Insurance Licensing and Regulation Flashcards

A disability income policy social insurance supplement (SIS) benefit rider:

Answer: Provides a payment only when the insured is totally disabled, but not receiving any social insurance benefit plans

A disability income policy's Social Insurance Supplement (SIS) benefit rider is designed to fill potential gaps in coverage related to government social insurance programs. This rider provides a benefit payment to the insured when they are totally disabled but are not yet receiving, or are ineligible for, benefits from social insurance plans like Social Security Disability. It ensures a more consistent income stream during the waiting period or if government benefits are denied.

A health maintenance organization (HMO) plan reduces costs by promoting?

Answer: Preventative care

Health Maintenance Organizations (HMOs) primarily reduce costs by emphasizing and promoting preventative care. By focusing on regular check-ups, screenings, and health education, HMOs aim to keep members healthy and detect potential health issues early, before they become more serious and expensive to treat. This proactive approach minimizes the need for costly hospitalizations and specialized treatments, leading to overall lower healthcare expenditures.

Renewable term insurance can be best described as :

Answer: A level death benefit with an increase in premium

Renewable term insurance allows the policyholder to renew the coverage at the end of each term without needing to undergo a new medical exam. While the death benefit typically remains level throughout the renewed terms, the premium will increase with each renewal. This increase reflects the insured's advancing age and the higher risk of mortality, making the coverage more expensive over time.

The basic feature of a managed care indemnity plan is that the participants:

Answer: Select a provider and submit claims to the insurance company

Managed care indemnity plans offer participants the freedom to choose any healthcare provider they prefer, without being restricted to a specific network or requiring referrals. After receiving services, the participant typically pays the provider directly and then submits a claim to the insurance company for reimbursement. This model provides flexibility but often involves deductibles and coinsurance, with the insurer reimbursing a portion of the approved costs.

How do rights of an irrevocable beneficiary differ from those of a revocable beneficiary?

Answer: An irrevocable beneficiary has a vested right that neither the policy owner nor his creditors can impair without the beneficiary's consent

An irrevocable beneficiary holds a vested right in the life insurance policy, meaning their claim to the policy's benefits cannot be altered or revoked by the policy owner without their explicit consent. This vested interest protects the beneficiary's rights, preventing the policy owner from changing beneficiaries, surrendering the policy, or taking out loans against it unilaterally. Furthermore, this right often shields the policy proceeds from the policy owner's creditors, ensuring the death benefit is paid to the designated beneficiary.