Insurance Policy Provisions and Regulations, Exams of Insurance Economics

Download Insurance Policy Provisions and Regulations and more Exams Insurance Economics in PDF only on Docsity! XCEL Arizona Life and Health Insurance State Exam/ 200 Quizzes with Certified Ans/ 2024- 2025. Mentally or physically handicapped dependent children MUST be covered under an individual health insurance policy - Answer: until they become self-supportive ERISA requires that a Summary Plan Description must be provided to a new plan member within how many days following the new member's eligibility date? - Answer: 90 days A policyowner suffers an injury that renders him incapable of performing one or more important job duties. Any decrease in income resulting from this injury Page 1 of 28 would make him eligible for benefits under which provision? - Answer: Partial disability What is the maximum number of employees (earning at least $5,000) that an employer can have in order to start a SIMPLE retirement plan? - Answer: 100 employees Which of the following health plans pay benefits on a pre-paid service basis? - Answer: HMO An individual may receive Medicare Part A Hospital benefits, regardless of age, as long as the person has received which of the following benefits for at least 24 months? - Answer: Social Security Disability Which of the co-annuitants listed below would receive the largest monthly benefit payments in a joint and 100% survivor annuity? - Answer: Ages 71 and 73 Kevin has an existing life insurance policy and assigns it to another insurer for a new contract. How would this transaction be treated for tax purposes? - Answer: As a Section 1035 exchange Karen is considering replacing her individual accident and health insurance policy with another individual policy. She has had issues in the past with her gall bladder that would be considered a pre-existing condition. How will a pre-existing Page 2 of 28 A life annuity with period certain is characterized as - Answer: guaranteeing benefit payments for a stated minimum number of years James owns a business and purchased a policy that covers the business expense of finding a permanent or temporary employee to replace a disabled one. This type of disability coverage is called - Answer: Key employee coverage Kelly purchases a health insurance policy issued on a conditionally renewable basis. The insurance company has a right to refuse renewal of the policy for - Answer: specific reasons stated in the contract Who is the beneficiary in a life insurance policy? - Answer: The stated person or entity who is designated to receive the death proceeds The guarantee of insurability option provides a long-term care policyowner the ability to - Answer: buy additional coverage at a later date Most prepaid dental plans cover - Answer: Oral examinations A policyowner fell behind on the premium payments of a whole life policy and is now in the grace period. How much will the beneficiary receive if the insured dies during this grace period and the policy also contains an outstanding policy loan? - Answer: Face amount minus the loan balance and past-due premium Page 5 of 28 In regards to the Affordable Care Act (ACA), which of these is NOT a role of a health insurance exchange? - Answer: Contact the employer if an employee stops coverage under a plan offered in the exchange An insurer must keep advertising materials and records for at least how many years? - Answer: 3 years A consumer who has been recently denied insurance, credit, or employment based on an unfavorable consumer report MUST be advised as such. Which of the following does this statute originate from? - Answer: Fair Credit Reporting Act The disability income policy most likely to have been issued on a substandard basis is - Answer: Non-cancelable with a health condition exclusion rider Which of the following situations would a medical exam NOT be required for an individual health insurance applicant? - Answer: Applicant's family members have a history of cancer A Medicare Supplement policy is required to do which of the following? - Answer: Provide a 30 day free-look period A statement MUST be signed by the _________ for any illustrations used in the sale of a life insurance policy. - Answer: producer Page 6 of 28 The policy provision that permits an employee to change from group life coverage to an individual life policy is called the - Answer: conversion provision A physician who accepts assignment on all Medicare claims is called a(n) - Answer: participating provider Straight whole life insurance can be accurately described in all of these statements EXCEPT - Answer: Policy protection normally expires at age 65 An agent whose actions exceed the authority granted by contract is - Answer: not backed by the insurer Which statement regarding the certificate of insurance is accurate? - Answer: It indicates evidence of an employee's insurance coverage Joe is a life insurance policyowner who has failed to pay interest on his policy loan. What will result from this nonpayment? - Answer: Loan amount is increased to reflect the amount of interest due Every producer licensed in Arizona must notify the Director within how many days of any change of residential, business or e-mail address? - Answer: 30 days According to federal fraud and false statements regulation, what is required for a prohibited person to transact insurance business in this state? - Answer: Written consent from the state insurance regulatory agency Page 7 of 28 In Arizona, at least ___ employee(s) are needed for a small employer medical expense plan. - Answer: 2 Which of the following is excluded in a medical expense plan? - Answer: Military duty How many hours of initial long-term care training must a producer complete before soliciting long-term care products? - Answer: 8 Tim is confined to a nursing home but doesn't have a terminal illness. Which life insurance rider is designed to help pay for this type of expense? - Answer: Long- term care benefit rider Which of the following statements about the installments for a fixed period settlement option in life insurance policies is NOT true? - Answer: The periodic