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Before delivering a health insurance policy to a client, the producer alters the insuring clause in a way that he believes will benefit the insurance company. Which of the following statements is true about this alteration? - ✔✔It is prohibited by the entire contract provision Which organization offers health insurance to Nebraska residents who are denied health insurance and unable to obtain coverage from private companies due to pre-existing medical conditions? - ✔✔Nebraska Comprehensive Health Insurance Pool Newborn children are automatically covered under an insured's individual health insurance policy for how long? - ✔✔from birth to 31 days As beneficiary of her husband's life insurance, Beth chooses to receive payments for life. However, she is guaranteed that the payments will be made for ten years. Beth has chosen which of the following? - ✔✔life income with period certain Which method of determining the benefit amount is most common in individual disability income policies? - ✔✔flat amount Which statement describes the "pool of money" approach to benefits under a long-term care insurance policy? - ✔✔Benefits are defined as a total sum of money from which money can be drawn in any amount for as long as the money lasts. Which statement best describes the restrictions an insurer must operate under when using information from the MIB? - ✔✔Insurers cannot rate or decline a life insurance applicant based solely on MIB information.
Which of the following must HMO members use to receive covered care? - ✔✔HMO's network of providers and caregivers Which statement is correct about a buy-up option in a disability income insurance policy for professionals? - ✔✔It lets the insured buy more coverage in the future without evidence of insurability. Bill believes he has a cause of action against his health insurer for its refusal to pay benefits on a claim. He filed written proof of loss on April 1. Not having received a response by May 1, he decides to take legal action. What will his attorney probably do? - ✔✔advise him to wait For tax purposes, a self-employed person includes all of the following, EXCEPT: - ✔✔an incorporated business owner The Director of Insurance can examine the business transactions, accounts, and records of insurers as often as necessary, but must do so at least once in how many years? - ✔✔five An insured has a comprehensive major medical insurance policy with a $1,000 deductible and 80/20 coinsurance. She incurs a bill of $11,000. What will she pay in total? - ✔✔$3, Adam owns an individual long-term care policy that was issued in Nebraska. Which of the following conditions must the policy cover? - ✔✔Alzheimer's disease Tax law considers any limited payment life insurance policy that is paid-up in seven years or less to be which of the following? - ✔✔a modified endowment contract
Producers and insurers selling Medicare supplement insurance policies are prohibited from engaging in all of the following acts EXCEPT: - ✔✔replacement Jessica, age 48, owns a traditional IRA that she funded with tax-deducted contributions and which is now worth $300,000. Which of the following correctly describes the tax consequences of converting her IRA to a Roth IRA? - ✔✔She would have to pay income taxes on the entire $300,000. What kind of insurance policy pays benefits to the business owner if an essential manager were to become disabled? - ✔✔key person disability income insurance If Jack takes a new job that is less hazardous than the job he had when he obtained health coverage, what may the insurer do? - ✔✔reduce the premium Dan owns a fixed whole life insurance policy. What type of death benefit is Dan guaranteed? - ✔✔the policy guarantees a fixed death benefit amount. Ralph, Jerry, and Paula are primary and equal beneficiaries of the $600,000 insurance policy on the life of their mother, Judy. Ralph dies before his mother. He leaves two children, Tim and Hal. Judy's life insurance policy designates the death benefit per capita. How will the insurer distribute the policy benefits? - ✔✔Jerry and Paula will each receive $300, For Social Security purposes, Brian is considered currently insured while Samantha is fully insured. Which of the following statements is correct? - ✔✔Samantha is eligible for more Social Security benefits than Brian When she applied for an individual health insurance policy, Betty neglected to disclose that her parents had undergone open-heart surgery many years ago. Her insurer discovers this misstatement four years after the effective date of coverage. What can it do? - ✔✔nothing
