Key Facts Flashcards
(240 cards)
1
Q
Replacing LTC Policy Commissions Are Calculated?
A
Based on the difference between the annual premium of the replacement policy and the original policy
2
Q
Cold Lead Device Leads Mean
A
Agent, Broker etc has to immediately disclose that fact to consumer
3
Q
Who submits claims under Part A
A
Provider
4
Q
What does Adult day care coverage cover in a LTC policy
A
Part time care in a facility for a person who lives at home
5
Q
Who is a group contract between?
A
Insurer and employer
6
Q
What is Keogh Plan
A
A retirement plan for those who are self employed
7
Q
What is an “Illustration” of a Life Insurance policy
A
A presentation or depiction that include nonguaranteed elements of a life insurance policy over a period of years
8
Q
What are “Non Guaranteed Elements” of a life insurance policy
A
These are the premiums, benefits, values, credits or charges under a policy that are not guaranteed or not determined at issue
9
Q
A stock redemption buy/sell agreement….
A
Facilitates the purchase of a deceseased shareholder’s shares from the shareholder’s heirs by a corporation
10
Q
At what age is a widow or widower without children eligible for social security survivors benefits
A
60
11
Q
What happens when a senior who has purchased an annuity which is invested in a mutual fund decides to cancel during the free look
A
CIC mandates that they be refunded the value of the account
12
Q
What is the Medicare Summary Notice
A
Quarterly explanation of benefits, sent out to describe what is covered under part A and B
13
Q
What must ever LTC policy in CA state on the first page
A
“This contract for LTC insurance is intended is intended to be a federally qualified LTC insurance contract and may qualify you for federal and state tax benefits”
14
Q
Where must a free look notice for seniors be printed
A
on the cover page of the policy in 10 point uppercase
15
Q
What can a collateral assignment be utilized for
A
To obtain a loan
16
Q
What does an equity indexed annuity have
A
A minimum interest rate and the chance to get a higher rate of return like that of the stock market
17
Q
What % is the early withdrawal penalty for a Modified Endowment Contract
A
10
18
Q
Where does an agents commission come from
A
the insurer expenses portion of the premium charged
19
Q
What were Life Insurance Policy illustrations NOT created for
A
To eliminate discolsure
20
Q
How does the CIC define insurance
A
A contract whereby one undertakes to indemnify another against loss, damage or liability arising from a contingent or unknown event
21
Q
When is an outline of coverage delivered to a prospective applicant for LTC
A
At the time of initial solicitation
22
Q
Joint Life Policy
A
Covers multiple lives and pays out when the first insured dies
23
Q
How are benefits paid in a non contributory group disability income policy
A
They would be included in the employees gross income (taxable)
24
Q
Exclusion Ratio
A
Formula used to determine the amount of annuity distribution which is taxable
25
When can the insured change the beneficiary
Anytime if they are revocable
26
What is the coordination of benefits
A provision which would prevent a family from collecting for the same loss twice in a group plan
27
When may a representation be altered or withdrawn
before the insurance is effected, but not afterwards
28
What happens if the premium for a group disability is fully paid by the employee
benefits would be excluded from the employees gross income (not taxable)
29
What must exist when a life policy is first issued
Insurable interest
30
What is the measure of liability in life insurance
The sum or sums payable as provided in the policy to the person entitled thereto
31
Insurance Commissioner shall be elected by the people
At the same time and place as the governor
32
What must be disclosed to term life insurance recipients of 55 years or older
Any change in premium resulting from aging of the insured, policy duration, or any other factor, if the insurer retains any right to modify premiums in the future, that fact shall also be disclosed.
33
What is a social security blackout period
A period of time when surviving family members are NOT eligible for Social Security survivors benefits (survivors benefits stop during this period)
34
When does the social security blackout period begin
When the youngest child reaches age 16
35
When does the social security blackout period end
When the surviving spouse reaches age 60
36
What is Social Security full retirement age based upon
The year in which you were born
37
Who is eligible for Retirement Benefits under Social Security
Workers who are fully insured
38
What is an Employee Stock Ownership Program
A qualified, defined contribution, employee benefit plan designed to invest primarily in the stock of the sponsoring employer
39
What is a profit sharing plan
A plan that gives employees a share in the profits of the company. Each EE receives a percentage of those profits based on the company's earnings
40
What is a speculative risk
A risk situation that includes a chance of loss and potential for gain. Speculative risks are not insurable.
