Life and Health Insurance (Combined) Flashcards
7 cards from real EXAMFX practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Life and Health Insurance (Combined) flashcards as text
Which of the following life insurance policy provisions allows a lapsed policy to be reinstated?
Answer: Reinstatement provision
The reinstatement provision lets the policy owner restore a lapsed policy by paying overdue premiums with interest and providing evidence of insurability within a specified period (typically 3–5 years).
A 'conversion privilege' in a group health or life insurance plan allows an employee who leaves the group to:
Answer: Convert to individual coverage without proving insurability
The conversion privilege lets a departing group member obtain an individual policy without a new medical exam, though typically at higher individual rates.
A Medicare Supplement (Medigap) policy is specifically designed to pay:
Answer: Costs that original Medicare does not cover, such as copays and deductibles
Medigap policies fill in the gaps left by original Medicare, such as deductibles, coinsurance, and copayments—they do not replace Medicare itself.
Which of the following is an example of a 'third-party ownership' arrangement in life insurance?
Answer: A business owns a life insurance policy on a key employee
Third-party ownership exists when someone other than the insured owns the policy—such as a business owning a policy on a key employee.
Under a long-term care (LTC) insurance policy, the 'benefit trigger' for most tax-qualified plans is the inability to perform a certain number of Activities of Daily Living (ADLs). What is that threshold?
Answer: 2 out of 6 ADLs
Tax-qualified LTC policies require the insured to be unable to perform at least 2 of 6 standard ADLs (eating, bathing, dressing, toileting, transferring, continence) to trigger benefits.
A producer who accepts premium payments from clients but does not remit them to the insurer is guilty of:
Answer: Commingling (conversion of funds)
Commingling or conversion of funds occurs when a producer mixes client premium funds with personal accounts or uses them for personal expenses rather than forwarding to the insurer.
The 'incontestability clause' in a life insurance policy limits the insurer's right to contest the policy's validity to:
Answer: The first 2 years the policy is in force
After the incontestability period (typically 2 years), the insurer cannot void the policy due to misrepresentations in the application, except in cases of fraud.