Why does an insurer require that a certain percentage of eligible members participate in a group health insurance plan? - ✔✔to protect the insurer from adverse selection Which of the following statements about a Medicare supplement policy is NOT correct? - ✔✔It can indemnify against loss from illness on a different basis than loss from accident. Which statement is true under a split-dollar life insurance plan? - ✔✔The employer and employee split the premiums. Laura was injured in an accident. She incurred $1,000 in medical bills. Even though she was not disabled or lost any income, her disability income policy paid for these expenses because it has:
- ✔✔a nondisabling injury provision What do covered employees receive to show they have coverage under a group life insurance policy? - ✔✔certificate of insurance Under the payor benefit rider of a juvenile life insurance policy, which of the following happens if the payor becomes disabled before the maximum age specified in the rider? - ✔✔Premiums are waived until the payor recovers or the insured child reaches a certain age (e.g., 21 or 25), whichever occurs first. What does the employer own under a group insurance plan? - ✔✔the master policy In which of the following areas may a life insurance underwriter discriminate in determining policy eligibility and coverage limits? - ✔✔personal health history Which of the following statements regarding the life insurance needs analysis is correct? -
Variable life insurance policies offer all of the following EXCEPT: - ✔✔flexible premium payments To reinstate a lapsed life insurance policy under the typical reinstatement provision, the policyowner must provide all of the following, EXCEPT: - ✔✔a valid reason for the unpaid premiums An insurer would use which of the following to limit or exclude coverage for an applicant's health condition? - ✔✔impairment rider A group disability income plan with a maximum benefit period of less than two years is what type of plan? - ✔✔Short-term disability plan Dave receives Social Security retirement benefits. His wife Cathy is still working. Which statement about Cathy's Social Security spousal benefit is CORRECT? - ✔✔Cathy can choose either the spousal benefit or the worker's benefit. What type of life insurance policy distributes its divisible surplus to policyowners in the form of policy dividends? - ✔✔participating policy A claimant on a health insurance policy must give written notice of the claim to the insurer within how many days following a loss? - ✔✔ 20 Cal bought a $100,000 universal life policy ten years ago. He has paid $8,000 in premiums into the policy. He now decides to surrender the policy for its full $15,000 cash value. What amount is taxable?
Jennifer purchases an individual health insurance policy on June 1. One week later, she loses her job and decides she can no longer afford the policy. What are her options? - ✔✔return the policy for a full refund of premiums Under the proof of loss provision of a health insurance policy, how long does the insured have to give written proof of loss to the insurer? - ✔✔ 90 days Producers and insurers must maintain records of their insurance transactions for at least how long? - ✔✔five years Which insurance company function calculates company mortality and morbidity rates as well as the dividends on participating life insurance policies? - ✔✔actuarial division Which one of the following would a state NOT permit as a life insurance policy exclusion? - ✔✔death resulting from a plane crash in which the insured was a fare-paying passenger Which rider is NOT commonly found in a disability income policy? - ✔✔long-term care rider Which statement about profit-sharing plans is correct? - ✔✔Contribution limits for profit- sharing plans are the same as those that apply to all defined contribution plans. Which of the following correctly describes the basic tax treatment of deferred annuity death proceeds paid out before the contract is annuitized? - ✔✔A portion of the death benefit, essentially representing the sum of premiums paid into the annuity, is taxable.
