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Understanding Insurance Policies and Regulations, Exams of Personal Health

Tarrant County CollegePersonal Health

This comprehensive overview covers various insurance concepts, including customer definition, insurance purpose, life policy types, agent roles, risk and insurance, needs analysis, advance notice, guaranty associations, group policy characteristics, insurer differences, contributory group insurance, policy loads, industrial life insurance, policy clauses, simplified issue life insurance, insurance commissioner, adverse selection, and life insurance as property. It serves as a valuable resource for students, professionals, and those interested in the insurance industry.

Typology: Exams

2024/2025

Available from 09/29/2024

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Life and Health Insurance Examination A
1. . Under the financial privacy safeguards of the Gramm Leach Bliley
Act, an individual about whom a financial institution collects
information is
a customer
a consumer
a client
a patron - ✔✔B
2. #1 thing for insurance to do - ✔✔protect customers financial well
being
3. 2 cash options in UL - ✔✔1. defined amount= death benefit (ex.
250K policy, 200K to beneficiary, 50 to insurance)
4. specified amount plus cash value (slower growth)
levels of premium - ✔✔-minimum premium: level at your issue
date, plus administrative leave, designed to keep it alive
-target premium: calculated at 140%, designed to keep it enforced
and maximize profit
-maximum guideline premium: deals with age, cannot exceed
what you put into a policy of 7 years whole life
4. A candlestick maker offers insurance to its employees. This type
of group is called
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Partial preview of the text

Download Understanding Insurance Policies and Regulations and more Exams Personal Health in PDF only on Docsity!

Life and Health Insurance Examination A

1.. Under the financial privacy safeguards of the Gramm Leach Bliley Act, an individual about whom a financial institution collects information is  a customer  a consumer  a client  a patron - ✔✔B

  1. #1 thing for insurance to do - ✔✔protect customers financial well being
  2. 2 cash options in UL - ✔✔1. defined amount= death benefit (ex. 250K policy, 200K to beneficiary, 50 to insurance)
  3. specified amount plus cash value (slower growth)  levels of premium - ✔✔-minimum premium: level at your issue date, plus administrative leave, designed to keep it alive  - target premium: calculated at 140%, designed to keep it enforced and maximize profit  - maximum guideline premium: deals with age, cannot exceed what you put into a policy of 7 years whole life
  4. A candlestick maker offers insurance to its employees. This type of group is called

 an employee group  a multiple employer trust o a Taft-Hartley trust o a labor group - ✔✔A

  1. A customer is anyone  About whom accompany collects information  with whom a company has an ongoing relationship  who prohibits the sharing of nonpublic  personal information  who permits the sharing of nonpublic personal  information - ✔✔B
  2. A policy may be issued in all of the following ways EXCEPT as applied for  as a modified or amended policy  as an exchange policy, covering someone  other than the original applicant  with a waiver excluding death by a certain cause - ✔✔C
  3. A social device for spreading the chance of financial loss among a large number of people is the definition of  hazard  risk  insurance  peril - ✔✔C

o risk underwriting - ✔✔C The fact that Albert is more likely to seek insurance coverage than Bernie is an example of adverse selection.

  1. Albert's life insurance premium is due on the 10th of the month. Because he gets paid at the end of the month, he has always sent the premium in late. The insurer has been accepting his premium this way for 3 years when a new CEO comes in and decides to crack down on late premiums, canceling Albert's policy for nonpayment of premium. Albert contests this decision legally and gets the policy reinstated. The decision to reinstate the policy is an example of A. estoppel B. waiver C. contract of adhesion. D. express authority - ✔✔A
  2. An arrangement in which an insurer transfers part of the insurance risk to another insurance company is known as A. avoidance B. fraud C. Lloyd's associations D. reinsurance - ✔✔D
  3. An insurance producer analyzed Bonita's life insurance needs, taking into account Bonita's net annual salary, her expenses, her current age, and depreciation of the dollar over time. This producer was using

A. the analytical approach to needs analysis B. the human life value approach to needs C. analysis D. the needs approach to needs analysis E. the planning approach to needs analysis - ✔✔B The human life value approach looks at net annual salary, expenses, current age, and depreciation of the dollar over time.

