an insurance policy to reveal the name and occupation of a family member who is NOT to be covered by the policy During the Grace Period, the benefits of an individual health policy will remain in force if - - correct ans- -the premium is paid The individual most likely to buy a Medicare Supplement policy would be a(n) - -correct ans- -68-year old male covered by Medicare M had an annual life insurance premium payment due January 1. She died January 10 without making the premium payment. What action will the insurer take? - -correct ans- - Pay face amount minus the past due premium J chooses a monthly premium payment mode on his Whole Life insurance policy. Which of these statements is correct? - -correct ans- -The gross premium is higher on a monthly payment mode as compared to being paid annually Which of the following statements regarding referral fees is CORRECT? - -correct ans- -The Commissioner may establish by rule a maximum amount for each referral K is the insured and P is the sole beneficiary on a life insurance policy. Both are involved in a fatal accident where K dies before P. Under the Common Disaster provision, which of these statements is true? - -correct ans- -Proceeds will be paid to K's estate if P dies within a specified time P purchases a $50,000 whole life insurance policy in 2005. One of the questions on the application ask if P engages in scuba diving, to which P answers "No". The policy is then issued with no scuba exclusions. In 2010, P takes up scuba diving and dies in a scuba- related accident in 2011. What will the insurer pay to P's beneficiary? - -correct ans- - $50,000 minus any outstanding policy loans Which of the following situations does a Critical Illness plan cover? - -correct ans- - Leukemia An individual has a Major Medical policy with a $5,000 deductible and an 80/20 Coinsurance clause. How much will the INSURED have to pay if a total of $15,000 in covered medical expenses are incurred? - -correct ans- -$7,000 What kind of special need would a policyowner require with an Adjustable Life insurance policy? - -correct ans- -flexible premiums The most important factor to consider when determining whether to convert term insurance at the insured's attained age or the insured's original age is - -correct ans- -the cost An insurance company that is incorporated in New York and does business in Tennessee is defined in Tennessee as - -correct ans- -a foreign insurer Which of the following is NOT an example of a producer's breach of fiduciary duty? - - correct ans- -allowing premiums to be submitted electronically What kind of life insurance starts out as temporary coverage but can be later modified to permanent coverage without evidence of insurability? - -correct ans- -Convertible Term P is a new employee and will be obtaining non-contributory group Major Medical insurance from her employer. Which of the following actions must she take during the open enrollment period? - -correct ans- -Sign an enrollment card Q applied for life insurance and submitted the initial premium on January 1. The policy was issued February 1, but it was not delivered by the agent until February 7. Q is dissatisfied and returns the policy February 13. How will the insurer handle this situation? - -correct ans- -Policy was returned within the free-look period, premium will be fully refunded A comprehensive major medical health insurance policy contains an Eligible Expenses provision which identifies the types of health care services that are covered. All of the following health care services are typically covered EXCEPT for - -correct ans- - experimental and investigative services All of the following would be considered fair marketing practices when an insurance company is trying to replace an existing insurance policy EXCEPT - -correct ans- -reduce the cost by lowering the commission Which statement regarding the Change of Beneficiary provision is true? - -correct ans- -The policyowner can change the beneficiary An insurance company formed under the laws of a state other than Tennessee is known in Tennessee as - -correct ans- -a foreign company Which of the following statements regarding a referral is INCORRECT? - -correct ans- - Referral fees must be filed and approved with the Commissioner of Insurance A Business Overhead Expense policy would cover which of the following if a business owner becomes disabled? - -correct ans- -Utilities and office rent Which of these statements concerning an Individual Straight Life annuity is accurate? - - correct ans- -Payments are made to an annuitant for life The approved prelicensing course of study requirement for health insurance is - -correct ans- -20 hours What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies? - -correct ans- -Family Maintenance Policy Tennessee insurance law specifically allows the Commissioner to issue a temporary license to which of the following individuals? - -correct ans- -A surviving spouse of a deceased producer Which of the following statements BEST describes the intent of a Coinsurance clause in a Major