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Maryland Life and Health General Exam
Simulator Questions And Answers
Graded A+
Individuals covered with employer-paid group health plans will normally receive tax-free benefits under all of these plans EXCEPT - Answer-disability income A life insurance policy's contingent beneficiary is the - Answer-person who receives the death benefits if the primary beneficiary dies before the insured If a disability income policy contains a cost-of-living adjustment rider, benefits must typically be increased - Answer-at least once per year from when benefits begin Which of these statements regarding the extended term insurance nonforfeiture option in a life policy is accurate? - Answer-the premium to purchase the coverage comes from the policy's cash value Which of the following is not a reason for a business to buy key person life insurance? - Answer-an increased pension liability if the key employee dies Ken is age 65 and has 2 years until he receives Social Security retirement benefits. At his current age, which is true about Medicare Part A Hospital Insurance coverage? - Answer-It is available through application to Social Security An accident and health insurance policy's premium requirements are set forth in which of the following provisions? - Answer-Consideration clause Sarah, age 88, is a life annuitant who has lived beyond her life expectancy. The funds for additional benefit payments will be derived primarily from funds that were - Answer- not distributed to life annuitants who died before life expectancy Under HIPAA requirements, eligibility for the pre-existing conditions exclusion waiver under new coverage is lost if - Answer-there is a break in coverage of more than 63 days The health insurance premiums paid for by each partner in a partnership is considered to be - Answer-100% tax deductible
An annuity which starts paying monthly benefits within a month after issuance is called a(n) - Answer-immediate annuity 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 What is the insurer responsible for when a producer is acting within the scope of authority granted in the agency contract? - Answer-responsible for acts by the producer that are authority only What does a fixed life annuity offer protect against? - Answer-savings depletion due to longevity Which of the following types of insurers limits the exposures it writes to those of its owners? - Answer-captive insurer An agent whose actions exceed the authority granted by contract is - Answer-not backed by the insurer Use of XYZ Insurance Company brochures, business cards, and rating guides is an example of - Answer-apparent authority What kind of arrangement gives the policyowner the right to change the beneficiary? - Answer-Revocable designation Which of these procedures is NOT designed for ambulatory care centers? - Answer- inpatient surgery 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 Alan is an enrollee of a health maintenance organization (HMO) which uses a gatekeeper system. If there ever comes a time when he needs emergency health services, what should he do? - Answer-proceed to the nearest emergency room Which statement is INCORRECT about the interest-only settlement option in a life insurance policy? - Answer-interest on proceeds must be paid by the beneficiary What happens to a life insurance policy when the policy loan balance exceeds the cash value? - Answer-policy will no longer be in force When using the needs approach for life insurance planning, a lump sum may be created to provide for all of the following EXCEPT - Answer-employee benefits
Medicare Supplement insurance requires an individual to be at least how old for open enrollment? - Answer-no minimum age How is the insured protected if a payor benefit rider is attached to the life insurance policy? - Answer-Premium payments are waived in the event the premium payor dies or becomes disabled Under HIPAA, medical plan late enrollees may be excluded for pre-existing conditions for a maximum of - Answer-18 months What happens to the purchasing power of benefit payments from a fixed life annuity when the cost of living goes up? - Answer-decreases When must a producer provide disclosure about information practices to an applicant? - Answer-Prior to or at the time of signing the application How can an insurance company minimize exposure to loss? - Answer-reinsuring risks The standard provisions of an accident and health insurance policy require that the - Answer-policy, endorsements, and attached papers constitute the "entire contract" A life insurance guaranteed insurability rider gives the insured the right, without proving insurability, to - Answer-periodically purchase additional insurance When funds are transferred directly from one IRA to another IRA, what percentage of the tax is withheld? - Answer-none During the early years of a whole life insurance policy, the cash value will normally be - Answer-less than the total premiums paid Which of the following statements is TRUE if the owner of an IRA names their spouse as beneficiary, but then dies before any distributions are made? - Answer-the account can be rolled into the surviving spouse's IRA Insurance is NOT characterized as which of the following? - Answer-as the number of insured increase the number of losses decrease Medicare can be described as - Answer-a federal health insurance program for individuals over the age of 65 or permanently disabled An HMO prescription drug plan is generally characterized by - Answer-drugs dispensed through participating pharmacies Which statement regarding the life insurance premium for a children's rider is true? - Answer-premium remains the same no matter how many children