41
What is the premium
The amount the insured pays the insurer for the coverage provided
42
What does the law of Large Numbers state
The more similar risks the insurance company combines together, the better they can guess approximately how many losses they will have in a given period of time
43
Doctrine of upmost good faith
Allows each party to rely on the representations made by the other party
44
How long a free look period does a senior citizen receive for life insurance
30 days vs. 10 days for non senior citizens
45
What is a TSA or 403-B
A tax sheltered annuity- a qualified plan created for public school EEs and non profits
46
What kind of contributions do Roth IRAs have
Non-deductible contributions
47
Are Annuity death benefits tax or deductible free?
NO
48
Is Divorce a QLE under COBRA
YES
49
What is the COBRA EE threshold
20
50
What is respite care
When the primary caregiver under a LTC policy needs a break they can get someone else to take over
51
Hospice Care
Terminally ill care under and LTC policy
52
What are LTC policies written on
Applicants ability to preform ADLs
53
WET
Whole Life, Endowment, Term Life insurance
54
Insurance Applicant
The individual who is applying to purchase insurance
55
Must an authorized insurer investigate fraud
Yes and they must establish a division to do so
56
What is the waiting period in disability income policies known as
Elimination period
57
Is an individual who has contributed 6 of the last 13 quarters to SS, who then becomes disabled insured under the system?
YES
58
Implied Authority
Doing things necessary to transact insurance that are not specified in a contract
59
What happens when an annuitant enters the payout period and annuitizes the contract
The insurance company will spread their costs basis (amount invested) over their lifespan. For example if an annuitant had invest 50k into the annuity (their cost basis) and the annuity account balance was now 100k then the annuitant annuitzed and was to receive payments of 4k per year they would NOT have to pay tax on the first 2k they receive each year
60
Does an employer who holds your license have to send written notice to the commissioner if they want to cancel it
YES
61
What does a vesting schedule mean
That by the end of the x year the total amount must be vested
62
What is an example of foreign insurer
An insurance company in Utah selling CA
63
Solvent Insurer
An insurance company that has enough reserves to pay for all of its liabilities
64
State insurance Guarantee fund
Provides protection to policyholders whose insurer becomes insolvent (bankrupt)
65
Primary Insurer
The insurance company that purchases insurance
66
Premium Rider Waiver
Will waive the insured's premium if the insured becomes disabled
67
Disability Income Rider
Pays the replacement of the insured's lost income if they become disabled
68
Accident Death Benefit Rider
Pays double the face amount if the insured dies in an accident. Known as double indemnity.
69
Extended Term - Life Insruance
Non forfeiture option that provides a new term life insurance policy with the same face amount of coverage as the original policy, not a settlement option
70
Settlement Option
Can be predetermined by the insured, but are usually chosen by the beneficiary
71
Mutual insurer policies
pay dividends to the policyholder, the dividend option is selected by the policy holder on the insurance application
72
Non-Participating policys
Owner will not receive dividends, non-participating policies are issued by stock insurers, stock insurers pay dividends to stockholders, not policy holders
73
Conversion feature
Allows an employee to go from group coverage to an individual policy
74
Hospital Confinement Policy
Pays a set amount per day if the insured is confined to the hospital
75
Corridor deductible
Applies in a major medical policy between the basic and excess coverage
76
First Dollar Coverage
NOT a feature of Major Medical
77
Capitation Fee
Per head fee that is paid to doctors the treat subscribers of HMOs, not a feature of Major MEdical
78
Stop Loss
Maximum the insured would have to pay of the coinsurance
79
Non-contributory plan
Group contract where the employer pays 100% of the premium
80
Multiple Employer Trust
Trust that small employers join to purchase health insurance
81
What has the hardest definition of total disability to meet?
Social Security
82
What Medicare covers prescription drugs
Medicare Part D
83
What part of Medicare provides coverage for hospitals
Part A and its free once you reach 65
84
Medicare Part B
Optional, and if an eligible individual enrolls, they must pay a monthly premium for the coverage, gives doctors services
85
Medicare Supplement Companies
Can offer whatever plans they want, as long as they at least offer part A
86
Specified Disease Policy
Covers only certain dread diseases, such as cancer
87
Preferred Risks
Risks that receive the lowest premium charges as
88
Incontestability clause
After a life insurance policy has been in effect for 2 yeats it becomes incontestable
89
Captive Insurer
An insurer created by a corporation to insure its own risks
90
Occupational Disability Income Policy
Provides Coverage on and off the job
91
How does one receive total disability benefits under SS
The disability must be expected to last at least 12 months or end in death
92
What is the primary coverage under Coordination of Benefits
The coverage where you work
93
What do HMO's Stress
Preventative medicine
94
What policy has the highest premium
A guaranteed renewable health policy, which cannot be changed except by class
95
How can one sell their life insurance policy to an investor?
