Final Exam - Michigan Life and Health | Complete Solutions (Verified Answers)

Final Exam - Michigan Life and Health | Complete Solutions (Verified Answers) What amount will be paid under a policy where the insured misstated his/her age? An amount the premium would have purchased at the correct age The acceptance of a credit life application requires the submission of a certificate of insurance to the insured within_____ days 30 days Which of these is considered to be a Living benefit option in a life insurance policy Accelerated death benefit Loans obtained by a policy owner against the cash value of a life insurance policy Would not be treated as taxable income A long-term care policy typically provides all of the following levels of care EXCEPT Acute care The elimination period under a hospital indemnity plan is The specific # of days an insured must wait before becoming eligible to receive benefits for each hospitalization What is an insurance policy's grace period? Period of time after the premium is due but the policy remains in force How do interest earnings accumulate in a deferred annuity On a tax-deferred basis A licensee who is required to take continuing education Must include how many ethics coursework hours 3 The automatic premium loan provision authorizes an insurer to withdraw from a policy's cash value the amount of Past due premiums that have not been paid by the end of the grace period Health insurance involves two perils, accident and ______ Sickness Who is responsible for assembling the policy forms for insureds Insurance carriers A securities license is required for a life insurance producer to sell Variable life insurance Which of the following is NOT an illegal inducement Giving the insured an article of merchandise printed with the producers name costing 5$ Which of the following is NOT a federal requirement of a qualified plan? Employee must be able to make unlimited contributions Which dividend option would an insurer invest the policy owner's money and add any interest earnings as the dividends accrue? Accumulation at interest option A health insurance policy will typically cover Preventative health services A life insurance policy owner was injured in a car accident which results in a total and permanent disability. Which rider would pay a monthly amount because of this disability? Disability income rider In addition to the actual policy, an entire contract includes which of the following? The application Field underwriting preformed by the producer involves Completing the application and collecting initial premium Kathy pays a monthly premium on her health insurance policy. How long is her grace period? 10 days Pierre is covered by his employer's group major medical plan. His employer pays for 75% of the premium and he pays for 25%. How much would a $10,000 benefit be taxable as income under this plan? 0$ -benefits that fall under a major medical plan are considered to be a reimbursement for a loss, and is not taxable as income After an insured gives notice of loss, what must he/she do if the insurer does not furnish forms? File a written proof of loss Under long term care insurance, which of the following MUST an insurer offer to each policy owner at the time of purchase? An inflation protection feature What is the primary factor that determines the benefits paid under a disability income policy? Wages What is the tax liability for employer contributions in Health Savings Accounts (HSA's)? No tax payment needed -Employer paid contributions to HSA's are tax free to the employee In the state of MI, properly filed health claims are not timely paid require the insurer to pay simple interest from a date 60 days from satisfactory proof of loss at the rate of? 12% annum In MI, legal action can be taken against an insurer for failure to pay HEALTH insurance claims for a period not to exceed 3 years Donald is the primary insured of life insurance policy and adds a children's term rider. What is the advantage of adding this rider? Can be converted to permanent coverage without evidence of insurability -An advantage of a children's term rider is the ability to convert to permanent insurance without evidence of insurability When an insured changes to a more hazardous occupation, which disability policy provision allows an insurer to adjust policy benefits and rates? Change of occupation provision The unfair trade practice of replacing an insurance policy from one insurer to another based on misrepresentation is called? Twisting Which type of coverage pays an amount per day for hospitalization directly to the insured regardless of the insured's other health insurance? Hospital Indemnity What kind of life insurance policy covers two or more people with the death benefit payable upon the last person's death? Last Survivor Life Insurance Which of these premium payment frequencies is not typically available to a policyowner? Bi-weekly Variable life insurance and Universal life insurance are very similar. Which of these features are held exclusively by variable universal life insurance? Policyowner has the right to select the investment which will provide the greatest return Consumer privacy regulations permit the release of an insured's financial information when? An authorized agency makes a written request to the insurer during an insurance fraud investigation Which type of life insurance policy pays the face amount at the end of the specified period if the insured is still alive? Endowment Policy According to the Michigan Insurance