  1. An insurance producer analyzed Dwight's life insurance needs, taking into account the amount of money Dwight anticipated needing for his funeral and the amount of income that would be required to maintain his family's standard of living in the event of his death, including projected college costs and the costs of supporting his spouse. This producer was using A. the analytical approach to needs analysis B. the human life value approach to needs C. analysis D. the needs approach to needs analysis E. the planning approach to needs analysis - ✔✔C the needs approach to needs analysis
  2. Ana wishes to purchase enough insurance to support her husband for the rest of his life if she should die prematurely and then leave a sizeable inheritance for her children upon his death. Which method should be used to calculate the amount of insurance necessary? A. Capitalconservation
  1. Associations organized to protect claimants, policyholders, annuitants, and creditors of financially impaired insurers are known as A. insuranceassociations B. department associations C. liability associations D. guaranty associations - ✔✔D
  2. Assume that Martha and Karen are identical twins. Martha selects death bene t option A. and Karen selects death bene t option B. Who is probably paying more for her universal life policy? C. Martha D. Karen E. They are probably paying the exact same F. amount for their policies because they are G. twins H. None of the above - ✔✔B Option B is generally more expensive than option A for the same coverage because, unlike the case with option A, the mortality risk under option B does not decrease over the life of the policy.
  3. Both parties to the contract have an affirmative duty to disclose all information relevant to the contract, whether or not it is requested. This is known as
  4. utmost good faith
  5. consideration
  6. aleatory
  1. waiver/estoppel - ✔✔A Utmost good faith means both parties to the contract have an affirmative duty to disclose all information relevant to the contract, whether or not it is requested.
  2. Brenda decides that she wants to buy a policy. She lls out the application but does not pay the initial premium. What kind of receipt will Brenda receive?
  3. Conditionalreceipt
  4. Binding receipt
  5. Inspection receipt
  6. Premium receipt - ✔✔C
  7. Brit purchases a policy and tells the producer he wants immediate coverage, regardless of what the underwriting outcome is. To meet Brit's demand, the producer most likely will accept the premium and
  8. setupatemporaryinsuranceagreement B. issue an inspection receipt
  9. issue a binding receipt
  10. issue a conditional receipt - ✔✔A
  11. broker - ✔✔represents the client
  12. Camille decides to buy a policy. She pays the first premium, and the producer issues a receipt and tells her that she is covered
  1. Chianna becomes injured in a car accident caused when she took her eyes off the road to answer her cell phone. This is an example of
  2. a physical hazard
  3. a moral hazard
  4. a morale hazard
  5. a legal hazard - ✔✔C
  6. commission - ✔✔=service fee
  7. Contracts must have - ✔✔1. Two parties
    1. good faith, disclosure of relevant material fact
    1. legal purpose
    1. offer and acceptance
    1. sane and sober
  12. Expressed authority - ✔✔in writing; explicit
  13. field underwriter - ✔✔multi-licensed agents
  14. For group insurance policies, the covered individual receives proof of coverage in the form of
  15. an insurance policy
  16. an insurance contract
  17. a certificate of insurance
  1. a certificate of policy - ✔✔C An individual covered by a group insurance policy receives proof of coverage in the form of a certificate of insurance.
  2. George has several policyowners at the factory set up on a plan that deducts the premium automatically from their bank accounts
  3. every month. Which type of policy do these policyowners probably have?
  4. Homeservicelifeinsurance B. Credit life insurance
  5. Term life insurance
  6. Industrial life insurance - ✔✔A These policyowners probably have home service life insurance because premiums are deducted automatically from the policyowners' bank accounts.
  7. Gianna is eligible for coverage on July 1. She enrolls on July
    1. She does not need to take a medical exam because she enrolled within
  8. the probationary period B. the eligibility period
  9. the selection period
  10. the waiting period - ✔✔B
  11. Gianna starts work at a new job on March 1. She is not eligible for insurance coverage until July 1. The period between start date and her eligibility date is
  12. the probationary period
  13. the eligibility period
  14. the selection period
  1. If an applicant is rated or declined an insurance policy, the reasons for this decision will be explained to the applicant by
  2. the producer
  3. the underwriter
  4. the insurer
  5. the Insurance Commissioner - ✔✔A If an applicant is rated or declined an insurance policy, the reasons for this decision will be explained to the applicant by the producer.
  6. If payment of a valid death claim is delayed, what is the usual reason?
  7. Adisputeoverthevalidityoftheclaim B. A dispute over the amount of the claim C. The insurer has not received proper
  8. noti cation of the death
  9. The insurer has not received proper
  10. noti cation of the policy - ✔✔C