Medical policy? - -correct ans- -Discourages overutilization of the insurance coverage Which of the following services is NOT covered under a hospitalization expense policy? - - correct ans- -surgeon's fees Which of these statements is INCORRECT regarding a Preferred Provider Organization (PPO)? - -correct ans- -PPO's are NOT a type of managed care systems G is involved in an automobile accident as a result of driving while intoxicated and suffers numerous injuries. According to the Intoxicants and Narcotics exclusion in G's policy, who is responsible for paying the medical bills? - -correct ans- -The insured According to Tennessee insurance law, while transacting insurance business, producers act as representatives of - -correct ans- -the insurer Which statement is true concerning a Variable Universal Life policy? - -correct ans- - Policyowner controls where the investment will go and selects the amount of the premium payment Which of the following characteristics are associated with a large group disability income policy? - -correct ans- -No medical underwriting The Commissioner does NOT have the power to - -correct ans- -incarcerate a producer What is the maximum Social Security Disability benefit amount an insured can receive? - - correct ans- -100% of the insured's Primary Insurance Amount (PIA) In a life insurance policy, which provision states who may select policy options, designate and name a beneficiary, and be the recipient of any financial benefits from the policy? - - correct ans- -Owner's Rights D was actively serving in the Marines when he was killed in an automobile accident while on leave. His $100,000 Whole life policy contains a War Exclusion clause. How much will D's beneficiary's receive? - -correct ans- -The full face amount The provision that defines to whom the insurer will pay benefits to is called - -correct ans- - payment of claims In Tennessee, a Long-Term Care policy must be renewable in which of the following ways? - -correct ans- -guaranteed renewable When must insurable interest exist for a life insurance contract to be valid? - -correct ans- - inception of the contract How do life insurance companies handle cases where the insured commits suicide within the contract's stated Contestable period? - -correct ans- -Claims are denied under the Suicide clause of the policy T has an annuity that guarantees an income payment for the rest of his life. The contract also guarantees that if T dies before receiving payments for 20 years, the remaining payments will be paid to his son for the balance of the 20 years. What type of annuity is this? - -correct ans- -Life Annuity with Period Certain C is trying to determine whether to convert her convertible term life policy to whole life insurance using her original age or attained age. What factor would affect her decision the most? - -correct ans- -the cost According to the Entire Contract Changes provision for health policies, what is required for a change to a policy to be valid? - -correct ans- -Changes in the policy must be approved by an executive officer of the insurer, endorsed, and attached to the policy What is the purpose of the Time of Payment of Claims provision? - -correct ans- -Prevents delayed claim payments made by the insurer Which health policy clause specifies the amount of benefits to be paid? - -correct ans- - Insuring All of the following statements about the classification of applicants are correct EXCEPT? - -correct ans- -a substandard applicant can never be rejected outright by the insurer. Which of the following statements is CORRECT about a Variable Universal Life policy? - - correct ans- -The policyowner directs the investment of cash values and chooses the timing and amount of premium payments Which of the following statements about Equity Indexed Life Insurance is INCORRECT? - - correct ans- -If the actual investment differs from what was expected, the premiums will be either lowered or raised Insurance companies may use all of the following sources to obtain underwriting information about an applicant EXCEPT? - -correct ans- -Actuarial rating bureaus Which of the following statements is CORRECT about third-party ownership of a life insurance policy? - -correct ans- -It is widely used in business insurance and estate- planning situations A producer is required to register with the National Association of Securities Dealers (NASD) in order to sell which of the following policies? - -correct ans- -Variable Life In a life insurance policy, the Consideration clause states that the policyowner's consideration consists of completing the application and? - -correct ans- -paying the initial premium A typical short-term medical expense policy is best described as? - -correct ans- - nonrenewable A producer takes an application for individual insurance and accepts a check from the client. The producer mails the check and application to the insurance company. A member of the company's underwriting department notices that the application is signed but the check is not. In this situation, if the applicant is