Download Life & Health Insurance Exam (Arkansas) Questions with Accurate and more Exams Advanced Education in PDF only on Docsity!
Life & Health Insurance Exam
(Arkansas)
Reserves - answer Funds held by the company to fullfull future claims. Funds are set by the state department of insurance. Multi-line Insurer - answer An insurance company selling more than one line of insurance. (Ex. Home, auto, health, etc) Stock Companies - answer Owned and controlled by stockholders, whose investment set the safety margin. Guaranteed fixed premiums. Nonparticipating policies. nonparticipating policy - answer Insurance under which the insured is not entitled to share in the divisible surplus of the company. Mutual Companies - answerOwned by the policy owners and issue participating policies. Participating plan. - answerA plan under which the policy owner receives shares (dividends) of the divisible surplus of the company. Reinsurer - answerA company that provides financial protection to insurance companies. Handles risk to large for insurance companies to handle alone. Fraternal Benefit Society - answerNonprofit organization that provides insurance to its members. It's agent who sell within the society do not make commission. Stays under specific premiums. Fair Credit Reporting Act - answerA federal law requiring a person to know if he/she is being investigated by an inspection company, and is notified prior to investigation. The maximum penalty for obtaining consumer information under false pretenses is $5, and/or 1 year imprisonment. Buyer's Guide - answerA booklet that describes insurance policies and concepts, and provides general information to help an applicant make an informed decision. Policy Summary - answera written statement describing the features and elements of the policy being issued. Includes conditions, coverage, limitations, and premiums.
National Association of Insurance Commissioners (NAIC) - answerOrganization made up of individual state insurance commissioners whose purpose is to promote uniformity in regulation by drafting model laws and regulations. State Guaranty Association - answerprotect policy owners in the event of any insurance company going out of business, becoming insolvent, or the in ability to pay claims. Every authorized insurer are legally required to participate. life insurance - answerinsurance paid to named beneficiaries when the insured person dies. Term Life Insurance - answerInsurance that provides financial protection from losses resulting from a death during a definite period, or term. whole life insurance - answerInsurance that is kept in force for a person's entire life and pays a benefit upon the person's death, whenever that may be. Characterized by level premiums & benefits, & cash value. Group life insurance - answerA single contract the covers a group of people; employer to employee. Those covered may or may not pay a portion of the premium, can usually choose their beneficiary, & does not own the contract. Consideration - answerThe part of insurance contract setting forth the amount of inital and renewable premiums and frequency of future payments. Often includes the initial premium and completed application for insurance. In other words "please consider me for insurance, here is my initial premium, completed application, and how much/often i agree to pay in the future." health insurance - answerA general way of describing health insurance through sickness and bodily injury. Not just hospital and doctor visits. disability income insurance - answerprovides payments to replace income when an insured person is unable to work, sometimes only protecting a portion of ones income. Insuring Agreement - answerThe section of an insurance policy containing the insurer's promise to pay, the description of coverage provided and perils insured against. (We ensure to insure you under these conditions for this amount) Medical Expense Insurance - answerPays benefits for nonsurgical doctors' fees commonly rendered in a hospital; sometimes pays for home and office calls. Entire Contract - answerAn insurance policy provision stating that the application and policy contain all provisions and constitute the entire contract. Notice of Claim provision - answerPolicy owner must notify Insurer of loss either in writing, in person or by phone within 20 days.