Which of the following will happen if the outstanding balance of a whole life insurance policy loan, including accrued interest, ever exceeds the policy's cash value? - ✔✔The insurer will cancel the policy. Frank intends to use his life insurance to make the down payment on a vacation home. In so doing, Frank is using which of the following? - ✔✔the policy's cash value Sandy and Cindy are healthy, are both 45 years old, and have similar life expectancies. Though they are insured by the same company, Sandy's life insurance premiums are considerably lower than Cindy's. What may this indicate a case of? - ✔✔unfair discrimination When Terry applied for his life insurance policy four years ago, he omitted any information in the application related to treatment he had received several years earlier for a serious chronic illness. Which of the following actions can the insurance company take when it learns of the omission? - ✔✔nothing Which disability would most likely qualify for a full benefit under the presumption of disability provision? - ✔✔loss of eyesight How does a family income policy differ from a family maintenance policy? - ✔✔A family income policy combines whole life insurance with decreasing term insurance, while a family maintenance policy combines whole life and level term insurance. Brent fails to pay his premium when due, and his life insurance policy lapses. Two years later, he pays the premium. The insurer accepts the payment, and the policy continues in force. Which provision allows this to happen? - ✔✔reinstatement Emily, age 48, withdrew $8,000 from her SIMPLE plan to buy a car. How much penalty tax will she owe? - ✔✔$
The guaranteed renewability provision in a health insurance policy guarantees that the policy can be renewed until the insured: - ✔✔reaches age 65 An insurable interest will typically be presumed in all of the following types of relationships EXCEPT: - ✔✔neighbor and friend Which statement is correct about the taxation of health insurance expenses? - ✔✔Premiums paid for individual disability income insurance are not deductible. Three times a week, Ernest pays for a licensed nurse to come to his house and help with his diabetes management. The nurse also helps with everyday tasks such as bathing and eating. Which type of care is Ernest receiving? - ✔✔home health care When acting in the best interests of applicants and insureds, producers must: - ✔✔give all important information about a proposed policy Sasha, Kendall, Adam, and Julio are licensed producers in Nebraska. The Director would NOT be able to suspend or revoke which producer's license for engaging in the following acts? - ✔✔Sasha, who sold insurance policies to family members and friends this year Which of the following statements about health insurance advertisements is NOT correct? - ✔✔Advertisements must disclose that policyholders are protected by the Nebraska Life and Health Insurance Guaranty Association. Dental plans commonly group covered treatment and benefits into how many classes? - ✔✔three
Which of the following best typifies the use of a structured settlement annuity? - ✔✔Shirley was paralyzed in a car accident, and a jury awarded her $2 million, which must be paid to her over a 20 - year period What is the purpose of disability income insurance? - ✔✔to replace income lost during disability The basic purpose for the insuring clause of a life insurance policy is to: - ✔✔state the insurer's promise to pay the death benefit to the named beneficiary if the insured dies Holly just turned 65 and purchased a Medicare Select policy. Which statement correctly describes the features of her policy? - ✔✔It contains restricted network provisions. Which plan reimburses the insured for the cost of covered medical care received? - ✔✔indemnity plan For purposes of group health insurance, a small employer is defined in Nebraska as any person or entity that employs no more than how many employees? - ✔✔ 50 Though not specifically cited in the producer's contract, the producer is expected to telephone prospects on the insurer's behalf to arrange sales appointments. This is an example of what kind of producer authority? - ✔✔implied authority The life insurance Buyer's Guide helps prospective buyers determine all of the following EXCEPT: - ✔✔most qualified insurer Policyholders who buy a health insurance policy issued in Nebraska are entitled to review the policy without obligation for at least how many days after it is delivered? - ✔✔ 10
Jeff is a licensed insurance producer in both New York and Nebraska. He is charged with embezzlement in New York, and his first pretrial hearing is set for March 1. He must notify the Nebraska Director of Insurance of this charge within how many days of the hearing? - ✔✔ 30 The Smiths set up a Section 529 prepaid tuition plan for their daughter, Jenna. They invested a total of $15,000, which covers the current cost of two semesters of college at their in-state public university. However, by the time Jenna goes to college, it will cost $30,000 for two semesters. What will happen in this case? - ✔✔The Smiths' prepaid tuition plan will cover two semesters of college. Persons who commit crimes of dishonesty while engaged in interstate insurance transactions can be sentenced to all of the following EXCEPT: - ✔✔imprisonment for up to 25 years From an insurance perspective, underwriting is best defined as: - ✔✔the process of determining if an applicant is an insurable risk An employer with five employees applies for a group health insurance plan. What may the insurer do when underwriting the policy? - ✔✔require the employees to provide evidence of insurability or undergo a medical examination What is another name for the annuitization phase of an annuity contract? - ✔✔the payout stage Which one of the following most accurately describes the income tax treatment of life insurance death benefits received by a terminally ill insured under the accelerated benefits rider? - ✔✔They are generally income tax free.
