Tennessee Health and Life Insurance Final Exam Study Guide 2025, Exams of Insurance Economics

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Tennessee Health and Life Insurance latest

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Which of the following reimburses its insureds for covered medical expenses? health maintenance organizations preferred provider organizations commercial insurers service providers - ✔✔COMMERCIAL INSURERS Commercial insurance companies function on the reimbursement approach. Policyowners obtain medical treatment from whatever source they feel is most appropriate and submit their charges to their insurer for reimbursement A business entity can be defined as a(n) agency that must only operate outside of TN agency that must only operate inside of TN association or a limited liability company business that requires approval by the Attorney General to transact business - ✔✔ASSOCIATION OR A LIMITED LIABILITY COMPANY The definition of a business entity includes an association or limited liability company Which of the following health insurance policy provisions specifies the health care services a policy will provide? insuring clause usual, customary, and reasonable clause

consideration clause

benefit clause - ✔✔INSURING CLAUSE The insuring clause identifies the specific type of health care services that are covered by that policy A Disability Income policy that only the policyowner can terminate and which the rates will never go up is considered to be optionally renewable noncancellable cancellable guaranteed renewable - ✔✔NONCANCELLABLE A disability income policy that only the policyowner can terminate and on which the rates will never increase is a noncancellable policy A producer may apply for one or more of the following licenses: life insurance personal lines property accident and health or sickness insurance all of the above - ✔✔ALL OF THE ABOVE A provision in a life insurance policy that pays the policyowner an amount that does not surpass the guaranteed cash value is called the: policy loan provision automatic premium loan provision

accelerated benefits provision consideration clause - ✔✔POLICY LOAN PROVISION a policy loan will pay the policyowner an amount that, with interest, does NOT exceed the guaranteed cash value Long Term Care policies will usually pay for eligible benefits using which of the following methods? Delayed fee for service expense incurred respite - ✔✔EXPENSE INCURRED Most long term care policies pay on a reimbursement (or expense-incurred) basis, up to policy limits Which of the following is NOT a limited benefit plan? Dental policy life insurance policy critical illness policy cancer policy - ✔✔LIFE INSURANCE POLICY is not a limited benefit plan In TN, the definition of "individual" may include which of the following? The individual's children

the individual's business associates the individuals legal representative the individuals financial accounts - ✔✔THE INDIVIDUALS LEGAL REPRESENTATIVE The term "individual" can be associated with an individuals legal representative What is the purpose of the Time of Payment Claims Provision? Requires the insured to wait 60 days after submitting Proof of Loss before filing a lawsuit prevents delayed claim payments made by the insurer requires a probation period for each claim filed by the insured protects the insurer from frivolous lawsuits - ✔✔PREVENTS DELAYED CLAIM PAYMENTS MADE BY THE INSURER The purpose of the Time of Payment of Claims provision is to prevent the insurance company from delaying claim payments What is considered to be a characteristic of an immediate annuity? Benefit payments start within one payment period of purchase benefit payments start within 5 years of initial purchase normally tied to a specific equity or stock index periodical contributions begin immediately - ✔✔BENEFIT PAYMENTS START WITHIN ONE PAYMENT PERIOD OF PURCHASE an immediate annuity is designed to make its first benefit payment to the annuitant at one payment interval from the date of purchase

A licensed producer can be BEST described as a(n) someone who places insurance advertisements in a newspaper underwriting officer of an insurance company individual who places insurance on behalf of anyone seeking insurance administrator answering calls for an insurance agency - ✔✔INDIVIDUAL WHO PLACES INSURANCE ON BEHALF OF ANYONE SEEKING INSURANCE A person who places insurance on behalf of anyone seeking insurance must be licensed as a producer What is the max fine that can be imposed by the Commissioner to a producer who violates an insurance law? $250 per violation $500 per violation $1,000 per violation no limit to the fine - ✔✔$1,000 PER VIOLATION If the Commissioner finds a producer to be in violation of insurance laws, the Commissioner may impose a fine of no more than $1000 per violation A father who dies within 3 years after purchasing a life insurance policy on his infant daughter can have the policy premiums waived under which provision? Payor provision accelerated benefits provision assignment provision waiver of premium provision - ✔✔PAYOR PROVISION

a payor provision provides that in the event of death or disability of the adult premium payor, the premium on a juvenile policy will be waived until the insured child reaches a specified age or the maturity date of the contract Medicare part C is:

• government insurance available to those who are enrolled in a Medicare Supplement Plan with income under $12, per year orginal part A and B medicare available to those who are enrolled in Medicare Part A and Part B - ✔✔AVAILABLE TO THOSE WHO ARE ENROLLED IN MEDICARE PART A AND PART B The Accelerated Death Benefit provision in a life insurance policy is also known as a(n): 1035 exchange inter vivos gift non-forfeiture option living benefit - ✔✔LIVING BENEFIT The accelerated death benefit provision in a life insurance policy is also known as a "living Benefit" J applies for an insurance policy. What BEST describes the particular terms of this policy? AM best statement policy summary provisional page

buyers guide - ✔✔POLICY SUMMARY a policy summary describes the particular terms of the policy being applied for Which of the following consists of an offer, acceptance, and consideration? warranty estoppel contract representation - ✔✔CONTRACT offer, acceptance, and consideration are all elements of a contract The commissioner notifies the association of an insolvent insurer no later than after receiving notice of the insurer's insolvency

• 3 days 5 days 10 days 30 days - ✔✔ 3 DAYS the commissioner notifies the association of an insolvent insurer no later than 3 days after receiving notice of the insurer's insolvency A Universal Life policy is sometimes referred to as an unbundled Life Policy because the owner can see the interest earned, cost of insurance, and the inherent risk

commission rate inflation factor expense charges - ✔✔EXPENSE CHARGES The universal life policy is called an unbundled life policy because the policyholder can see the expense charges, the interest earned, and the cost of insurance A provision that the policy, application, and all attachments shall constitute the between the parties grace period entire contract notice of claim proof of loss - ✔✔ENTIRE CONTRACT a provision that the policy, application, and all attachments shall constitute the entire contract between the parties Who is normally considered to be the owner of a 403(b) tax-sheltered annuity? the 403(b) custodian the financial institution the employer the employee - ✔✔THE EMPLOYEE The participating employee normally applies for and owns a 403(b) tax-sheltered annuity

The Automatic Premium Loan provision is designed to: provide a source of revenue to the insurance company avoid a policy lapse allow a polocyowner to request a policy loan allow a pollicyowner to take out additional coverage without evidence of insurability - ✔✔AVOID A POLICY LAPSE The purpose of the automatic premium loan is to keep the policy from lapsing An agent gives a conditional receipt to a client for an insurance policy after collecting the initial premium. When will the policy become effective? when the policy is issued the date of policy deliver when the conditions of the receipt are met the date the sales appointment was set - ✔✔WHEN THE CONDITIONS OF THE RECEIPT ARE MET A conditional receipt indicates that certain conditions must be met in order for the insurance coverage to go into effect T and S are named co-primary beneficiaries of a $500,000 Accidental Death and Dismemberment policy insuring their father. Their mother was name contingent beneficiary. Five years later, S dies of natural causes and the father is killed in a scuba accident shortly afterwards. How much of the death benefit will the mother receive? $1,000, $500, $250, $0 - ✔✔$

The mother receives $0 because T is still alive and the sole primary beneficiary, while the mother is still the contingent beneficiary Q applied for life insurance and submitted the initial premium on Jan 1. The policy was issued Feb 1, but it was not delivered by the agent until Feb 7. Q is dissastisfied and return the policy on Feb 13. How will the insurer handle this situation? Premium will be fully refunded minus a surrender charge policy was not returned within the free-look period, premium will not be refunded policy was returned within the free-look period, premium will be fully refunded premium will be fully refunded minus a prorated amount for the period of Feb 7 - Feb 13 - ✔✔POLICY WAS RETURNED WITHIN THE FREE-LOOK PERIOD, PREMIUM WILL BE FULLY REFUNDED free-look period begins when the policy is delivered to the policyowner After and inured gives notice of loss, what must he/she do if the insurer does not furnish forms? file a lawsuit contact the insurer again requesting forms nothing file written proof of loss - ✔✔FILE WRITTEN PROOF OF LOSS the insured may file written proof of loss in any form if the insurer does NOT furnish forms after the insured gives notice of loss How long is the typical free look period for long term care insurance policies? 20 days

