PHP Agency Licensing Prep Quiz

The correct answer is Health Maintenance Organization. With a Health Maintenance Organization, the medical care providers work directly for the HMO.

The correct answer is Health Maintenance Organizations (HMO's). Health Maintenance Organizations require you to have a primary care physician. This primary care physician oversees all of your medical care and places in emphasis on preventative care. The goal is to drive down the need for expensive treatments by preventing illnesses from occurring.

The correct answer is Those enrolled as a full-time student. Medicare is for seniors and the exceptionally ill or disabled. With mediCARE, think we CARE about our seniors and sickly.

The correct answer is To attest that the statements on the application are accurate to the best of the applicant's knowledge. The applicant must agree that all of the statements made on the application are true to the best of their knowledge which is why the application requires a signature.

The correct answer is $50,000. Since S died of natural causes ONLY the $50,000 whole life policy will pay the beneficiary.

The correct answer is 10 days. If an insured pays their individual health insurance premium once a month, their grace period is 10 days.

The correct answer is States the scope and limits of the coverage. The insuring clause or insuring agreement in an insurance contract establishes the insurance companies promise in regards to the amounts of coverage and it’s promise to pay out the policy if premiums are being paid.

The correct answer is $50,000. Since the suicide happened outside of the contestable period the claim will be pai However, suicide is not considered an accident so only the $50,000 face value will be paid, not the accidental death and dismemberment rider.

The correct answer is July 1, 2010. An insured must wait 60 days after filing a written Proof of Loss for a Disability Income claim or AD&D claim prior to taking legal action against the insurer.

The correct answer is Insuring clause. The insuring clause specifies the services or amount of benefits to be paid. This clause is basically the insurance company stating; I promise to provide this coverage under these circumstances.

The correct answer is the cost. When converting a policy, the insureds health and insurability are locked in from the original application. However, the age used to determine the premiums for the new policy will usually be the insureds attained, or current age. For example, if you applied for a term policy at age 20 and wanted to convert it at age 40. Using your attained age of 40 would cost you more in premium than using your original age of 20.

The correct answer is dental work. Medicare Part A is hospitalization coverage. Medicare Part B is physician coverage. No Medicare policy will cover dental work.

The correct answer is 2. Activities of daily living include things like; bathing, dressing, eating, grooming, and using the toilet. In order to qualify for Long-Term Care benefits, you must be unable to perform at least 2 activates of daily living.

The correct answer is determine if the applicant is an acceptable risk by completing standard underwriting procedures. Once the application is complete, premiums are collected, and a conditional receipt is issued, an insurance company will underwrite the application to determine whether or not to issue a policy.

The correct answer is Claims are denied under the Suicide clause of the policy. The suicide clause of an insurance policy states that any loss resulting from suicide or attempted suicide will not be covered during the 2 year contestable perio

The correct answer is Premiums normally increase at time of renewal. A guaranteed renewable insurance policy assures renewability (usually up to a specific age) although the company reserves the right to change the premium rate on a class basis. Basically, the insurance company say’s we GUARANTEE we will renew your policy every year, but we don’t guarantee we will keep the price the same.

The correct answer is Policy issued with a rating. A policy being mailed to the applicant, a policy being mailed to the producer-agent, and a policy being delivered to the applicant by the producer-agent are all acceptable ways to deliver a policy. The policy being ISSUED with a rating would not be considered a valid policy delivery.

The correct answer is Applicant. The applicant must agree that all of the statements made on the application are true and that they agree to any changes made to their application which is why their initials are required where changes are made. For example, if an agent needed to correct the date of birth on an application the applicant would need to initial next to any changes.

The correct answer is Entire Contract. The entire contract clause, or provision, requires that the application becomes part of the policy. Entire contract includes the application, any addendums or endorsements, and the policy itself. Just like it sounds everything need to be included and provided to the customer in the contract which is why it’s called the entire contract.

The correct answer is Entire Contract. An insurance company is not allowed to reference a document not originally provided to the policyowner because by definition, it is NOT part of the contract.