payment amount is determined by the beneficiary's age Which life insurance settlement option pays a stated monthly benefit until both principal and interest are exhausted? - Answer: Fixed amount installment option Which statement concerning an adjustable life insurance policy is FALSE? - Answer: Evidence of insurability is required when there is a change in premium Page 10 of 28 Which of the following is NOT a valid reason for an insurer to contest a life insurance policy during the policy's first two years of existence? - Answer: Misstatement of age Which of the following is NOT subject to the promise to pay in an insuring clause? - Answer: How the premium is calculated Sylvia purchased an annuity for $100,000 from the proceeds of an inheritance. No further payments are permitted and the income stream begins in 15 years. This contract is a(n) - Answer: single premium deferred annuity How long does one premium payment cover in a single premium whole life policy? - Answer: Full life of the policy Dan has a major medical expense policy with a $200 deductible and an 80/20 coinsurance provision. He incurs covered medical expenses of $100 in November and $400 in January. Under the carryover provision, what will the insurer pay? - Answer: $240 An insured is covered under a group long-term disability policy. Under this type of policy, the definition of disability based on any occupation typically applies - Answer: after two years of disability The powers directly given to a producer in an agency contract are called - Answer: express Page 11 of 28 What is the name of the period of time during which a new employee is ineligible for group Health insurance coverage? - Answer: Probationary period An annuity's accumulation period may - Answer: continue after the purchase payments stop What is the guaranteed cash value of a whole life insurance policy when the insured turns 65 years old? - Answer: Less than the policy's face amount To protect information systems, producers, brokers, and insurance companies must implement and maintain a(n): - Answer: cybersecurity policy An advantage of owning a flexible premium life insurance policy would be - Answer: The policyowner can make policy changes without difficulty Which of the following accurately describes a participating insurance policy? - Answer: Policyowners may be entitled to receive dividends Which of the following best describes the presumptive disability provision? - Answer: Waives the typical total disability requirements Emily is disabled. In order to become eligible for Social Security disability income benefits, she must be - Answer: fully insured, according to Social Security Page 12 of 28 The authority to change the beneficiary in an individual annuity lies with the - Answer: owner Greg applies for insurance and makes a false statement on the application that will influence whether or not the insurer will accept the risk. Greg's false statement is called a(n) - Answer: material misrepresentation According to the law of large numbers, how would losses be affected if the number of similar insured units increases? - Answer: Predictability of losses will be improved Which of the following may be considered an act of misrepresentation? - Answer: Misleading or failing to adequately disclose the title and true nature of a policy offered to a client What happens when a policyowner borrows against the cash value of his life insurance policy? - Answer: The policy proceeds would be reduced by the outstanding loan balance A(n) _______ insurer operates in the U.S but is headquartered outside the U.S. - Answer: The type of health insurance in which underwriting procedures are the most restrictive is - Answer: Individual Page 15 of 28 Which of the following is NOT true of participants in multiple-employer trusts? - Answer: Participants must purchase all coverages the trust offers Which of the following covers the Part A deductible of Medicare? - Answer: Medicare supplement core benefits An individual participant personally received eligible rollover funds from a profit- sharing plan. What is the income tax withholding requirements for this transaction? - Answer: 20% is withheld for income taxes A(n) ________ agent is an insurance agent who represents only ONE insurance company. - Answer: captive Which type of policy can group term life insurance normally be converted to? - Answer: An individual permanent life insurance policy Which statement is INCORRECT concerning a tax-sheltered annuity (TSA)? - Answer: Annual investment gains are included in participant's gross income When does the insured stop making payments under a thirty-payment whole life policy? - Answer: At the time of death or 30 years after the policy's inception, whichever comes first Page 16 of 28 Which of the following situations would an insurance agent need to guard against liability for professional errors and omissions? - Answer: Making a recommendation to a potential insured to replace existing coverage In what way is a life insurance policy affected by an accelerated benefit payment? - Answer: Decreases the death benefit Which life insurance settlement option pays lifetime benefits to two or more people? - Answer: Joint and survivor These are all accurate statements regarding universal life insurance EXCEPT - Answer: Policy loans are not permitted Which of the following is a true statement regarding a Medicare Supplement policy purchased during the open enrollment period? - Answer: The policy will be issued regardless of health Where will a life insurance policy's proceeds be directed to if all the beneficiaries die before the insured? - Answer: Insured's estate Which of the following is NOT a reason the government provides insurance? - Answer: Reduce fraudulent claims Page 17 of 28 For employees covered in multiple states under a group health plan, jurisdiction rules cannot alter - Answer: COBRA laws The owner of a single premium deferred annuity is entitled to do all of these EXCEPT - Answer: make additional payments into the annuity Emergency health care coverage for Medicare enrollees traveling abroad is - Answer: a Medicare Supplement additional benefit