approved by the insurance company, coverage will be effective as of which of the following dates? - -correct ans- -The date the producer delivered the policy collected the initial premium and obtained a statement indicating that there is no change in the insured's health Adjustable Life insurance is designed to meet an insured's need for? - -correct ans- - flexible premiums Which of the following policies will pay monthly benefits to a surgeon who is unable to work as a result of injuries sustained in a car accident? - -correct ans- -Disability Income Which of the following items may be used to include coverage for children under their parent's insurance policy? - -correct ans- -A Term rider An underwriter's evaluation of information on a life insurance application is also known as? - -correct ans- -risk classification Which of the following elements of a contract is necessary before a life policy will be issued? - -correct ans- -A prospect's signature on an application An example of a Limited-Pay Life policy is? - -correct ans- -Life Paid-Up at Age 65 Which of the following features is typical of Term insurance? - -correct ans- -The policy expires at the end of the policy period Which of the following policies is designed to provide flexible premiums and an adjustable death benefit? - -correct ans- -Universal Life Which of the following statements is CORRECT if the premiums on a participating policy are waived because of an insured's disability? - -correct ans- -The insurer will continue to pay declared dividends Which of the following statements is CORRECT about the premium payment schedule for a Whole Life Policy? - -correct ans- -Premiums are payable throughout the insured's lifetime, and coverage continues until the insured's death B is the owner and insured in a Single Premium Universal Life Insurance contract. B wants to name a charitable entity as beneficiary and make the change permanent. Which is the best type of designation to assure B's wishes? - -correct ans- -Irrevocable Which of the following statements describes the income tax treatment of policyowner dividends? - -correct ans- -Only interest on accumulations is taxed Which of the following reflects the definition of a Modified Endowment Contract (MEC)? - - correct ans- -The guideline level premium being the maximum level that can be paid into a policy and still have it qualify as a life insurance contract An insurance policy on the life of another person is valid if the policyowner has an insurable interest in the insured at which of the following times? - -correct ans- -When the application is made Which of the following statements is CORRECT about a minor beneficiary? - -correct ans- - In most cases, insurers require that a guardian be appointed in the beneficiary clause of the policy or that a guardian be designated in the will On September 9, S applied for a life insurance policy and submitted the first annual premium. The policy was issued October 3 but the producer did not deliver it to S until October 18. On October 24, S returned the policy to the insurance company and request the return of her premium. In this situation, the insurance company will take which of the following actions? - -correct ans- -Refund the entire premium because the policy was returned within the Free Look period Investor-Originated Life Insurance (IOLI) is an arrangement in which the death of the insured benefits the? - -correct ans- -owner An underwriter reviews an applicant's personal medical history and determines that the risk should be reclassified. In this situation, the life insurance policy may be issued with? - - correct ans- -an extra premium Which of the following features of a group Term Life policy enables an individual to leave the group and continue his or her insurance without providing evidence of insurability? - - correct ans- -Conversion privilege All of the following policies are considered interest sensitive life products EXCEPT? - - correct ans- -Adjustable Life The annual premium on an insured's life policy was due September 4. If he died on September 21 without paying the premium, the insurance company would take which of the following actions? - -correct ans- -Pay the Death benefit less the past-due premium The applicant's signature is required on a life insurance application for which of the following reasons? - -correct ans- -To represent that the statements on the application are true to the best of the applicant's knowledge Which type of coverage when selected will allow an applicant to have excess life insurance coverage? - -correct ans- -Term Rider The Z Company takes out a Key Employee policy on its director of operations. Several years later the employee leaves Z company, joins A Company and is killed in an automobile accident while the Key Employee policy is still in force. In this situation, the insurance company will pay the proceeds to which of the following entities? - -correct ans- -Z Company Which of the following provisions would keep a Whole Life policy in force if a required premium payment is not