Reciprocal Insurers - answerOrganized on the basis of ownership by their policyholders. The policyholder themselves assume the risk of other policyholders. Managed by an attorney-in-fact Reinsurers and retention limits - answerThey insure the insurers Reinsurance - answerTo enable a company to meet certain objectives, such as favorable underwriting or mortality results. ceding company - answerThe company transferring the risk. Net retention (net line) - answerThe portion of the risk that the ceding insurer obtains. Treaty Reinsurance - answerTo enable a company to meet certain objectives, such as favorable underwriting or mortality results. Primary Insurer - answerIn a reinsurance agreement, the insurance company that transfers its loss exposure is the primary insurer. captive insurer - answerAn insurer established and owned by a parent firm for the purpose of insuring the parents firm loss exposure. Risk Retention Group (RRG) - answera mutual insurance company formed to insure people in the same business, occupation or profession. (Ex. Pharmacists, dentist, engineers) Surplus Lines Insurance - answerCoverage available to those who need protection but it is not available through private or commercial carriers. Surplus lines - answerRefers to the nontraditional insurance market. A person will seek coverage through surplus lines broker in order to secure coverage for substandard or unusual risk. (Ex. Hole-in-one insurance or nonappearance coverage) Industrial insurer - answerInsurance sold through a special branch of the industry known as home service or debir insurers. Charaterized by small face amounts (usually $1,000- $2,000) with premiums paid weekly. Service providers - answerOffer benefits to subscribers in return for the payment of a premium. They sell medical and hospital care services, not insurance. Benefits - answerAre in the form of services provided by the hospitals and physicians partcipating in the plan. Health Maintenance Organization (HMO) - answeran organization that provides comprehensive medical care to subscribers for a fixed fee.
Preffered Provider Organization (PPO) - answerA managed care organization of doctors, hospitals, and other providers who have an agreement with an insurer to provide health care at reduced rates to subscribers. PPO clients do not pay deductibles when using the preferred providers, but can use other providers and pay a higher co- payment as well as a deductible. Government as Insurer - answerThese programs pay billions of dollars in benefits every year & affect millions of people. -social security -social security hospital insurance -medicare -Medicaid OASDI - answerSocial security- Old-Age, Survivors, and Disability Insurance HI - answerSocial security hospital insurance SMI - answersupplementary medical insurance Self- insurers - answerNot a method of transferring risk, establishes its own funds to cover potential losses. Often used by larger companies for funding pension plans and some health insurance plans. Looks to insurance companies to provide insurance above a certain maximum level of loss. Self insurers bear the amount of loss below that maxium amount. Captive or career agent - answerWorks for one insurance company and sells only that companies insurance policies. Independent agent - answerWorks for himself and sells the insurance products of many companies. Career Agency System - answerAgents are recruited, trained and supervised by either a managing employee or General Agent who is contracted with the insurance company. Personal Producing General Agent (PPGA) - answerDo not recruit, train, or supervise career agents. They primarily sell insurance, although they may build small sales force to assist them. Independent Agency System - answerA creation of the property and casualty industry, does not tie sales staff or agency to one particular insurance company. Represent any number of insurance companies through contractual agreements. Compensated off of commission or fee-basis for the business they produce. This system is also known as the American Agency System.
Documentation - answerThe ethical agent documents each clients meetings and transactions. The agent uses fact-finding forms and obtains the clients written agreement for needs determined, the products reccomended and decisions made. Client service - answer-follow up phone calls -ensures that the clients needs are met -products in place are still suitable Advertising code - answerSpecifies certain words and phrases that are considered misleading and are not to be used in advertising of any kind. Also required under this code is full disclosire of policy renewal, cancellatuon, and termination provisions. unfair trade practice acts - answerGives chief financial officers the power to investigate insurances companies and producers, to issue cease and desist orders, and impose penalties. Claim Settlement Practice - answerRegulated by state of insurance department. Do Not Call Registry - answerAllows consumers to include their phone numbers on the list to which solicitation calls cannot be made by telemarketers. Calls mad on behalf of charities, political organization and surveys are exempt. Rating Service - answerThe PRIMARY purpose is to determine the financial strength of the company being rated. Rating service company - answer-A.M Best -Fitch Ratings -Standards and Poor's -moodys Mixed Insurer - answerOperates both participating and nonparticipation. Dividends can NEVER be guaranteed regardless of the type of company offering them. SGLI & VGLI - answerLife insurance for active and retired members of the military. -Servicemans -Veterans Primary Insurer - answerThe insurance company that transfers its loss exposure to another insurer. Captive Insurer - answerAn insurer established and owned by the parent company to insure the parent company's loss exposure. Tri-Care - answerHealth insurance for members of the military and their family. Managerial System - answer-Branch manager (supervises agents)