By requesting an absolute assignment, which is a permanent transfer of ownership rights
96
What is an insurance company that is based in Canada but doing business in CA
An Alien insurer
97
Doctrine of upmost good faith
All parties to the contract can rely upon the statement of the other party
98
Concealment
When a part fails to communicate that which a part knows and ought to communicate
99
Key person life insurance
Insurance a business takes out in case a valued employee dies
100
SS Disability income coverage
Created to provide a minimum floor of income in case of total disability, not to provide full replacement of lost income
101
Social security benefits are equal to contributions Y or N
No!
102
Why would someone decrease their term life insurance
To pay off an outstanding mortgage upon death of the borrower
103
Payor benefit rider
waives the premium for the policy until the child reaches a certain age (often 21)
104
Who governs variable insurance products
SEC
105
What happens if a rider is added to a cash value life insurance policy
The extra premium paid for the rider will NOT apply towards the cash value
106
What happens when an insured purchases a cost of living rider
The policy limits will automatically increase, but so will the underlying premium
107
Misstatement of age clause
Allows the insurance company to adjust the face amount at the time of death to what the premium insured would have paid
108
CA Senior Citizens
60+ and get 30 day life look period, everyone else 10 day look period
109
Common disaster clause
When both the insured and the primary die as result of the same accident - protects contingent beneficiary
110
Reduced Paid Up Front Forfeiture Option
Provides whole new life policy with a reduced face amount of protection
111
Are HMOs required to provide coverage for prescription drugs
NO!
112
What is the difference between a morbidity and mortality table
Morbidity- statistical data relating to the probability of a sickness or disability
Mortality - statistical data referring to death
113
Explain probationary period
Do it!
114
What is an underwriters responsiblity
To reject applications that have a higher rate of loss than what they normally accept
115
Is the location of the group a factor in determining premium charged for group disability income
NO
116
Any occupation definition for disability income
Insured cannot preform any job that they have previously been trained to do
117
Are intentional injuries covered by health insurance
NO!
118
Return of premium rider
Gives premiums back, as long as the insured remains disabled
119
Can life insurance agents deliver binders
NO!
120
What is the penalty for failing to produce documents under notice of siezure
1 year in jail and or a 1k fine
121
Agents who receive commission related to premium financing must..
Keep their records for three years
122
Is financial loss exposure one of the three major types of loss exposures?
NO
123
Does hospice care cover the costs of rehab
NO
124
Does an LTC policy pay for convalescence care
NO
125
What is the spendthrift clause
Claus that protects the proceeds from the creditors of the beneficiaries, this clause, however, does not apply if the proceeds are paid out in a lump sum
126
Domestic Insurer
Selling in the state that you are liscensed
127
Who are mutual insurers owned by
Policyholders
128
What is ERISA designed to protect
Group plan participants, establish pension equality, and mandate strict reporting and disclosure requirements
129
What must an insurer have to remain financially solvent
Enough assets to provide for its liabilities and for reinsurance for all outstanding risks and also minimum requirements equal to the pain-in capital.
130
Why are HMOs and PPOs referred to as service providers
Since doctors and hospitals get paid directly for those services provided
131
What kind of insurance should a movie company get to protect against an ill star
Miscellanneous insurance
132
What can a representation be considered in insurance terms
Implied warranty
133
What does an intentional concealment entitle
The injured party the option to rescind the contract
134
Is providing free insurance coverage in connection with the sale of services as an inducement for completing the transaction illegal?