30 days 40 days 50 days - ✔✔ 30 DAYS most long term care policies require a 30 day free look period J, an AD&D policy holder, dies after injuries sustained in an accident. J's age, as stated on the application 5 years ago, was found to be understated by ten years. Which of the following will the insurance company take? the insurer will pay the original benefit stated in the policy the insurer will adjust the benefit to what the premiums paid would have purchased at the insured's actual age the insurer will pay the original face amount minus any premium deficiencies owed the insurer will deny the claim and refund premiums paid - ✔✔THE INSURER WILL ADJUST THE BENEFIT TO WHAT THE PREMIUMS PAID WOULD HAVE PURCHASED AT THE INSURED'S ACTUAL AGE For a change to a health policy to be valid, what is required? the producer must approve of the changes changes in the policy must be approved by an executive officer of the insurer changes must be notarized by the commissioner and attached to the policy the producer must take an affidavit from the policyholder - ✔✔CHANGES IN THE POLICY MUST BE APPROVED BY AN EXECUTIVE OFFICER OF THE INSURER V is insured under an individual disability income policy with a 30-day elimination period. on july 1, he is involved in an accident and temporarily disabled. He returns to work on december

1. How many months of benefit are payable?

6 months 5 months 4.5 months 4 month - ✔✔ 4 MONTHS

• after the 30 day eliminiation period has been satisfied, there will be 4 months of benefit payments The Notice of Claims provision requires a policyowner to: provide proof of loss to an insurer within a specified time - notify an insurer of a claim within a specified time wait 60 days after filing a claim to initiate a lawsuit against insurer notify their physician of a claim within a specified time - ✔✔NOTIFY AN INSURER OF A CLAIM WITHIN A SPECIFIED TIME Health insurance benefits NOT covered due to an act of war are: excluded by the insurer in the contract provisions assigned to a reinsurer given a longer probationary period charged a higher premium - ✔✔EXCLUDED BY THE INSURER IN THE CONTRACT PROVISIOSNS An exclusion is a provision that entirely eliminates coverage for a specified risk, such as an act of war or aviation In TN, the max fine that the Commissioner can impose on a producer is per violation

$

$

$

$2000 - ✔✔$

Under the USA patriot act, insurers are required to report receipt of cash payments in excess of:

• $10, $7, $5, $2,500 - ✔✔$10, When an insurance company sends a policy to the insured with an attached application, the element that makes the application part of the contract between the insured and the insurer is called the Entire Contract Provision Insuring clause time limit on certain defense provision legal contract clause - ✔✔ENTIRE CONTRACT PROVISION An insurer must provide an insured with claim forms within days after receiving notice of a loss 5 10

20 - ✔✔ 15

All of these are considerd a producers breach of fiduciary duty EXCEPT missapropration of premiums conversion of premiums improper withholding of premiums allowing premiums to be submitted electronically - ✔✔ALLOWING PREMIUMS TO BE SUBMITTED ELECTRONICALLY What determines the full amount of Social Security retirement benefits a qualified individual is entitled to receive? Primary insurance amount (PIA) total taxes paid into FICA number of dependents state of residence - ✔✔PRIMARY INSURANCE AMOUNT (PIA) the PIA determines the full amount of retirement benefits for an eligible person all of these settlement options involve the systematic liquidation of the death proceeds in the event of the insured's death, EXCEPT fixed period interest only