-Salaried -Agents can be insurer's employees or independent contractors 2010 Patient Protection and Affordable Care Act - answerRepresents one of the most significant regulatory overhauls and expansion of coverage in US history. 2001 USA Patriot Act - answerDesigned to detect and deter terrorist and their finding by imposing anti-money laundering requirements on brokerage firms and financial institutions. National Association of Insurance and Financial Advisor's (NAIFA) - answerAn organization of life insurance agents that is dedicated to supporting the life insurance industry and advancing the quality of service provided by insurance professionals. -Also created a code of ethics detailing the expectations of agents and their duties toward clients. aleatory - answerA feature of insurance contracts in that there is an element of chance for both parties and that the dollar given by the policyholder (premiums) and the insurer (benefits) may not be equal. The premiums paid by the applicants is small in relation to the amount that will be paid by the insurance company in the event of a loss. -consideration may be unequal -the outcome depends om chance or uncertain event -a legal bet is considered an aleatory contract -both insurance and gambling contracts are typically considered aleatory contracts Apparent Authority - answerDeals with the relationship between the insurer, the agent and the customer. It is a situation in which the insurer gives the customer reasonable belief that an agent has the power and authority to bind the principal even in cases where the agent does not have such authority. Competent Party - answerOne who is capable of understanding the contract being agreed too. -Must be of legal competence -Legal age -Mentally capable of understanding the terms -Not influenced by drugs or alcohol Conditional Contract - answerCertain conditions must be met by all parties to the contract when a loss occurs in order for the contract to be legally enforceable. (Ex. timely payment of premiums is a condition for keeping the contract in force. If the premium isnt paid, the company is relieved of its obligation to pay a death benefit.) Concealment - answerFailure of the insured to disclose to the company a fact material to the acceptance of the risk at the time the application is made.
Offer and Acceptance - answerMay be made by the applicant by signing the application,, paying the first premium, and if necessary; submitting to a physically examination. -Premium payment on the offered policy constitutes acceptance by the applicant. -When another offer is offered by a counteroffer, the first offer is void. Policy - answerA written contract where one party promises to indemnify another against loss from an unknown event. Policy Rider - answerA legal attachment amending policy. Additional benefits or a reduction in benefits are often incorporated in policies by the attachment of either benefit or an exclusion rider. Represenation - answerStatements made by applicants on their application for insurance. -Must be true to the best of their knowledge and belief -Not warranted as exact in every detail. Stranger-Originated Life Insurance (STOLI) - answerLife insurance arrangements where investors persuade comsumers (usually seniors) to take out new life insurance polices, with the investors named as beneficiary. Investorhs loan money to the insured to pay the premiums for a defined period. The insured ultimately assigns ownership of the policy to the investors, who receive the death benefit when the isured doed. The insured recieves additional financial benefits, such as upfront payment or loan. Sometimes called investor-orginated life insurance (IOLI) Unilateral Contract - answerOne sided agreement,where only the insurer is legally bound. -Only the insurer makes any kind of enforceable promises. Utmost Good Faith - answerImplies that there will be no attempt by either party to misrepresent, conceal, or commit fraud, as it pertains to insurance policies. Voidable Contract - answerA contract that can be made void a the option of one or more parties to the agreement. (Ex. If the insured stops paying the premium, the contract is then voidable. The insurance company has the right to cancel the contract and revoke the coverage.) Void Contract - answerAn agreement without legal affect. (Ex. A contract having an illegal purpose is void, and neither party to the contract can enforce it.) Waiver - answerVoluntary giving up a legal given right.