made and sufficient cash value exists from which the premium can be paid? - -correct ans- -Automatic Policy Loan If a forty-five year old individual bought an annuity to provide income for life beginning at age sixty-five, the insured did NOT buy? - -correct ans- -an immediate annuity If an annuity's cash value is based on the results of investment funds, the annuity is considered to be? - -correct ans- -variable Under a group Credit Life policy, the amount of insurance on the life of a debtor is limited to? - -correct ans- -the total amount of the insured's loan Under an Accidental Death and Dismemberment policy, in which of the following will an autopsy NOT be performed? - -correct ans- -When it is prohibited by law A Basic Hospital policy pays expenses for? - -correct ans- -hospital room and board Which of the following statements is CORRECT about Medicare? - -correct ans- -It is a hospital and medical expense insurance program A rider on a life insurance policy that guarantees that the premium will be paid if the insured is disabled for a specified period of time is referred to as? - -correct ans- -Waiver of Premium Which of the following Term policies guarantees the insured the right to continue term coverage after expiration of the initial policy period? - -correct ans- -Renewable A producer takes a life insurance application without collecting the initial premium. The policy will go into effect after all of the following actions occur EXCEPT the? - -correct ans- - expiration of the Free Look period All of the following data on an insured may affect the underwriting of a life insurance policy EXCEPT the insured's? - -correct ans- -marital status A company wants to purchase a Key Employee Life policy. Which of the following statements is INCORRECT? - -correct ans- -The employee names the beneficiary A method of providing life insurance on the children of a person who is covered by a life insurance policy is by? - -correct ans- -a child term rider In a life insurance policy, the promise by the insurer to pay certain benefits is the? - -correct ans- -Insuring clause P is both the policyowner and the insured under a $100,000 Whole Life policy. The beneficiary is P's mother. When P marries, ownership of the policy is transferred to P's spouse. If P dies without making any other changes, the policy proceeds will be payable to P's? - -correct ans- -mother only A Life annuity offers protection against the risk of? - -correct ans- -living longer than anticipated In most Term Life policies, which of the following provisions allows the insured to change the policy to a permanent life policy without providing evidence of insurability? - -correct ans- -Conversion provision Life insurance written to cover a need for a specified period of time at the lowest premium is called? - -correct ans- -level term insurance The governing body of a mutual insurance company is elected by the? - -correct ans- - policyholders Under an Accidental Death Policy, in which of the following circumstances will an autopsy NOT be performed? - -correct ans- -When it is prohibited by law L is injured from a fall and permanently disabled. L will be eligible to file for Social Security benefits after he has been disabled for how many months? - -correct ans- -5 Which of the following policies provides a specified income benefit when the insured person becomes unable to work because of illness or accident? - -correct ans- -Disability Income The hospitalization expense of the Basic Medical Expense Policy pays for? - -correct ans- - hospital room and board A common exclusion for which disability contract would NOT pay is a disability due to? - - correct ans- -an act of war Under the Intoxicants and Narcotics exclusion, if an insured suffers severe injuries in a fall while intoxicated, who is liable for the medical bills? - -correct ans- -The insured Which of the following statements is CORRECT about Basic Medical Expense insurance? - - correct ans- -It generally has lower benefit limits than major medical A church member recently pledged $10,000 to the church to replace a roof, which will need replacement in 10 years. If the member wants to be sure that the $10,000 will be available when needed, the member should purchase which of the following $10,000 policies? - - correct ans- -Ten-Year Endowment If a primary beneficiary dies before the insured and a contingent beneficiary is also named in the policy, which of the following will occur when the insured dies? - -correct ans- -The contingent beneficiary will receive the proceeds P, covered for the past 10 years under P's employer's group life contract retires at age 59 1/2 can elect to? - -correct ans- -convert to a permanent policy at the individual rates A contract that provides for the liquidation of all or part of an estate through periodic payments is known as? - -correct ans- -an annuity Which of the following factors is MOST important when an insured owner is trying to decide whether to convert term insurance at the insured's original age or the insured's attained age? - -correct