Who typically makes the purchase payments in an individual annuity? - Answer: Owner Which of these is true regarding the exchange of consideration among parties involved in an insurance contract? - Answer: Can be unequal What typically changes at the re-entry option date found in some term life policies? - Answer: premium Which of these policies is considered to be a comprehensive health policy? - Answer: Major medical policy Peter, age 50, surrenders his modified endowment contract (MEC). How is the gain treated in terms of federal income taxes? - Answer: The gain is treated as taxable income and a penalty tax is imposed on the gain Page 20 of 28 Which of these statements reflects an accurate portrayal of Medicare SELECT? - Answer: Insured uses preferred providers in exchange for paying lower premiums Which of the following would provide a reimbursement of some premiums when a long-term care policy is cancelled? - Answer: Return of premium rider When is it acceptable to charge or receive a fee or service charge in addition to the premium in connection with the transaction of insurance? - Answer: If the amount of the fee or service charge is reasonably related to the cost of the service Custodial care is normally covered under - Answer: Long-term care insurance When an annuity contract has been fully surrendered, how will the surrender charges affect the final contract settlement? - Answer: Final contract settlement will be reduced Which settlement option makes minimum guaranteed dollar payments over a stated number of years? - Answer: Fixed-Period Which of the following describes the act of insuring a risk against possible loss? - Answer: Risk transfer The Telemarketing Sales Rule states that ______ is the LATEST time of day that telemarketing calls may be received. - Answer: 9:00 PM Page 21 of 28 Mary has a Health Savings Account (HSA). Distributions that she has made for anything other than qualified medical expenses are considered taxable and subject to a penalty of - Answer: 20% An insured MUST wait ___ days to bring legal action against an insurer after written proof of loss has been received by the insurer. - Answer: 60 Tina is insured under a business overhead expense insurance policy. Which of the following would be covered if she were to become disabled? - Answer: Business property rental expense How are the premiums for an individually-owned disability income policy treated for tax purposes? - Answer: Not tax-deductible at all What is the tax treatment of benefit payments for a non-qualified annuity? - Answer: Benefit payments are always taxable Medicare can be described as - Answer: a supplemental income source for individuals over the age of 65 or permanently disabled A licensee whose name or address changes must notify the Department of Insurance within ___ days. - Answer: 30 Page 22 of 28 What is covered under a limited accident and health insurance policy? - Answer: Limited perils and amounts Which of the following best describes the tax treatment of medical expense policies for the self-employed? - Answer: 100% of medical expense plan premiums are tax deductible In a disability buy-sell agreement, the policies funding the agreement are owned by the - Answer: business entity Which benefit supplement added to a life insurance policy insures an entire family? - Answer: Family term rider Larry has a Major Medical Expense policy for his family with a $1,000 per family/per year deductible and an 80/20 coinsurance provision. If Larry's family files four claims of $400, $800, $100, and $700 in one year, how much will the insurance company pay? - Answer: $800 Larry wants to purchase an individual disability income policy to provide continuous income while disabled. He is also covered by a two-month wage continuation benefit from his employer. What should the policy elimination period be for his individual policy? - Answer: 60 days Page 25 of 28 An insurance company can be liable for a producer's unauthorized acts - Answer: when the agency contract is unclear concerning the authority given A(n) _________ company is licensed by the Department of Insurance to conduct insurance business in Arizona. - Answer: authorized Which of the following statements regarding hospital pre-admission authorization is NOT true? - Answer: It encourages weekend admission A client applies for an individual accident and health policy in Arizona. If the insurer collects personal information from any source other than public records or the applicant, a notice of application practices MUST be given to the applicant no later than the - Answer: application date An insurable risk requires - Answer: that the chance of loss be calculable Which of these procedures is NOT designed for ambulatory care centers? - Answer: Inpatient surgery How is an insured's accident and health claim handled by an insurer if it occurs during the policy's grace period? - Answer: The unpaid premium may be subtracted from the reimbursement Page 26 of 28 Which of the following best describes a point-of-service (POS) plan? - Answer: A plan which combines indemnity plan features with those of an HMO Which statement best defines what a Policy Title means on an insurance policy? - Answer: Every policy must have a title on the face and on the back of the policy, briefly describing the policy Switching Life insurance policies without tax consequence is permitted under - Answer: Section 1035 rules A producer is proposing that a policyowner replace an existing individual health insurance policy with a new one. Under the new contract, a pre-existing conditions exclusion - Answer: may reduce the insured's benefits Which of the following entities does NOT establish regulations for variable insurance products? - Answer: State attorney general Specialty care is provided by which of the following health maintenance organization (HMO) providers? - Answer: Neurologist When would evidence of insurability be required for a person already covered with a variable universal life policy? - Answer: When the death benefit is increased In long-term care insurance, what is an "ADL"? - Answer: Activities of daily living Page 27 of 28