No
135
What happens when a premium is paid on a universal life policy
The insurance company will subtract from it the mortality and general expenses and then add the current interest and deposit it into the cash value
136
Who does not need LTC
The very poor and the very rich
137
What part of a workers comp policy provides workers comp
PArt 1
138
How long must life insurance agents keep their records
5 years
139
What does the transplant donor benefits provide
It considered the insured to be disabled if donating a body organ
140
What is the purpose of the rehabilitation provision
To encourage this disabled insured to return to their original occupation
141
How does one determine the amount of premium and insured will pay
The insurer multiples the rate by the number of exposure units
142
In what capacity are agents acting when they handle customers premiums
Fiduciary
143
When is growth accumulating in a qualified plan taxable
At withdrawl
144
Can EE benefit plans self fund for life insurance benefits
NO
145
What is the written instrument in which the insurance policy is set forth
Insurance policy
146
Is a life insurance agent required to keep records of printed material in general use which has been distributed by the insurer
No
147
Is an employee considered partially disabled if they are working and receiving lost income
Yes
148
Demutualization
When a mutual insurer becomes a stock company
149
Loss exposure
Any situation that presents the possibility of loss
150
Rate
= Cost per exposire unit
151
What must an applicant do to release the attending's report
sign the consent form
152
Are life insurance companies members of the medical information bureau
Yes!
153
How does someone meet the chronically ill trigger on their LTC policy
They must not be able to do 2 ADLs
154
Does group life insurance exclude accidental death
No
155
What is industrial life insurance generally written with
A death benefit of $2000 or less
156
What are benefits linked to in a defined benefit plan
EEs yrs of service and or amount compensation
157
Non guaranteed elements of Life insurance
Life insurance illustrations showing premiums, values, credits or charges not determined at issue
158
Can an insurer us the disciplined current scale in the illustration
Yes
159
Stock Insurer
an insurance company owned by individuals who purchase shares of stock in the company, share in profits in proportion to shares owned and vote for board of directors
160
What is eligibility of social security retirement based upon
number of quarters earned
161
What does the California Life and Health Insurance Guarantee Association not cover
employer self funded plans and group stop loss plans
162
Are life insurance illustrations required to be said if they are guarenteed or not
NO
163
If an illustration is used
A summary must be sent out annually
164
When is a child who is covered under a group life plan able to receive care without limitation
when they are incapable of self support
165
What are the rules of the 7 yr graded vesting schedule
40% after 4 years, 60% after 5 years, 80% after 6 years, 100% after 7 years
166
Does an agent need to put their phone number on an internet add
No, but it must have their license number, name and business address
167
Mistatement of age provision
If you lie about your age, when you die your life insurance premium will be paid at a lower (correct rate)
168
Automatic premium loan rider
Adds a cash value to a life insurance policy in case the insured forgets to pay their premium, taking effect at the end of the grace period
169
Free look on life insurance =
Right to return
170
Are dividends received by policy holders taxable
No
171
What does a binding receipt give
Limited coverage right away
172
Is there coverage under a conditional receipt
No
173
Are deferred compensation plans qualified
No they are non qualified
174
Roth IRA
An account that has both non deductible contributions and non-taxable distributions
175
What is a qualified plan where the ER contributes a specified amount
Defined contribution plan, such as a 401k
176
On a family policy of life insurance, is the dependents coverage convertible to whole life without a physical exam
Yes
177
Whole life insurance is also known as
Continuous premium whole life insurance
178
Variable Life
A life insurance policy that allows the policy owner to "self-direct" cash values into different sub accounts
179
Guaranteed Insurability Rider
Allows the insured to adjust benefits upwards at a specified future option date
180
Does the rate of return paid on the cash value of an Indexed Whole Life Policy keep up with inflation
Yes!
181
What accidents might group life policies exclude
Aviation, suicide and military action
182
How does one leave proceeds with an insurer and receive investment income
By selecting the interest option
183
Do all eligible EEs have to participate in a non-contributory group life plan
Yes!