ans- -Cost of insurance An insurance company must provide information on fraudulent claims at the request of all of the following entities EXCEPT? - -correct ans- -an insured Which of the following BEST describes Credit Life insurance? - -correct ans- -Insurance issued on a debtor to cover outstanding balances on installment loans A producer has taken an application for an individual Disability income policy, collected a premium, and given the applicant a conditional receipt. Which of the following statements is CORRECT about this situation? - -correct ans- -The insurance company will complete standard underwriting procedures before making a decision about whether to insure the applicant All of the following entities are managed care organizations EXCEPT? - -correct ans- -MIB The insurance phrase which considers a particular fee charged by a physician, dentist, or other health professional is? - -correct ans- -usual, customary, and reasonable expenses J is sixty-five years old, works for a company with fifty employees, and decides to continue working to increase his Social Security benefits. He elects to continue group coverage. If J falls off a ladder at home and is hospitalized, which of the following coverages would be primary? - -correct ans- -The group health plan In a contract of adhesion, any confusing language would be interpreted in the favor of which of the following parties? - -correct ans- -The insured Which of the following medical care expense programs is partially funded by the federal government and administered by individual states? - -correct ans- -Medicaid An insured purchases a family Hospital/Surgical Expense policy on May 1, 2013. The policy is issued with a $250 deductible and a limit of three deductibles per calendar year. The insured and the insured's spouse incur medical expenses in excess of the deductible on July 15 and September 1 of the same year. Their two children incur medical expenses in excess of the deductible on January 15 and April 1 of the following year. The insured's MAXIMUM out-of-pocket expenses for 2013 would be which of the following amounts? - - correct ans- -$500 Which of the following statements is CORRECT about an irrevocable beneficiary designation? - -correct ans- -By naming an irrevocable beneficiary, a policyowner forfeits the right to change the beneficiary Which of the following statements is CORRECT about a Straight Life policy? - -correct ans- -Premiums are payable for the period of time that insurance protection is provided An immediate annuity can be recognized by which of the following features? - -correct ans- -Payout begins one payment period after purchase Which of the following policy features permits an insured to pay premiums MORE than once every year? - -correct ans- -Mode of Premium provision Traditional Individual Retirement Account (IRA) withdrawals are generally subject to a tax penalty if they are made before the insured reaches what minimum age? - -correct ans- -59 1/2 To verify if replacement is involved in a Medicare Supplement sale, insurance law requires that a question about replacement appear on? - -correct ans- -the application form Unless specifically excluded in the policy, a Medicare Supplement policy must provide coverage for pre-existing conditions after the policy has been in effect for a minimum of how many months? - -correct ans- -Six Long-term care policies issued in Texas must provide benefits for at least? - -correct ans- - 12 months To maintain continued coverage for a newborn under an accident and sickness policy, the policyowner must provide notification of birth and payment of premium to the insurance company within a MAXIMUM of how many days after birth? - -correct ans- -Thirty-one A Medicare beneficiary who wants to apply for Medicare supplement insurance is entitled to an open enrollment period of how many months beginning on the date she first enrolls for Medicare Part B? - -correct ans- -6 Once an employee's employment has terminated, how many days does the insured have to convert the group health plan to an individual one? - -correct ans- -31 M is a valued employee of XYZ Corporation. A Key Employee life policy is purchased on his life. Which of the following statements is CORRECT about M's policy? - -correct ans- -XYZ is the policyowner, M is the insured, and XYZ is the beneficiary An insured died four years after purchasing a life policy. When investigating the beneficiary claim, the insurer discovered that the insured had made material misrepresentations in the application. In this situation, the company will take which of the following actions? - - correct ans- -Pay The Death Benefit to the beneficiary To determine the premium rate on a Whole Life policy, an insurance company will consider which of the following factors about an applicant? - -correct ans- -Risk classification A life insurance policy that has a level premium but allows the policyowner to choose from a selection of investment options is known as which of the following types of policies? - - correct ans- -Variable Life