  11. Implied authority - ✔✔is not expressly granted under an agency contract, but it is actual authority granted to an agent in accordance with general business practices.
  12. insurance - ✔✔unilateral contract= conditional contract- both parties have to satisfy something before a claim is paid
  13. Insurance laws generally are written by
  1. thefederalgovernment
  2. the state legislature
  3. the state Department of Insurance
  4. the Commissioner - ✔✔B
  5. Insurers sometimes require personal delivery so that
  6. theproducerhasanotheropportunitytosell policies
  7. the producer can verify the insured's good health at the time of delivery
  8. the insurer can save mailing costs of delivering the policies
  9. the rst premium may be collected - ✔✔B
  10. INTESTE - ✔✔No will
  11. Jerry has a policy that pays dividends, which are used to purchase additional paid-up insurance to increase the face value of the policy. Jerry has
  12. a whole life policy
  13. a limited-pay policy
  14. a single premium policy D. an economatic policy - ✔✔D
  15. Jimmy's Print Shop and Bryan's Boutique join together to form a trust to provide insurance to their employees. This type of group is called
  16. an employee group
  17. a multiple employer trust C. a Taft-Hartley trust
  18. a labor group - ✔✔B
  1. Ken has paid only 4 premiums on his health insurance policy when he is hit by a car. The insurance company pays out nearly half a million dollars to cover his treatment and a lengthy stay in intensive care. This is an example of
  2. contractofadhesion B. aleatory contract
  3. unilateral contract D. utmost good faith - ✔✔B
  4. Ken has terminal cancer and wants to access the death benefit of his life insurance policy to pay medical expenses. How might he be able to do this?
  5. He won't be able to access the policy funds until after his death.
  6. He may access the funds through accelerated benefits.
  7. He may access the funds through a viatical settlement.
  8. He may access the funds either through a viatical settlement or by use of the accelerated benefits provision. - ✔✔D
  9. Kim is injured in a house fire. When the bills come, the insurance company pays 80% of the cost, and Kim pays the rest. This is an example of
  10. coinsurance
  11. a deductible
  12. extraneous insurance D. policy limits - ✔✔A
  13. Laura collects insurance premiums every Friday at the home of several policyholders. Which type of policy do these policyholders probably have?
  14. Homeservicelifeinsurance
  1. Credit life insurance
  2. Term life insurance
  3. Industrial life insurance - ✔✔D Industrial life policies are characterized by weekly collection of premium at the policyholder's home or workplace.
  4. Lee applies for a policy, pays the initial premium, and receives a conditional receipt on March 14. On March 15, he passes the medical exam with ying colors. On March 16, an undiagnosed brain aneurysm bursts, killing Lee instantly. On March 17, the insurer receives the results of the medical exam, which includes no information about the aneurysm. On March 19, the insurer receives the notice of claim. The insurer will
  5. pay the claim
  6. return the premium
  7. pay the claim plus the amount of the rst
  8. premium
  9. pay the claim minus a processing fee - ✔✔A
  10. Life and health insurance producers have the authority to bind an insurance company to a contract agreement.
  11. True B. False - ✔✔B Life and health insurance producers do not have the authority to bind an insurance company to a contract agreement.
  12. Life insurance contracts contain all of the following EXCEPT
  13. apolicyfolder
  14. an insuring clause C. conditions
  1. Most insurance regulation takes place at
  2. theinternationallevel
  3. the national level
  4. the state level
  5. the local level - ✔✔C
  6. Non financial regulatory activities of an insurance department fall under the broad heading of
  7. market regulation
  8. conduct regulation
  9. market conduct
  10. insurance conduct - ✔✔C
  11. Pam owns a 1-year term policy. At the end of the year, she may purchase another identical policy without showing proof of insurability. Pam's policy is
  12. convertibleterm
  13. renewable term
  14. increasing term
  15. decreasing term - ✔✔B
  16. Producers may act as
  17. agentsrepresentingtheinsurancecompany
  18. brokers representing the individual seeking
  19. insurance
  20. either agents representing the insurance
  1. company or brokers representing the
  2. individual seeking insurance
  3. neither agents representing the insurance
  4. company nor brokers representing the individual seeking insurance - ✔✔C
  5. Ralph is a producer for Hoosier Insurance Company. His contract states that he is allowed to put the company's logo on his business cards and the door to his of office. This is an example of
  6. expressauthority
  7. implied authority
  8. lingering implied authority
  9. apparent authority - ✔✔A Express authority is authority the company gives to the producer in writing.
  10. re-insurers - ✔✔insurance company who insure other insurance company (reciprocal=provide insurance to each other)
  11. receivership - ✔✔state owns your credit
  12. representation - ✔✔true to best of our knowledge and belief
  13. Robin is a 25-year-old man who drinks occasionally, does not smoke, and has no known health problems. He probably would be classified by an insurer as