The correct answer is age 100. A limited-pay policy is a whole life policy where you are LIMITING the amount of time you are required to PAY PREMIUMS. Since limited-pay policies are whole life, coverage on a limited pay policy lasts until death or age 100.

The correct answer is Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract. A policy is considered OVERFUNDED by the IRS’s 7-PAY TEST if more than 7-years of PREMIUMS are paid in to the insurance account at once. If this happens, the IRS no longer allows the policy to be recognized as a life insurance contract. It is now viewed as an investment and loses the favorable tax benefits of an insurance policy.

The correct answer is closed panel. The physicians in an HMO are known as a closed panel because they are direct salaried employees of the HMO and are not able to work outside of the HMO. Also, with an HMO you must use on of the doctors in their closed network, or panel.

The correct answer is Services are reimbursed after insurer receives the invoice. A dental care indemnity policy will pay a stated amount for each covered dental expense. For example, say you have a dental indemnity policy which pays $200 for teeth cleaning. When you go to the dentist and have your teeth cleanedà the insurance company will reimburse you for the cleaning UP TO $200 upon them receiving the invoice.

The correct answer is 68-year old male covered by Medicare. In order to be eligible to purchase a MediCARE supplement, you MUST be insured under MedicARE Part A and Part B.

The correct answer is 15-year decreasing term. Decreasing term is usually used for mortgage insurance. The face value of the term policy decreases in line with the decreasing mortgage amount decreases. It is usually designed so the insurance policy terminates when the mortgage is paid.

The correct answer is Dread disease insurance. Dread disease policies cover a SPECIFIC, DREADED disease.

The correct answer is Her group health plan. A person’s group health plan will always be considered the primary policy. If you had Medicare and Group insurance, any covered expenses would first be billed to your group policy, then any balance not covered by the group would be billed to Medicare.

The correct answer is exclusion for the medical condition. An insurance company has the ability to still issue a policy while excluding coverage for certain health issues. So in essence you would be covered for all health conditions except for those specifically excluded by the health insurance company.

The correct answer is Reinstatement. The reinstatement provision is a mandatory provision that can be used to put an insurance policy back in force after it has lapsed due to nonpayment. Since the insurance company understands sometimes life gets busy and you forget to pay your bill, they have to offer you the option to REINSTATE the policy. To Reinstate the policy requires paying them all past-due premium and providing them a statement of good health

The correct answer is Modified Whole Life. Most whole life policies come with a guarantee from the insurance company that the face value will pay as agreed as long as the premiums are paid. Variable life policies do not typically come with that same guarantee as the face value is said to be interest-sensitive or based on returns. If a policy is an interest sensitive whole life or a variable whole life it falls under both categories; there is a guarantee, but it is also interest-sensitive.

The correct answer is interim coverage. Short term medical policies are designed to cover you during a specified, short period of time, or in the INTERIM.

The correct answer is SINGLE PREMIUM. A health insurance policy does not have a clearly defined end date so there would be no way for the insurance company to accept a single-premium payment. For example, if you were to buy a 20-year life insurance policy that was going to cost you $500 a year, you could pay $10,000 up front ($500 X 20 years = $10,000) and never have to make another premium payment. With health insurance you do not have this option.

The correct answer is Coverage will be adjusted to reflect the insured's true age if a misstatement of age is discovere The misstatement of age provision is a standard optional provision in an insurance policy stating an insurance company can ALWAYS adjust the benefits if it discovers that an insured gave a wrong age at the time of application.

The correct answer is Seven-day grace period. HMOs must provide for a grace period of at least 10 days.

The correct answer is Conversion privilege. The conversion privilege is the feature that allows an individual to convert a group life policy to an individual policy without providing evidence of insurability. For example, if you are covered under a group life policy and then change jobs, you can take that group policy with you by converting it to an individual policy and you will not have to prove you are in good health.