Which of the following statements accurately describes the financial impact of total disability? - Answer-may be worse than the financial impact of death Which of the following disability buy-sell agreements is best suited for businesses with a limited number of partners - Answer-cross-purchase agreement An organization that requires healthcare services to be provided by a network of physicians and hospitals is known as a(n) - Answer-HMO Which of these is NOT an advantage of term life insurance? - Answer-a cash benefit will be provided if the insured is alive at the end of the policy period A disability income insurance policy was recently issued with a rating. What does this mean? - Answer-policyowner will be charged an additional premium Which of the following statements is NOT true concerning the relationship between group health insurance plans and Medicare? (assuming the business has more than 20 employees) - Answer-Group health coverage is NOT available for workers over the age of 65 A group-owned insurance company that is formed to assume and spread the liability risks of its members is known as a - Answer-risk retention group A disabled business owner who has payroll and business expenses paid for has what kind of insurance policy? - Answer-business overhead expense What are premiums for group credit life insurance based on? - Answer-flat rate unrelated to the borrower's age An individual is insured under a major medical plan with a $1,000,000 lifetime benefit. The plan has a $500 deductible and an 80% coinsurance. If the insured suffers a $50,500 medical expense during the calendar year, what is the remaining lifetime benefit? - Answer-$960, $50,500 - $500 = $50,000 * 80% = $40, $1,000,000-$40,000 = $960, How much is normally paid to a policyowner in a life (viatical) settlement? - Answer-less than the death benefit Which of the following is generally a form of group credit life insurance? - Answer- decreasing term insurance Medicare Part B excess charges are covered by - Answer-Medicare supplemental insurance
The principal source of information concerning an applicant's identity, age, and marital status is found in the - Answer-completed applications 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 What is an insurance contract that identifies individuals by relationship to a specific organization? - Answer-Group Insurance A prepaid dental plan has an agreement in place with a network of dentists which - Answer-accepts an established amount as payment in full for the dental services rendered Which of the following is NOT a basic underwriting action for accident and health insurance? - Answer-removing uniform policy provisions Which of the following can be used to avoid the mandatory withholding tax on qualified plan distributions? - Answer-Conduit IRA (a holding tank for funds that originally came from a qualified plan and are on their way to another qualified plan) The guarantee of insurability option provides a long-term care policyowner the ability to
- Answer-buy additional coverage at a later date The dental specialty which deals with the replacement of missing teeth is called - Answer-prosthodontics Which of these is an accurate statement regarding the fixed period settlement option on a life insurance policy? - Answer-a portion of the payments paid to beneficiary comes from interest calculated on the proceeds of the policy Which of these is NOT a common life insurance nonforfeiture option? - Answer-Life income annuity A policyowner with a terminal illness who sells his life insurance policy to a third party is called a - Answer-viator First-time homebuyers are able to withdraw up to how much from their qualified IRAs without incurring the 10% early withdrawal penalty? - Answer-$10, What is the name of the rider that provides an additional purchase option in a life insurance policy? - Answer-Guaranteed Insurability Rider 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
For employees covered in multiple states under a group health plan, jurisdiction rules cannot alter - Answer-COBRA laws Linda is covered with long-term care insurance and has early-stage Alzheimer's. She is still able to reside in her home while receiving primary care, as opposed to moving into a nursing home. All of the following long-term benefits encourage home health care EXCEPT - Answer-Custodial care (custodial care is typically associated with the services provided at a nursing home) Which type of life insurance policy allows a policyowner the choice of investments along with flexible premium payments? - Answer-variable universal life Ch 2 Health Insurance Providers Flashcards | Quizlet quizlet.com › Social Science › Business › Insurance If an individual would like to enroll in Medicare or seek public information about Medicare, which federal agency handles this? - Answer-Social Security Administration The absolute assignment of a life insurance policy results in - Answer-all incidents of ownership transferred to the assignee Which of these statements is NOT a characteristic of the law of large