Code, which of the following MUST a producer do when replacing a Life Insurance Policy? Submit to the replacing insurer a list of all Life Insurance policies or annuity contracts proposed to be replaced A policy owner suffers an injury the renders him incapable of performing one or more important job duties. Any decrease in income resulting from this injury would make him eligible for benefits under which provision? Partial Disability A pharmacy benefit covers prescription drugs derived from list called a(n) Drug Formulary All of the following are examples of a Business Continuation Plan except Deferred Compensation Which of the following actions MUST be taken by producers Pay premiums due to insurers on a timely basis Rob has a benefit at work which enables him to defer his current receipt of income and have it paid at a later date, when he will probably be in a lower tax bracket. Which benefit fits his description? Deferred Compensation Option What does the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 allow an employee to do? In the event of employment termination, group health insurance can be kept if the employee pays the premiums Distribution from a Health Savings Account (HSA) for qualified medical expenses are Tax Free An indemnity plan limitation that will pay the dental bills after a small amount is paid by the insured is called Coinsurance A notice of cash surrender value must be sent to a Universal Life policy owner At least Annually The term which describes the fact that both parties of a contract may NOT receive the same value is referred to as Aleatory Which of the following gifts from a producers would NOT be considered rebating? $5 pen Which of these riders will pay a death benefit if the insured's spouse dies? Family Term Insurance Rider Which form of insurer has shareholders? Stock Company A plan in which an employer pays insurance benefits from a fund derived from the employer's current revenues is called A self funded plan Ron has a life insurance policy with a face value of $100,000 and a cost of living rider. If the consumer price index has gone up 4%, how much may Ron increase the face value of the policy? $4,000 -$100,000 * .04=$4,000 A change in an insurance application requires An initial made by the applicant An applicant intentionally lying to an insurance company on an application in order to obtain a cheaper premium is an example of rebating coercion fraud twisting Fraud The period in which there are no social security benefits for the surviving spouse is called the Blackout period -the blackout period begins when the youngest. Child turns 16 and continues until the spouse reaches age 60, at the earliest. If there are no eligible children with the surviving spouse when the breadwinner dies, the blackout period starts immediately In the state of MI, a licensed producer Represents the insurer When an insurance licensee changes his or her address under the Michigan insurance code, who must be notified? The commissioner of the department of insurance The legal action provision in a health contract is limited to no more than __ years 5 Upon receiving a producer complaint, the commissioner may immediately Issue a cease and desist order Which of the following services MUST be provided by HMO plans Home health care A father has a son who is mentally handicapped but not eligible for Medicare. The son is dependent on his father. Under which of the following circumstances can the son remain on the father’s coverage after the age of 26. With written proof of disability and dependency How long must an individual be unable to engage in any gainful activity due to physical or mental disability in order to qualify for Social Security Total Disability. 12 months Health insurance will typically cover which of the following perils Injury due to accident A person who is a nonsmoker, of average weight, and excellent health would most likely be in which risk classification? Preferred A disability income policy can prevent an insured from earning a higher income than if he/she were working by utilization Benefit limits Which of these is a method of determining the level of funds required for ongoing support in the event of the breadwinner's death. Human Life value To receive proceeds from a death benefit, a minor Must have an appointed guardian A partial surrender is allowed in which of the following policies Universal life What is the automatic continuance of insurance coverage referred to as? Renewal Major Medical insurance will typically cover medical expenses that result from A negative reaction to prescribed medication What is considered to be the primary reason for buying life insurance Provide death benefits To qualify for a resident producer license in the state of MI, an individual Must complete the requires pre-licensing education within 12 months of licensing application What is issued to each employer health plan Certificate Which of the following decision would a Health Savings Account owner NOT be able to make? The amount contributed by the employee Group health plans may deny participation based upon the Members part time employment status -full time employees are typically eligible Matt is applying for life insurance and requests a double indemnity rider. A double indemnity benefit will be payable to Matt's beneficiary if Matt Dies instantly from a car accident ABC insurance agency is entering each applicant who purchases insurance through their agency into a drawing to win a free trip. This is an unlawful insurance practice known