-If an insurer fails to "enforce" a provision of a contract, it cannot later deny a claim based on a violation of that provision. General Law of Contract - answerA contract is an agreement enforceable by law. -With life insurance, the insurer binds itself to pay a certain amount upon the death of the insured, if the insured pays the premium. Cancellation - answerThe voluntary act of terminating an insurance contract Personal Contract - answerThe owner of the policy does not bear the risk the insurer assumed. Valued Contract - answerPays the stated sum regardless of the actual loss that occured. Indemnity Contract - answerPays amount equal to the loss. Warranty - answerA statement made by the applicant that is assumed true in every aspect. -It becomes part of the contract -If found untrue, it can be grounds for revoking the contact -Presumed to be material because that affect the insurers decision to accept or reject the applicant. Agent Authority - answerAuthority is what's given by an insurer to a licensee to transact insurance on their behalf. Express Authority - answerThe authority a principal deliberately gives to its agent. (Ex. An agent has the express authority to solicit applications for insurance on behalf of the company.) Implied Authority - answerThe unwritten authority that is not expressly granted, but which the agent is assumed to have in order to transact the business of the principal. (Ex. An agents contract may not specifically state that he can print business cards that contain the companies name, but the authority to do so is obvious.) Apparent Authority - answerThe appearance or assumption authority based on actions, words, or deeds of the principal. It can also exist because of circumstances the principal created. Significance of Authority - answerWhether it be express, implied or apparent, it ties the company to the acts and deeds of its agents. Brokers vs. Agents - answer-Agents need errors and omissions (E&O) professional liability
nonrenewable policy - answerAre for stabilised policy lengths of a year or less, these are considered temporary. Cafeteria Plans - answerBenefit arrangements in which employees can pick and choose from a menu of benefits. Taxation of the plan is regulated by section 125. Business Continuation Plans - answerProvide a way to help a business continue in the event the key employee dies, becomes disabled, sickness, or injured. Business Overhead Expense - answerA form of disability income coverage designed to pay necessary expenses, such as rent, should the insured owner become disabled. Disability buy-sell plans (Disability buy-out agreement) - answerAgreements between business and co-owners that provides that sharesowned by any one of them who becomes disabled shall be to and purchased by the other co-owner or by the business using funds from the insurance. Key person disability insurance - answerThe protection of a business against financial loss caused by the death or disablement of a vital number of the company. Tax free. noncontributory - answerAn employee benefit plan under which the employer bears the full cost of the employees benefits. In most stares, the plan must insure 100% of eligible employees. Contributory - answerGroup insurance plan issued to an employer, where both the employer and employee contribute to the cost of the plan. Coordination of benefits - answerDesigned to prevent duplication of group insurance benefits. Enrollment period - answerThe limited period of time where all members may sign up for a group plan. Enrollment card - answerMust be completed and signed by a new employee during the open enrollment period to enroll in group insurance. Waiting period - answerA period of time (often 12 months) beginning with your effective date where your health insurance plan does not provide benefits for pre-existing conditions. The period may be reduced or waived based on any prior health care coverage you had before applying for your new health insurance plan. Probationary period - answerA specified number of days after an insurance policy issue date where coverage is not afforded for sickness. -does not apply to accidents -goal is to prevent people from buying insurance only when they need it and immediately filling a claim.
Health Insurance Portability and Accountability Act (HIPAA) - answerProvides the ability to transfer and continue health care insurance cover age for American workers and families when they change or lose their jobs. -provides technical safeguards to assure the confidentiality of electronic protected health information. Conversion Privilege - answerAllows a policy owner to elect to have a new policy issued that will continue the insurance coverage. preexisting condition - answerAn illness or medical condition that existed before a policy's effective date; usually excluded from coverage through the policy standard provisions or by waiver. Creditable Coverage - answerPrevious coverage under another insurance plan where there has not been a break in coverage for 63 days. -an individuals waiting period for pre-existing conditions is reduced or eliminated altogether when shows proof. Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) - answerFederal legislation which extends group health coverage to terminated employees and/or their families at the individuals expense for up to 18 months. Blanket health policies - answerIssued to cover a group who may be exposed to the same risk, but the composition of the group are constantly changing. -issued to airline or bus company to cover passengers -issued to a school to cover students Franchise health plans - answerProvide health insurance coverage to members of an association or professional society. Credit policies - answerDesigned to help the insured pay off a loan in the event they are disabled due to an accident or sickness or if they die. Nonoccupational Coverage - answerCoverage provided by a disability income policy that does not provide benefits for losses occurring as the result of the insured employment. Health Savings Account (HSA) - answerIs tax-advantaged medical savings account available to taxpayers in the US who are enrolled in a high-deductible health plan (HDHP) Accidental means - answerUnforeseen, unexpected, unintended cause of an accident. Requirement of an accident-based policy that the cause of the mishap must be accidental for any claim to be payable.