numbers? - Answer-rates can be calculated to compensate for losses (law of large numbers states that larger groups provide better loss predictions, the high the exposure the more likely the event can be predicted) Many deferred annuity contracts waive the surrender charge when the - Answer- annuitant dies or becomes disabled When there is a named beneficiary on a life insurance policy, the death benefits - Answer-are paid directly to the beneficiary without interference from the insured's creditors Which of the following can be defined as a cause of a loss? - Answer-Peril Medicaid will pay for nursing home expenses under what condition? - Answer-must have financial need (Medicaid is a federal and state funded program for those whose income and resources are insufficient to meet the cost of necessary medical care) 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 Chris has a single major medical contract which covers all medical expenses. His plan is considered to be - Answer-comprehensive (a single major medical contract which covers all medical expenses)
Which of these statements is NOT true regarding a cash value loan against a life insurance policy? - Answer-interest payments made by policyowner are deductible If a disability income policy contains a cost-of-living adjustment rider, benefits must typically be increased - Answer-at least once per year from when benefits begin The agreement in which hospitals and physician groups in a specific area contract with an insurance company to provide medical care at predetermined costs is - Answer- Preferred Provider Organization (PPO) (a collection of health care providers who offer their services to certain groups at prearranged prices) What is covered under a limited accident and health insurance policy? - Answer-limited perils and amounts All of the following are covered under most dental plans EXCEPT for - Answer-mouth cancer A business becoming incorporated is an example of risk - Answer-transfer Medicare Part B excess charges are covered by - Answer-... How do birthing centers reduce medical costs? - Answer-Using certified nurse midwives Mary has a Health Savings Account (HSA). Distributions that have been made for anything other than qualified medical expenses are considered taxable and subject to a penalty of - Answer-20% An insurer will typically assess a back-end load on a deferred annuity that is cancelled during the early contract years. What is this back-end load referred to as? - Answer- surrender charge Prepaid dental plans differ from most other types of dental plans in what way? - Answer- closed panel of dentists can only be used An annuitant is paid $495 per month until the contract value is exhausted at some undetermined date in the future. Which type of annuity payout option is this? - Answer- fixed amount Which of these is a type of private insurance that covers the cost-sharing amounts under Medicare? - Answer-Medicare supplement How many employees must an employer have for the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) to apply? - Answer-20 or more
Tom has a qualified retirement plan with his employer that is currently considered to be 80% "vested". How can this be interpreted? - Answer-If Tom's employment is terminated, 20% of the funds could be forfeited When does the producer give a premium receipt for a life insurance application? - Answer-when the initial premium has been paid with the application Which of the following is NOT an example of risk retention? - Answer-Not doing a business deal after deciding it would be too risky All of these statements concerning group credit life insurance are false EXCEPT - Answer-the face amount is based on the outstanding loan balance 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 Part A Medicare includes coverage for all of the following services EXCEPT - Answer- 120 days of skilled nursing facility care The difference between a doctor's actual charges and the amount approved by Medicare is referred to as a(n) - Answer-excess charge (the amount above and beyond what Medicare approves for a specific procedure/doctor visit) Rick recently died and left behind an individual IRA account in his name. His widow was forwarded the balance of the IRA. The widow qualifies for the - Answer-the marital reduction A material change in a modified endowment contract (MEC) results in - Answer-the seven pay test, adjusted for cash value, applies again What typically changes at the re-entry option date found in some term life policies? - Answer-premium (re-entry gives the insured the opportunity to provide evidence of insurability at the end of the term to qualify to renew the policy at a lower premium) what is another term used for a "pure" life annuity? - Answer-life income A medical fee schedule shows the amount an insurer will pay for a given procedure. This amount is considered to be the - Answer-highest amount payable If an individual would like to enroll in Medicare or seek public information about Medicare, which federal agency handles this? - Answer-Social Security Administration Group life insurance is typically issued as - Answer-level term insurance
when a ceding insurer transfers a portion of risk to an assuming insurer on a case by case basis, this process is referred to as - Answer-Facultative reinsurance What is the maximum Social Security Disability benefit amount an insured can receive?
