Questions of Insurance Terms

Question 1

What is the purpose of STOLI (Stranger-Originated Life Insurance)

Answer 1

The policy is originated primarily or solely to be sold

Question 2

How does the per capita rule apply to proceeds from life insurance policy

Answer 2

The proceeds are divided equally among living primary beneficiaries

Question 3

What problem is universal life supposed to fix

Answer 3

Low interest rate during periods of high inflation

Question 4

Why is rehab worthy of getting federal help under workers’ comp

Answer 4

It reduces insurance losses and regains workers’ dignity

Question 5

What advantage does the insured get for reinstatements of policy instead of getting a new policy

Answer 5

The original age is used

Question 6

When must insurable interest occur for property/casualty and life insurance

Answer 6

P/C: at the time of loss

Life insurance: only at the time of application

Question 7

In order for group life to be eligible for insurance the group must not…

Answer 7

Be gathered for the purpose of insurance only

Question 8

What defines the eligibility for Long Term Care

Answer 8

Inability to perform 2 activities of daily living

Question 9

What is covered by a dread disease policy

Answer 9

Illness that doesn’t occur often but are costly

Question 10

Why is Long Term Care becoming more important

Answer 10

More people care living longer, more people need it

Question 11

Why is relying solely on employer’s group life insurance generally not good for person’s needs

Answer 11

It’s financially insufficient to cover end of life expenses

Question 12

What is not a tax qualified retirement plan

Answer 12

Section 529 plan

Question 13

What is true of the limited pay whole life policy

Answer 13

Coverage continues after the policy is paid up

Question 14

Which insurance plans are not commonly offered through worksite

Answer 14

Medicare

Question 15

What is a characteristic of Preferred Provider Organization (PPO)

Answer 15

Prearranged costs for services rendered

Question 16

What is not a characteristic of variable whole life

Answer 16

There is no guarantee minimum death benefit

Question 17

Why is accidental death benefit called double indemnity

Answer 17

It provides twice of the face value in the policy for death due to accident

Question 18

What is true about a point of service plan (POS)

Answer 18

A patients care is coordinated by an in-network primary care physician

Question 19

What is the most common method to supplement Medicare coverage

Answer 19

Coverage offered by private insurer

Question 20

What is true for a flexible premium annity

Answer 20

The purchaser has options to vary the amount of each premium payment falling between min and max amount

Question 21

Why are insurance policies considered conditional contracts

Answer 21

Certain conditions need to be met to be a legal contract

Question 22

How do warranties and misrepresentation differ

Answer 22

Warranty: guaranteed to be true
Representation: given to best of knowledge

Question 23

What does coinsurance mean

Answer 23

The insurer and the insured shared expenses over deduction

Question 24

What are the 4 types of health insurance policies (HDDL)

Answer 24

Hospital/Medical
Disability Income
Dental
Long-Term Care

Question 25

In Health Savings Accounts are contributions not tax deducted or tax deducted

Answer 25

Tax deducted

Question 26

Are earnings within Health Savings Accounts not deferred or tax deferred

Answer 26

Tax deferred

Question 27

What are the 4 requirements of a legal contract

Answer 27

Agreement Consideration Competent Parties Legal Purpose

Question 28

When is the right to change the policyowner not allowed without permission

Answer 28

When the beneficiary is irrevocable

Question 29

In Buy/Sell and Key Person disability insurance premiums are what and benefits are what

Answer 29

Premium: Not deducible Benefits: Tax-free

Question 30

In Business Overhead insurance premiums are what and benefit are what in reference to taxes

Answer 30

Premiums: Deductible Benefits: Tax Free

Question 31

Can IRA funds be invested in Life Insurance, Collectibles, or Hard Assets

Answer 31

No

Question 32

Can IRA funds be invested in Flexible Premium Annuities, Banks Accounts, Brokerage Accounts or Mutual Funds

Answer 32

Yes

Question 33

Which part of Medicare covers hospital, skilled nursing, hospice, and home health

Answer 33

Part A

Question 34

Which part of Medicare covers medicare provided by physicians and other medical services and requires a paid premium and has a 6 month enrollment period

Answer 34

Part B

Question 35

Which part of Medicare covers healthcare delivers by managed care plans

Answer 35

Part C

Question 36

Which part of Medicare covers prescription drugs

Answer 36

Part D

Question 37

What are the 4 parts of Medicare Advantage Plans (Managed Care)

Answer 37

HMO/POS PPO Private Fee-for-Service Medicare Specialty Plans

Question 38

What are the five uses of personal life insurance

Answer 38

``` Survivor Protection Mortgage Payoff Estate Creation Liquidity Cash Accumulation ```

Question 39

The "Do Not Call" List does not cover which organization types

Answer 39

Calls with established business relationship calls not given permission for commercial or unsolicited advertisements Nonprofits

Question 40

What consists of an application, insurance policy, and any riders

Answer 40

Entire contract

Question 41

After 2 years from the date of the policy issue, no misstatements except fraud, shall be used to void or deny a claim for loss after this period

Answer 41

Time Limit on Certain Defenses

Question 42

Are HSA contributions tax deductions? Earnings tax deferred? Distributions for medical expense tax free?

Answer 42

Yes

Question 43

What are 6 health optional policy provisions (CMOIRC)

Answer 43

1. Change of occupation 2. Misstatement of Age 3. Other Insurance with this Insurance more than one policy, insurer can limit amount of benefits will be paid under all contracts. 4. Insurance with other insurers: if insurers has coverage with another insurer providing benefits for the same things, amount paid by both will be prorated 5. Relation of earnings to insurance insurer will pay claim and deduct unpaid premium from unpaid premium from claim 6. Cancellation on illegal occupation

Question 44

What are the 4 types of licenses

Answer 44

Producer: works for an insurance company Business Entity: corporation, association, partnership Non-Resident: sell in state you are a non-resident in Temporary: continuing/changing business for 180 day maximum

Question 45

What are 5 types of beneficiaries

Answer 45

Individuals, Classes, Estates, Trusts, Minors

Question 46

What are the methods of handling risk

Answer 46

Sharing: 2 or more pay portion of loss Transfer: insurer pays if loss as premium for loss Avoidance: eliminating certain risk Retention: individual pays loss if occurs Reduction: lessening chance or extent