Accidental Means Provisions - answerUnforeseen, unexpected, unintended cause of an accident. Requirement of an accident-based policy that the cause of the mishap must be accidental for any claim to be payable. Accident and Health Insurance - answerUnder which benefits are payable in case of disease, accidental injury, or accidental death. Accumulation Unit - answerPremiums an annuitant pays into annuities are credited as accumulation units. At the end of the accumulation period units are converted to annuity units. Acquired Immune Deficiency Syndrome (AIDS) - answerA life-threatening condition brought on by the human immunodeficiency virus, insurers must adhere to strict underwriting and claims guidelines in regard to risk and related conditions. Acute Illness - answerA serious conditions, such as pneumonia, from which the body can fully recover with proper medical attention. Adjustable Life Insurance - answerCombines features of both term and whole life coverage with the length of coverage and amount of accumulated cash value as the adjustable factors. Premiums may be increased or decreased to fit the specific needs. Administrative-Service-Only (ASO) Plan - answerArrangement under which an insurance company or an independent organization, for a fee, handles the administration of claims, benefits, and other administrative functions for a self-insured group. Admitted Insurer - answerAn insurance company that has met the legal and financial requirements for operation within a given state. Adult Day Care - answerType of care (usually custodial) designed for individuals who require assistance with various activities of daily living, while their primary caregivers are absent. Offered in care centers. Adverse Selection - answerSelection "against the company." Tendency of less favorable insurance risk to seek or continue insurance to a greater extent than others. Also, tendency of plicy owners to take advantage of favorable options in insurance contracts. Advertising Code - answerRules established by the National Association of Insurance Commissioners (NAIC) to regulate insurance advertising. Agency - answerSituation wherein one party (an agent) has the power to act for another (the principal) in dealing with third parties.
Agent - answerAnyone not a duly licensed broker who solicits insurance or aids in placing risk, delivering policies, or collecting premiums on behalf of an insurance company. Agents Report - answerThe section of an insurance application where the agent reports personal observations about the applicant. Aleatory - answerFeature of insurance contracts in that there is an element of chance for both parties and the dollar given by the policyholder (premiums) and the insurer (benefits) may not be equal. Ambulatory Surgery - answerSurgery performed on an outpatient basis. Amount at risk - answerDifference between the face amount of the policy and the reserve or policy value at a given time. Annually Renewable Term (ART) - answerA form of renewable term insurance that provides coverage for one year and allows the policy owner to renew coverage each year without evidence of insurability. (also known as yearly renewable term YRT) Annuitant - answerOne to whom an annuity is payable, or a person upon the continuance of whose life further payment depends. Annuity - answerA contract that provides a stipulated sum payable at certain regular intervals during the lifetime of one or more persons or payable for a specified period only. Annuity Unit - answerThe number of units denotes the share of the funds an annuitant will receive from a variable annuity account after the accumulation period ends and benefits begin. A formula is used to covert accumulation units. Any Occupation - answerDefinition of total disability that requires that for a disability income benefits to be payable, the insured must be unable to preform any job for which the insured is "reasonably suited by reason of education, training, or experience." Application - answerForm supplied by the insurance company, usually filled in by the agent and medical examiner (if applicable) on the basis of information received from the applicant. Appointment - answerAuthorization or certification of an agent to act for or represent an insurance company. Approval Receipt - answerRarely used today, a type of condition receipt that provides that coverage is effective as of the date the application is approved (before the policy is delivered.)
Best Insurance Report - answerA guide, published by A.M Best, Inc. that rates insurers financial integrity and managerial and operation strengths. Binding Receipt - answerGiven by a company upon an applicants first premium payment. The policy, if approved, becomes effective from the date on the receipt.