The correct answer is issued in an amount not to exceed the amount of the loan. A bank or lender is not allowed to profit if the borrower dies. They can only receive the money that is owed to them as that is their only insurable interest on that person or group. For example if you wanted to take out an insurance policy to pay off a $20,000 car loan in the event you die before paying off the loan, the insurance policy could not be worth more than $20,000.

The correct answer is home health care. A long-term care plan is designed to help cover the cost for extended or long-term treatment associated with an illness. This may include services provided through home health care, skilled nursing care, adult day care, assisted living centers, and nursing homes.

The correct answer is buy additional coverage at a later date. Guarantee of insurability option is also called the future increase option and allows a policyowner the ability to purchase additional coverage at a later date without providing proof of good health. For example, if you purchased a long-term care policy at age 50 and at age 60 wanted to increase the coverage amount to keep up with inflation, you could do so regardless of any changes to your health.

The correct answer is Policy was returned within the free-look period, premium will be fully refunded. The free-look period is the period of time after receiving the physical contract that they policyowner is allowed to review and return the contract for any reason in exchange for a full refund of any premiums paid.

The correct answer is detect and deter terrorism. The U.S. Patriot Act is designed to detect and deter terrorism as well as help fight the funding and money laundering of terrorism activity.

The correct answer is Who the policyowner is and what rights the policyowner is entitled to. Remember, the policyowner, the insured, and the beneficiary can all be different people. Sometimes the insured may not be able to handle their finances and elect to have someone else be in charge of their insurance. Or sometimes a business may take out a policy on one of the partners or key persons. In both of these examples someone other than the insured would be the owner. Who that owner is and what rights they have is outlined in the ownership clause.

The correct answer is Variable Life. The policyowner controls the investments used to tied to the variable life policy. There is no guarantee of returns, and the performance of the investments will directly impact the death benefit.

The correct answer is increase face amount. An adjustable life policy owner does not have any control over the face value. If they wanted to increase the benefit amount of the policy, they would have to provide proof of insurability, or good health.

The correct answer is Fair Credit Reporting Act. The Fair Credit Reporting Act allows an insurer to obtain an inspection report on a potential insured, but it also requires that the insurer notify the applicant at the time of application if an inspection report will be obtained. It also requires the insurer to notify the applicant if information obtained from an inspection report negatively impacted the applicants request for insurance.

The correct answer is Payment of Claims. The main purpose of an insurance policy is to pay claims when the insured has a covered loss. Since most insureds are depending on these claim payments, it is mandatory that the insurance company includes a provision in the policy informing the insured how they will pay claims.

The correct answer is File written proof of loss. I health insurer is supposed to provide a proof of loss form within 15 days of receipt of the notice of loss. If they do not, the insured must file a proof of loss using any form. Again, if the insured wants the claim paid, it is always on them to PROVE that a LOSS occurre

The correct answer is Level term. Level term will offer a level face value or coverage amount and LOW level premiums, but since all TERM insurance TERMINATES, the coverage will only last for a limited amount of time.

The correct answer is when the producer-agent delivers the policy and collects the initial premium. The applicant can either pay the initial premium at the time of the application or, upon receipt of the policy. Whether it be a life insurance policy or a health insurance policy, you will not be covered until payment is received.

The correct answer is Marital status. Avocations or hobbies, credit status, and occupation are all considered when underwriting a life or health insurance policy. Your marital status is not a consideration when underwriting a life or health insurance policy.

The correct answer is Face amount plus the policy's cash value. Remember, NORMALLY, the cash value of a policy is for the insured to use while they are alive and the face value of a policy is what the beneficiary receives upon the death of the insure If the policy is a FACE AMOUNT PLUS CASH VALUE policy, the beneficiary would receive both the FACE AMOUNT PLUS THE CASH VALUE.

The correct answer is Change of occupation provision. The change of occupation provision also states that in the event the insured changes to a less hazardous occupation, benefits can be increased in the event of a covered claim. The change of occupation provisions is NOT a required provisions.

The correct answer is Joint Life Policy. A joint life policy is ONE policy with ONE face amount and ONE premium. It covers the lives of two people, and pays the full benefit when ONE of the two people covered under the policy dies. This in turn ends the coverage on the other person.