- Answer-100% of the insured's Primary Insurance Amount (PIA) Which of the following statements BEST describes the HIPAA portability rules for an individual who changes from one group medical plan to another? - Answer-reduces or eliminates any pre-existing conditions excluded under the new plan In what situation could an insurance policy's coverage be modified? - Answer-applicant is a substandard risk Switching Life insurance policies without tax consequence is permitted under - Answer- Section 1035 rules Health Maintenance Organization (HMO) wellness programs may include each of the following EXCEPT - Answer-Diagnostic testing services Which of the following statements BEST describes a double indemnity provision in travel accident insurance? - Answer-benefits are doubles under certain circumstances state in the policy When premiums are determined, one factor would be the expenses of the - Answer- insurer Which statement regarding the cash value of a whole life insurance policy is correct? - Answer-Available to the policyowner when policy has been surrended The interest credited to the cash values of personally-owned non-qualified annuities is considered - Answer-tax-deferred What is the face amount of a $50,000 graded health benefit life insurance policy when the policy is issued? - Answer-Under $50,000 initially, but increases annually until fully insured Which of these occurrences could improve an insurer's ability to reduce premiums? - Answer-Rate of earnings on investments increase In what situation would disability income insurance premiums be a deductible expense?
- Answer-corporation paying for group disability income coverage for its employees What would be considered an advantage of purchasing term life insurance? - Answer- the initial premium is lower compared to an equivalent amount of whole life coverage
After the extended term life nonforfeiture option is chosen, the available insurance will be - Answer-level term for a stated period of time In what way is a life insurance policy affected by an accelerated benefit payment? - Answer-decreases the death benefit Julie is an employee with a group health plan that contains the Mandatory Second Surgical Opinion provision. What is to be expected with this provision in place? - Answer-Out-of-pocket expenses are lower when a second surgical opinion is obtained as opposed to having only one All of these are considered features of whole life insurance EXCEPT - Answer-initial premium is lower than for an equivalent amount of term insurance Laura 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? - Answer-Sign an enrollment card Which life insurance clause prohibits an insurance company from questioning the validity of the contract after a stated period of time has passed? - Answer-incontestable clause What is a major difference between private commercial insurers and HMO's? - Answer- An HMO combines medical care delivery and funding in one organization What does the rehabilitation benefit cover in a disability income policy? - Answer-covers the approved cost of the rehabilitation necessary to help a disabled insured return to work Under a key person disability income policy, benefits will be received as - Answer-tax- free income to the business Medicare Part A coinsurance payments are covered by - Answer-Medicare Supplement Plan A All of these statements correctly describe an aleatory contract EXCEPT - Answer-only one party makes any kind of legally enforceable offer Which action will trigger a penalty tax on premature distributions from a modified endowment contract (MEC) - Answer-policy loans Which statement regarding the certificate of insurance is accurate? - Answer-It indicates evidence of an employee's insurance coverage
Which event triggers a deferred annuity to start making benefit payments to the annuitant? - Answer-when the contract is annuitized Which of the following statements accurately describes the "time limit on certain defenses"? - Answer-after a stated period, claims cannot be denied due to material misrepresentation on the application Kyle is an insured who disregarded an accident and health insurance policy provision that requires him to seek a second surgical opinion. What will the end result be? - Answer-he may be reimbursed for the surgical procedure at a reduced benefit level A description of a qualified plan's insurance contract may be found in which ERISA reporting form? - Answer-Annual return/report (Form 5500) (Form 5500 is a disclosure document that employee benefit plans use to satisfy annual reporting requirements under ERISA) Individuals who participate in an HMO plan are called - Answer-subscribers A Medicare Supplement policy is required to do which of the following? - Answer- provide a 30 day free-look period According to ERISA regulations, a Summary Plan Description must be provided to a new plan member within ____ days of the member's eligibility date. - Answer-90 days In long-term care insurance, what is the length of time for which claims will be paid? - Answer-elimination period What type of premiums are associated with individual mortgage protection life insurance policies? - Answer-level premiums Ron recently purchased an immediate, straight life fixed annuity. His benefit payments will - Answer-remain a constant dollar amount for the duration of the annuity period Which of the following is NOT an allowable exclusion for long-term care insurance policies? - Answer-Care for incurable conditions Which of the following is NOT covered by a comprehensive long-term care policy? - Answer-acute care Which of these is NOT used as selection criteria in the underwriting process of a life insurance application? - Answer-national origin A family counseling benefit is typically offered under which of these coverages? - Answer-Hospice care
When does interest income for a flexible premium deferred annuity get reported for federal income taxes? - Answer-upon receiving distributions from the contract Which of the following is true regarding a person receiving a waiver of premium benefit?