An applicant for a $500,000 whole life insurance policy pays the initial premium along with his application. In this case, what has the applicant done? - ✔✔made an offer to the insurer The basic purpose for the re-entry option with a renewable term life insurance policy is to let the policyowner: - ✔✔renew the policy at lower current rates rather than guaranteed renewal rates The purpose for the Policy Summary, which must be given to every insurance applicant before an application is signed, is to: - ✔✔provide buyers with details of the specific insurance contract they are considering for purchase In accordance with Section 1035 of the Tax Code, which of the following exchanges is permitted on a tax-free basis? - ✔✔a deferred market-value adjusted annuity for an immediate variable annuity Mattie received proceeds from her viatical settlement agreement on May 1. Three weeks later, she decides that she no longer wishes to sell her policy. What are her options? - ✔✔Mattie may cancel the contract because the cancelation period has not expired. Under the Patient Protection and Affordable Care Act, how must group medical plans handle new insureds with pre-existing medical conditions? - ✔✔Pre-existing condition exclusions are prohibited in all group medical plans that begin on or after January 1, 2014. Which one of the following statements most correctly describes how interest-sensitive whole life and current assumption whole life insurance differ? - ✔✔Current assumption policies guarantee minimum cash values while interest-sensitive policies do not guarantee a minimum cash value.
All of the following are insurable risks EXCEPT: - ✔✔the risk of one's home value decreasing due to a drop in market prices A deferred annuity rider that lets the annuity owner commit only part of the annuity's funds to providing guaranteed lifetime income, leaving the remainder available for withdrawal at the owner's discretion, is called a: - ✔✔guaranteed income rider In a major medical insurance plan with a deductible and a 80/20 coinsurance requirement, how much of the covered expenses will the insured pay? - ✔✔20 percent of all expenses after paying the deductible Bob is a licensed health insurance agent and now wants to perform medical utilization review services for commercial insurers in his area. What must Bob do before he can act as a utilization review agent? - ✔✔obtain a certificate as a utilization review agent What is the principal purpose of Medicaid? - ✔✔to provide health care and health-related services to people with low incomes How many days does the insurer have to provide claim forms to the insured after receiving a notice of claim? - ✔✔ 15 Under the other insurance with other insurer provision, what happens to any premiums the insured paid in excess of those needed for coverage? - ✔✔the insurer returns them. All the following types of insurance involve a personal contract EXCEPT: - ✔✔a life insurance policy
Even though they offer the same benefits as Medicare supplement policies, why do Medicare SELECT plan's charge a lower premium? - ✔✔Medicare SELECT plans deliver health care through a network of providers. Many payees worry about choosing the straight life income option because they know that if they die after receiving only a single income payment, the insurer makes no further payment. To address this concern, the insurance industry created which of the following? - ✔✔life income settlement options guaranteeing that a certain minimum number of payments will be made or a specified minimum amount will be paid A life insurance policy cannot be backdated more how long before the original application was made? - ✔✔six months Under Sanjay's individual health insurance policy, the insurer may cancel the policy only on the policy's anniversary date and can also increase the premium. Which type of renewability provision does Sanjay's policy have? - ✔✔renewable at insurer's option What does Medicare Part D offer for Medicare beneficiaries? - ✔✔prescription drug coverage for those enrolled in Part A and B Which of the following settlement options does NOT include a life contingency? - ✔✔period certian-only option Which one of the following statements about term life insurance is most correct? - ✔✔At any given age when issued, a level term policy will be less expensive than a permanent policy of the same face amount. Which of the following distribute a sum of money regularly, starting very shortly after they are bought? - ✔✔immediate annuities
What happens when a universal life insurance policy's cash value no longer covers the monthly deductions to cover the policy's insurance and operational costs? - ✔✔the policy lapses