The correct answer is Blanket health policies do not issue certificates. Blanket policies are designed to cover specific people in a specific situation. For example, if you were a student at a university, or a passenger on a large commercial plan, you may be covered under a blanket policy in the event something happens to you while at the university or on the plane.

The correct answer is 100% of the insured's Primary Insurance Amount (PIA). Primary insurance amount is based on the amount of time you spent working prior to needing Social Security Disability. You will receive all that you are eligible for regardless of any retirement plan.

The correct answer is free-look period has expired. The free-look period only comes in to play after the policy is delivered. Collecting the initial premium, issuing the policy, and the policy being delivered all must occur prior to the policy going in to effect.

The correct answer is Application will be returned to the writing producer-agent. The insurance company will not even begin to underwrite an incomplete application or an application missing signatures. Any incomplete application will be returned to the producer-agent so they can return to the customer to finish and resubmit the application.

The correct answer is Void the policy only if it is discovered during the Contestable period and proven to be material. After the contestable period the insurance company can no longer question statements made on the application. During the contestable period the insured can only void a policy if misrepresentations are found to be material. For example, finding out I am 5’9 when I wrote down I was 5’11 is probably not material enough to void my policy.

The correct answer is The insurer will adjust the benefit to what the premiums paid would have purchased at the insured's actual age. Remember, it does not matter how old the application is, the insurance company can ALWAYS adjust the policy benefit if it discovers the age was misstate

The correct answer is automatically add the amount of interest due to the loan balance. As you know, every year you decide not to pay the loan back, you will receive interest. If you decide to not pay the interest, the insurance company will add the interest to your loan balance.

The correct answer is Time Limit on Certain Defenses. When filing a claim, the insurance company may set certain conditions that must be met for your claim to be valid, but there is time limit for these conditions, they cannot be expected to last forever. For example, say you filed a claim for a broken leg. If someone from the insurance company drove by the next day and saw you moving a grand piano down 6 flights of stairs, they would probably question the validity of your broken leg claim. However, there is a TIME LIMIT to how long they can expect you to be injure It is expected that at some point you will heal and no longer have to DEFEND your claim.

The correct answer is Beneficiary will be paid the Death Benefit. Because the policy is over the 2 years incontestable period they must pay the Death Benefit.

The correct answer is Premiums are waived (or paid) after the insured has been totally disabled for a specified time perio A waiver of premium provision keeps the cover in force without premium payments after an insured has been totally and permanently disabled as defined in the policy.

The correct answer is Owner's Rights. The owner, not the insured, has the rights to select policy options, designate and name a beneficiary, and be the recipient of any financial benefits from the policy. This is outlined in the Owner’s Rights Provision.

The correct answer is the cash value. Any investment gains from a universal life policy will go directly in to the cash value. It is through manipulation of this cash value that the policyowner gets all of their control.

The correct answer is Whole life policy with other insured rider. Other insured riders can only be temporary or term insurance. Both Q and his wife would have their own face amount, but if Q’s wife dies first Q would lose his policy because it is RIDING on hers. If her policy goes away there is no longer a policy for his to attach to.

The correct answer is Family Maintenance Policy. A family maintenance policy MAINTAINS the family from the moment the insured dies for a set period of time. It can involve just a set stream of income, or a stream of income followed by a lump sum at the end of the income period.

The correct answer is Substandard applicants are never declined by underwriters. Substandard risk applicants can be declined and are the most likely to be declined or have their policy issued with a premium rating or coverage exclusion.

The correct answer is Claim will be paid and coverage will remain in force. Since the application was taken 5 years ago, it is now outside of the contestable period and the insurance company cannot refuse to pay due to misstatements on the application. For this reason, the claim will be paid in full.

The correct answer is Premiums may increase at time of renewal. With a conditionally renewable policy, premiums will normally increase at the time of renewal. The insurance company can only refuse renewal for specific reasons or conditions stated in the contract, which may be reasons other than the insured’s health.