- Answer-The insured must be disabled for a period of time Assets that back the non-guaranteed values of variable life insurance products are held in which account? - Answer-separate account set up by the insurer A MET third-party administrator may NOT perform which of the following functions? - Answer-marketing the plan When does the owner's contractual rights begin under an individual annuity contract? - Answer-time of purchase Which of these is NOT considered to be a cost connected with an individual's death? - Answer-Business expenses Medicare will cover a maximum of how many days per benefit period in a skilled nursing facility? - Answer-100 days Which of the following would NOT be a reason for purchasing life insurance on a child's life? - Answer-provide benefits for the child if the parents die Which of these is NOT a true statement of the war exclusion? - Answer-civil insurrections apply Extended term option - Answer-uses the policy's cash value to purchase a level term insurance policy in an amount equal to the original policy's face value, for as long a period as the cash value will purchase Which of the following guidelines does NOT apply under the pregnancy provision of the Civil Rights Act? - Answer-Post-termination extensions of medical benefits must apply equally to pregnancy An individual who purchases a modified life insurance policy expects - Answer-an improvement in future income Which annuity allows contributions to an IRA? - Answer-Deferred When group benefits under COBRA have expired, a fully insured group policy can be converted to a(n) - Answer-Individual health policy After expiration of group benefits under COBRA, a fully insured group policy can be converted to an individual health insurance policy.
A Policyowner fell behind on the premium payments of a whole life policy and it 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 Tori has an annuity that pays her a $500 per month income benefit for life or for ten years, whichever is longer. What kind of annuity is this? - Answer-fixed life annuity with period certain In the event of premium default, which life insurance provision will use the cash value to keep the policy in force? - Answer-automatic premium loan A certificate of coverage for a group health policy is best described as - Answer-proof of coverage for the employee An officer for a corporation takes out numerous unsecured loans from the company's qualified retirement plan. Which of these rules is the plan in violation of? - Answer- exclusive benefit rule A "premature distribution from a modified endowment contract (MEC) incurs a penalty tax of - Answer-10% A hold-harmless clause is an example of risk - Answer-transfer Mike recently lost sight in both eyes. He has a policy that pays a lump sum benefit for this injury. What type of insurance does Mike have? - Answer-accidental death and dismemberment The type of health insurance in which underwriting procedures are the most restrictive is
- Answer-individual An agent's authority to bind an insurer to an insurance contract may be granted in the - Answer-agent's contract and the insurance company's appointment Periodic health claim payments MUST be made at least - Answer-monthly If a disability income policy contains a cost-of-living adjustment rider, benefits must typically be increased - Answer-At least once per year from when benefits began Rick owns a variable universal life policy and chooses a variable death benefit option. What will typically happen to the death benefit as a result of this selection? - Answer- fluctuate with changes in the cash account
Which statement concerning the Entire Contract provision in an individual accident and health insurance policy is TRUE? - Answer-the agent doesn't have the authority to change the policy or waive its provisions which life insurance policy provision prohibits beneficiary from "commuting, encumbering, withdrawing or assigning" any portion of the proceeds prior to actual receipt from the company? - Answer-spendthrift The annuitant in a single premium deferred annuity (SPDA) - Answer-makes only one premium payment Care coverage is typically found in a(n) - Answer-long term care policy Which tax would an IRA participant be subjected to on distributions received prior to age 59 1/2? - Answer-10% tax penalty for early withdrawal Which of the following is NOT an intended use of an annuity? - Answer-create new funds upon the death of a wage-earner A policyowner has a life insurance policy where she had listed her age on the application as 5 years younger than her actual age. If she dies and the insurer discovers the misstatement of age, how much will the insurance company pay? - Answer-less than the face amount Which of the following is NOT subject to the promise to pay in an insuring clause? - Answer-How the premium is calculated Who may terminate coverage under a cancelable health insurance policy? - Answer-the insurer or the insured XYZ Insurance Company gives direct authority to its producers to sell insurance through an agency contract, but nothing is stated regarding the collection of premiums. Which authority grants the producer the right to collect premiums? - Answer-implied authority 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 of these factors does NOT influence an applicant's need for life insurance? - Answer-self-maintenance expenses How does the cost for a survivorship policy compare to the cost of combining two separate individual life insurance policies? - Answer-survivorship life policy is lower If an employer pays for accidental death and dismemberment insurance for its employees, the amount paid by the employer is generally - Answer-tax deductible to the business