184
Do life insurance policies contain a probationary period for pre-exisiting conditions
No
185
How does one become fully insured under social security
By getting 40 quarters of coverage
186
Who must sign the notice regarding replacement
Agent and the applicant
187
What will cash surrender of an annuity prior to age 59 1/2 =
ordinary income tax and a 10% premature distribution penalty, both of which apply to the earnings portion
188
Variable Annuity
When you multiply the value of an accumulation unit by the number of unites owned in the separate account
189
Non-Medical application
Allows the insurer to write a life insurance policy without a physical exam
190
Are HICAP counselors allows to accept compensation
No
191
What is the name of the amount exchanged for coverage
The premium
192
What kinds of plans do TPAs often help ERs administer
Self funded plans
193
Hazard
Something that increases risk
194
What costs more, the quarterly mode of payment or the annual
The quarterly
195
When might life insurance premiums be refunded
If death occurs by suicide within 2 yeats
196
When is a policy considered to be executed
When coverage is bound
197
How are most claims settled
Negotiation
198
What is the waiting period like on disbility income insurance
Like a deductible, except it is stated in terms of time rather than dollars
199
Do disability income policies offer a life time benefits period
No
200
Can an insurer change a non-cancellable health insurance policy
No
201
What is the only way that guaranteed renewable health insurance policies can be changed
Rates, by class only
202
Are contributions to social security compulsory
Yes
203
Promise
A representation as to the future
204
Is the portion of the premium used by an ER to buy group life coverage for an EE in excess of 50k taxable to the EE
Yes
205
What kind of rate of return does a Variable/Universal life policy have
No fixed or guaranteed rate of return
206
What is extended term
A life insurance non-forefiture provision
207
Will a computer programmer still be eligible for disability income benefits although he returned to work as a janitor
Yes, as long as he has the own occupation definition of total disability in his policy
208
Are Sole proprietors eligible for group life coverage
No
209
Social Security Offset Rider
Rider on disability income that will pay the difference between what social security pays and the insured actual loss of earned income
210
Prohibited Person
A person whose activities affect interstate commerce and who knowingly with the intent to deceive, makes any false material statement or financial report to any insurance regulator. This person cannot practice without written consent and my be imprisoned for 10-15 years and fined up to 50k per violation
211
What is the first thing that an agent should do before a sale
ID the clients overall financial objectives
212
Is wearing eyeglasses considered a diability
No, but being confined to a wheelchair, HIV and deafness are
213
Who submits claims to Medicare
The provider
214
Must all health plans in CA cover both mastectomies and reconstructive surgery?
Yes
215
MRMIP
Gives CA residents health insurance when they cannot get it through the individual market. Subscribers pay monthly premiums, annual deductible and co payments. IT is funded by tobacco tax funds. IT has an enrollment cap.
216
MRMIP Eligibility
CA resident, not eligible for MEdicare or COBRA and have a pre-exisiting condition as show by a denial letter from a health insurance plan
217
What are MRMIP premiums based on
Individuals age, where they live and dependents
218
PPACA (Obama Care)
All citizens must have health insurance starting in 2014, creates state based exchanges
219
Pre-Exisiting Condition Program (PCIP
CA developed high risk pool program, providing benefits through a PPO provider netwrok
220
AIM (Access for Infants and Mothers)
Provides low-cost healthcare coverage for pregnant women who dont have insurance to cover their pregnancy and are not receiving Medi-Cal or Medicare benefits.
221
AIM Eligibility
Resident of the state, household income that does not exceed 250% of FPL and agree to pay 1.5% of cost of service
222
Healthy Families Program
Low cost health dental and vision for children and teens up to age 19 who reside in household with family incomes below 200% of FPL, eligible is they life in CA 18 or younger and not Medi-Cal
223
Implied Warrant
Representation in an insurance contract
224
Materiality of concealment
Rule which is used to determine the importance of a misrepresentation
225
Financial Rating of Insurer
Not required to be specified in the insurance policy
226
Rate
Price of insurance per each exposure unit
227
Primary Insurer
The insurance company who transfers its loss exposure to another insurer in a reinsurance transaction
228
De-Mutualization
Process whereby a mutual insurer becomes a stock company
229
What happens is an insured sign a fraudulent claim
Perjury
230
Straight life annutiy
An insurance product that makes periodic payments to the annuitant until his or her death
231
Term Insurance
Lower premiums, only protect against early death, no cash
232
Automatic Premium Loan
An optional provision in life insurance that authorizes the insurer to pay from the cash value any premium due at the end of the grace period. This provision is useful in preventing inadvertent lapse of the policy
233
Premium
Price of insurance per exposure unit
234
The portion of the return on investments that is income tax exempt. It represents a payback of initial investments rather than capital gains.
Exclusion Ratio
235
HICAP
Advocacy program
236
Living benefits
can help offer peace of mind at a critical time. It entitles the policyowner to an early (accelerated) payout of policy death benefits,1 if the insured is diagnosed to have a life expectancy of 12 months or less.
237
Hospital Confinement Rider
Does away with elimination period
238
Collateral Assignment
is a conditional assignment appointing a lender as the primary beneficiary of a death benefit to use as collateral for a loan. If the borrower is unable to pay, the lender can cash in the life insurance policy and recover what is owed.
239
Conversion Privaldge
also guarantees coverage and set premium payments for a certain number of years regardless of the health status of the insured.
240
Refund Life Annuity
An annuity contract that returns funds back to a beneficiary in the event that the annuitant dies too early.