The correct answer is When the state prohibits this by law. When an application for insurance is being completed, the insured agrees to an autopsy or physical exam at the request of the insurance company. Regardless of any family preferences or beliefs, if the insurance company requests an exam or autopsy it will be performed as long as it is not prohibited by state law.

The correct answer is Insuring agreement. In a Life insurance contract, an insurance company's promise to pay stated benefits is called the insuring agreement, or clause.

The correct answer is Amount of premium payments and when they are due. The policyowner’s consideration is agreeing to pay a set premium at set intervals.

The correct answer is PPO. A PPO or PREFERRED PROVIDER ORGANIZATION is an ORGANIZATION which uses a PREFERRED group of doctors or PROVIDERS and hospitals in a designated area. If you use providers outside of the preferred network, it may cost you more money.

The correct answer is Coverage that pays a stated amount per day of a covered hospitalization. A hospital indemnity policy will pay a stated amount per day of a covered hospitalization to help make up for income lost due to the hospitalization. For example, if you had a hospital indemnity policy which paid $200 per day and spent 5 days in the hospital for a covered hospitalizationà The policy would pay you $1,000.

The correct answer is Risk classification. Underwriting determines your risk classification. The insurance company uses the risk classification determined in the underwriting process to decide if and under what conditions they will issue you an insurance policy. The higher the risk the higher the premiums.

The correct answer is probability of making timely premium payments. An underwriter may use a consumer report, also called a credit report, to determine the probability of an applicant making timely premium payments.

The correct answer is contest a claim during the contestable perio For life and health insurance applications the contestable period is 2 years. During the first two years of a life and health insurance policy the company can go back to the application and question whether the information provided was accurate. After that point, the insured no longer had to defend their application answers because the insurance company can no longer contest claims based on statements made on the application.

The correct answer is beneficiary's age. The beneficiary’s age will NEVER impact the price of an insurance policy. However, the insured’s attained age is one of the most import factors in determining premium, and as you know, the cost of different types of insurance can be very different. The amount of money the insured has to spend or in this case the dividend amount of course will also play a role in determining how much insurance she can buy.

The correct answer is Paid-Up Additional Insurance. Paid up addition insurance will allow the teacher to continue to increase his face value every year he receives a dividend check.

The correct answer is does not guarantee a return on its investment accounts. A variable life policy has a benefit tied to its underlining investment portfolio. Unlike ordinary life policies, the policyowner of a variable life policy manages the investments tied to their policy in a separate account assuming all the risk, with no guarantee.

The correct answer is Modified Whole Life. Any variable policy is tied to investments. Any person wishing to sell policies tied to investments must have proper FINRA securities registration. Whole life and term life are not tied to investments so FINRA registration is not required to sell these types of policies.

The correct answer is Variable Universal Life. Variable policies contain self-directed investments leaving the policyowner in charge of the overall performance of the policy’s investments. Universal life policies have a monthly mortality charge that is paid with a combination of premiums and cash value. A variable Universal Life policy gives the policyowner complete control of the investments and has a monthly mortality charge.

The correct answer is flexible premiums. An adjustable life policyowner has control of the premiums. They can control the amount, and the frequency. They do not have any control over the face value.

The correct answer is Expense incurred. Long-term care policies pay for expenses as they are occurred and must provide at least 12 months of coverage.

The correct answer is Premiums are payable for as long as there is insurance coverage in force. With straight life, you are agreeing to pay on your whole life policy for as long as coverage is in force. Said differently, you will be paying until death, or age 100, whichever occurs first.

The correct answer is policyowner. An investor-originated or stranger-originated life insurance contract is designed to sidestep the laws of insurable interest. With these policies, an investor takes out an insurance policy on someone to gain financially when that person dies. With these policies, the investor is the policyowner and receives any financial gains produced by the policy. These policies are illegal in most states as the investor as more to gain from the death of the insured than they do from the continuation of the insured’s life.