as Illegal inducement For what purpose is a life insurance application backdates To reduce the premium An error was made on Mary's life insurance application. Which of the following areas are errors commonly made on applications for which the incontestable clause does NOT apply? Age Dorian exercised a nonforfeiture option by using his life policy's cash value to purchase an extended term insurance option. When the term insurance expires, The protection ends What activity does NOT require an insurance producer's license Underwriting Making a statement that is false or maliciously critical of the financial conditions of an insurer is known as Defamation Phil is shopping for an annuity that guarantees he CANNOT outlive the benefits. Which of these benefit options would he choose? Guaranteed lifetime withdrawal benefit How many employees must an employer have for a terminated employee to be eligible for COBRA 20 A hospital or medical expense policy will typically cover dental treatment expenses under which circumstance Dental treatment is needed to repair an injury HIPAA considers which of the following as "individually identifiable health information"? A person’s health claim information Who assume the investment risk with a fixed annuity contract The insurer Medical Expense insurance would cover An injury occurring at the insured's residence When an insured has a major medical plan with first dollar coverage, how does this impact the benefits paid No deducible payment is required Key Person Disability insurance pays benefits to the Employer In order to activate the reinstatement clause of a lapsed life insurance policy, the insured MUST Provide evidence of insurability to the insurer Bob and Tom start a business. Since each partner contributes an important element to the success of the business, they decide to take life insurance policies out on each other, and name each other as beneficiaries. Eventually, they retire and dissolve the business. Bob dies 12 months later. The policies continue in force with no change. Both partners are still married at the time of Bob's death. In this situation, who will receive Bob's policy proceeds? Tom If an employee contributes 50% toward the disability plan premium provided by an employer, what would be considered the taxable income of a $1,000 monthly disability benefit $500 A rider that assures premiums will be paid on a juvenile policy until the child reaches a specific age is called Payout rider Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary? Life income An example of a presumptive disability would be Deafness In MI, legal action can be taken against an insurer for failure to pay LIFE insurance claims for a period not to exceed 6 years Under a disability income policy, which provision would be payable if the cause of an injury is unexpected and accidental? Accidental bodily injury provision Providing incorrect, misleading, incomplete, or materially untrue information in the license application is Misrepresentation All of these are characteristics of a major medical expense policy EXCEPT Elimination Periods -The elimination period is the period of time between the onset of a disability, and the time you are eligible for benefits. It is typically a characteristic of disability policies, not major medical expense policies. A producer's license has been suspended due to the failure of completing required continuing education credits. The license may be activated by completing the CE requirement within how many days of the renewal date? 90 The type of multiple protection coverage that pays on the death of the last person is called a(n) Survivorship Life Policy A rehabilitation benefit is intended to Prepare the insured to return to employment Under the subrogation clause, legal action can be taken by the insurer against the Responsible Third Party Which of these is NOT subject to income taxation under a Modified Endowment Contract (MEC)? Death Benefit When determining the exact cause of death from an accident, which of the following actions by the insurer takes precedence? Autopsy In order to save on premiums, a Life Insurance policy can legally be backdated up to 6 months What will the beneficiary if an annuitant dies during the accumulation period? The greater of the accumulated cash value or the total premium paid The typical long-term care insurance is designed to provide a minimum of __ year(s) of coverage Juan When calculating the amount of life insurance needed for an income earner, what has to be determined when using the Needs Approach? The family's financial objectives if the income earner were to die or become disabled -When using the Needs Approach to determine the amount fo life insurance needed for the income earner, it is necessary to determine the family's financial objectives in the event of death or disability of the income earner Which of these statements about Medicaid is CORRECT Funded by federal, state and local taxes Susan is insured through her Group Health Insurance plan and changed her coverage to an individual plan with the same insurer after her employment was terminated. This change is called a(n) Conversion The unfair trade practice of using threat or force to restrict fair trade in the transaction of insurance is called Intimidation James is the insured on a life insurance policy where his age was misstated on the application. Which of the following is CORRECT regarding the death benefit amount? The death benefit paid will be what the premium would have purchased at the correct age