fixed amount life income - ✔✔INTEREST ONLY the interest only option foes NOT involve the systematic liquidation of the death proceeds Which of the following statements is CORRECT regarding the tax treatment of a lump-sum payment paid to a life insurance policy's primary beneficiary? the proceeds which exceed the amount paid in premiums are taxable the proceeds taxable only if the beneficiary's tax bracket has changed from the payout all proceeds are considered taxable income in the year they are received all proceeds are income tax free in the year they are received - ✔✔ALL PROCEEDS ARE INCOME TAX FREE IN THE YEAR THEY ARE RECEIVED The USA patriot act was enacted in 2001 2002 2003 2004 - ✔✔ 2001 P is self employed and owns an individual disabilitt income policy. he becomes totally disabled on june 1 and receives $2,000 a month for the next 10 months. How much of this income is subject to federal income tax? $20, $14, $6, $0 - ✔✔$

Which of these factors do NOT play a role in the underwriting of a life insurance policy? avocations credit status marital status occupation - ✔✔MARITAL STATUS With AD&D policies, what is the purpose of the Grace Period? gives the policyowner additional time to pay overdue premiums gives the policyowner additinal time to file a lawsuit gives the policyowner additional time to file a claim gives the policyowner additional time to provide proof of loss - ✔✔GIVES THE POLICYOWNER ADDITIONAL TIME TO PAY OVERDUE PREMIUMS Which of the following is NOT a requirement to sell, solicit, or negotiate long-term care insurance? be a licensed producer for life or health complete a one-time 8 hours long-term care specific training course complete 4 hours of long-term care continuing education complete a one-time 4 hour course on estate planning - ✔✔COMPLETE A ONE TIME 4 HOUR COURSE ON ESTATE PLANNING Which of these is a valid TN regulation for referral fees?

Referral fees can be unlimited in amount if the referral sale involves replacement, the notice regarding replacement form is not required referral fees may only be paid in the event a policy is purchased the commissioner may establish by rule a max amount for each referral - ✔✔THE COMMISSIONER MAY ESTABLISH BY RULE A MAX AMOUNT FOR EACH REFERRAL Which of the following are NOT managed care organizations? POS - PPO MIB HMO - ✔✔MIB (Medical information Bureau) P is a producer who notices 5 questions of a life application were not answered. What actions should P take? mail incomplete aplication to applicant to be completed and returned to the agent submit the application as-is to the insurer call the applicant and complete application over the phone set up a meeting with the applicant to answer the remaining questions - ✔✔SET UP A MEETING WITH THE APPLICANT TO ANSWER THE REMAINING QUESTIONS Which of these is an element of a Variable Life policy? a fixed, level premium insurer assumes the investment risk no investment risk to policyowner

rate of returns are guaranteed - ✔✔A FIXED LEVEL PREMIUM The AD&D provision in a life insurance policy would pay additional benefits if the insured: dies of natural causes becomes critically ill becomes chronically ill is blinded in an accident - ✔✔IS BLINDED IN A ACCIDENT Which of these is NOT a type of agent authority? express implied principal apparent - ✔✔PRINCIPAL agent authority is what an agent is authorized to do on behalf of their company. the 3 types of agent authority include express, implied, and apparent authority which of the following types of organizations are prepaid group health plans, where members pay in advance for the services of participating physicians and hospitals that have agreements? PPO HMO MEWA POS - ✔✔HMO

HMO is prepaid group health plan, where members pay in advance for the services of participating physicians and hospitals that have agreements in life insurance, the needs approach is used mostly to establish which type of life insurance a client should apply for how much life insurance a client should apply for which company a client should use when applying for life insurance what the max amount the client can spend of life insurance - ✔✔HOW MUCH LIFE INSURANCE A CLIENT SHOULD APPLY FOR A long term care policy sold in TN must be conditonally renewable optionally renewable guaranteed renewable noncancellable - ✔✔GUARANTEED RENEWABLE Unfair discrimination is BEST described as charging a different rate for someone in the same actuarial class charging different policy rates for a 60-year old individual and a 30-year old individual requiring physical exams for all employees to be covered by a company's insurance policy converting term coverage to an individual whole life policy after the insured as reached an attained age of 50 - ✔✔CHARGING A DIFFERENT RATE FOR SOMEONE IN THE SAME ACTUARIAL CLASS