The correct answer is Family Maintenance Policy. A family maintenance policy MAINTAINS the family from the moment the insured dies for a set period of time. It can involve just a set stream of income, or a stream of income followed by a lump sum at the end of the income period.

The correct answer is PPO's are NOT a type of managed care systems. PPO’s normally have a larger network of providers to choose from than HMOs. With a PPO, prices are negotiated with in-network provides in advance and as such, in-network PPO providers offer members better coverage for incurred expenses. Since PPO’s negotiate prices in advance with PREFERRED PROVIDERS to MANAGE expenses, PPOs ARE a type of managed care system.

The correct answer is Medicaid. MedicAID, provides MEDICAL AID for the financially needy. There are no age requirements for Medicaid, and those who are elderly AND financially needy may receive both MediCARE and MedicAID. Medicaid is funded by both state and federal AID however; each state administers their own Medicaid program.

The correct answer is Rating Services. Rating services are designed to rate companies not people. An insurance company would not use information obtained from a rating service to underwrite an applicant.

The correct answer is Time Limit on Certain Defenses. The time limit on certain defenses basically states there is a time limit for which you must defend certain things. In regards to insurance this applies to 3 different things. First, is pre-existing conditions. Second, is your initial application. And third, is new claims. All three of those situations have a specific timer period for which you have to defend their validity.

The correct answer is adjust the death benefit to a reduced amount. Remember age is the number one factor that determines a person’s insurance premium. Since L was actually older than she stated on the application the benefit would be reduce

The correct answer is Payment of Claims. They payment of claims provision informs the insured who the insurance company will be making payments to. Depending on the type of policy it may be a medical service provider, the insured, or some other beneficiary.

The correct answer is Payor provision. Since an infant obviously cannot go to work and earn money to pay their insurance premium, the payor provision ensures that the child’s life insurance policy does not lapse if the parent paying the child’s premium dies or becomes disable

The correct answer is Modified Whole Life. Since a modified whole life is whole life, we know coverage will last for your entire life, you will have cash value, a level premium, and a level face value or coverage amount. The only special feature of a modified whole life policy is; the insurance company gives you a premium discount for the first 5 years.

The correct answer is upon death of the last insured. A joint and Survivor life insurance policy is also called a Joint Survivor, Survivor, Survivorship or last to die policy. This is ONE policy with ONE face amount and ONE premium that covers the lives of two people and pays the full benefit when BOTH of the people covered die. With a joint survivor policy, no benefit is paid until there are no more survivors.

The correct answer is Medicare Supplement. A MediCARE Supplement policy is designed to SUPPLIMENT Medicare Part A and Medicare Part B by covering expenses which exceed Medicare Part A and B coverage

The correct answer is Existing life insurance coverage with other carriers. The Medical Information Bureau (MIB) report will identify life insurance in force with other carriers. The Medical Information Bureau is basically like your credit score between insurers. If other insurers have viewed you as a favorable applicant, it is probably that the insurer you are currently applying with will view your as favorable.

The correct answer is Insured must be eligible for Social Security disability for claim to be accepte As you learned, the insured does not have to eligible for Social Security disability for a waiver of premium claim to be accepte They simply must be totally disabled as defined by the possible for a specific period of time.

The correct answer is Policyowner controls where the investment will go and selects the amount of the premium payment. A Variable Universal Life Policy is a combination of both a variable life policy and a universal life policy. These policies put the policyowner in complete control. The can control the premiums, face amount, and investments.

The correct answer is When the conditions of the receipt are met. With a conditional receipt, you are covered as soon as you pay the premium and receive the conditional receipt but the policy is not in effect until the conditions of the receipt are met. These conditions typically include the application being complete, the initial premium being paid, the policy being underwritten and approved.

The correct answer is Inform insurer of relevant information not included on the application. The producer must submit an agent statement with every application disclosing relevant information not included on the application. This could include information for which there was not a specific question on the application or information pertaining to a specific question on the application requiring more details.

The correct answer is Adjust the premium payments. An accident and health policyowner cannot decide or change the premium payments unless they cancel the policy and apply for something different.