Which of the following life insurance policies combine term insurance with an investment element? Increasing term life Decreasing term life universal life graded life - ✔✔UNIVERSAL LIFE A universal life policy combines term insurance and an investment element Which of the following is the reimbursement of benefits for the treatment of beneficiary's injuries caused by a third party? indemnity subrogation legal action consideration - ✔✔SUBROGATION According to the mandatory uniform policy provisions, what is the max amount of time after the premium due date during which the policy remains in force even though the premiums has not been paid? 7 days 10 days 31 days 60 days - ✔✔ 31 DAYS

G is an accountant who has ten employees and is concerned about how the business would survive financially if G became disabled. The type of policy which BEST addresses this concern is" Business Overhead Expense Disability Income Key employee life contributory - ✔✔BUSINESS OVERHEAD EXPENSE purpose is to cover certain overhead expenses that continue when the business owner is disabled P's individual health policy is now in the grace period. P's coverage will remain in force if no claim is presented the premium is paid the insured proves insurability the insured does not leave the state - ✔✔THE PREMIUM IS PAID If an insurance producer applicant is required to pass a written examination, what is also required? a fingerprint based criminal background check a college degree applicant is at least 21 years old the applicants credit report - ✔✔A FINGER PRINT BASED CRIMINAL BACKGROUND CHECK

T has a term policy that allows him to continue the coverage after expiration of the initial policy period. What type of term coverage is this? renewable increasing level decreasing - ✔✔RENEWABLE insurance contract may be sold, solicited, or negotiated by an insurance producer ONLY upon filing an application for licensure passing the licensure exam issuance of license becoming an appointed producer of an insurer - ✔✔BECOMING AN APPOINTED PRODUCER OF AN INSURER An agent needs to complete of continuing education every years 25;2 24;3 24;2 25;2 - ✔✔24;2 if a producer commits an act of coercion or intimidation, how would the producer's insurance company be held responsible for this act? if the insurer only suspends the producer, not terminate

if the insurer reduces the commission level of the producer if the insurer approves of the act if the insurer does not make a public announcment of the act - ✔✔IF THE INSURER APPROVES OF THE ACT All of the following statements regarding group health insurance is true, EXCEPT: premiums are usually determined by the claims experience of the group a master contract is issued for the group an individual policy is given to each member

• group health insurance premiums are typically lower than individual health insurance premiums - ✔✔AN INDIVIDUAL POLICY IS GIVEN TO EACH MEMEBR
• each member receives a certificate of insurance not an individual policy a potential client, age 40, would like to purchase a whole life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct? straight life accumulates faster than limited- pay life 20 pay life accumulates cash value faster than straight life cash value accumulation of both 20 pay life and straight life depend on the insurer's financial rating 20 - pay life and straight life accumulate cash value at the same rate - ✔✔ 20 - PAY LIFE ACCUMULATES CASH VALUE FASTER THAN STRAIGHT LIFE Which of the following is an example of defamation?

making statements that encourage the purchase of term life insurance over whole life insurance publishing a newsletter that makes reference to reputable brokers in the area circulating brochures that falsely denounce the financial condition of an insurer issuing pamphlets containing false info about term life insurance - ✔✔CIRCULATING BROCHURES THAT FALSELY DENOUNCE THE FINANCIAL CONDITION OF AN INSURER Which type of renewability best describes a disability income policy that covers an individual until the age of 65, but the insurer has the right to change the premium rate for the overall risk class? conditionally renewable noncancellable guaranteed renewable optionally renewable - ✔✔GUARANTEED RENEWABLE When a medicare supplement policy is delivered to a policyholder, which of the following MUST accompany the policy? producer's address outline of coverage insurer's AM best rating outline of policy- loss ratios - ✔✔OUTLINE OF COVERAGE A(n) annuity pays benefits based on units rather than stated dollar amounts deferred