FREE Life and Health Insurance Assessment Questions and Answers


Who decides which of the 11 optional life insurance provisions will be part of an insurance contract?

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Insurers are required to include 12 provisions in their contracts, but they can also choose from 11 other provisions to add to their contracts.  Most of the time, these optional provisions are more about putting limits on the policyholder than on the person who is putting in the insurance.

Catastrophic losses are covered by major medical expense insurance if:

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Under the Affordable Care Act, major medical expense insurance is not a qualified plan because it does not cover all of the required minimum essential coverage.

Major medical expense insurance is meant to cover only catastrophic losses, and it doesn't pay out claims until the annual or lifetime maximums of the basic medical insurance plan have been reached.

At the moment, the Federal Insurance Office (FIO) of the U.S. Department of the Treasury has the power to:

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The Federal Insurance Office (FIO) is in charge of keeping an eye on the insurance industry in the United States and giving advice to the Treasury Department about insurance issues.

When dealing with the International Association of Insurance Supervisors, the FIO can also speak for the United States. The FIO does not advise on health or long-term care insurance unless it is tied to an annuity or life insurance policy.

A Qualified Health Plan is considered "affordable" as of January 2023 if the individual's premium contribution for the lowest priced plan does not exceed:

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The Affordable Care Act (ACA) mandates that all consumers have access to reasonably priced health insurance alternatives. The employee's household income should be multiplied by 9.12% to figure out if the option with the lowest price is affordable. If the lowest premium offered is more than this number, there may be penalties. The Affordable Care Act also puts limits on things like deductibles, copayments, and out-of-pocket maximums.

What is the MOST important thing for an insurance agent to think about when talking to a client about who should be the beneficiary of their life insurance plan?

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When helping a client choose a beneficiary for their life insurance plan, there are many things to think about. For example, if the insured wants to name someone other than the spouse as the beneficiary of a life insurance policy in a community property state, both the insured and the spouse may have to sign the policy.

The most important thing to think about with the above choices is whether or not the policy was ordered by the courts. There are often life insurance clauses in child custody orders to make up for the loss of child support payments if a parent dies.

The 11 extra provisions that can be added to life insurance contracts are mostly restrictions on:

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Insurance firms must incorporate measures that benefit policyholders. One example is the rule requiring a 2-year time limit on the duration of a specific exclusion.  Optional clauses, such as those that allow insurers to recalculate premiums if an applicant's age is misled on a life insurance application, are more beneficial for insurers.

Insurance is governed by:

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The Ferguson Act of 1945 says that each state is in charge of regulating and taxing insurance. This act says that state insurance laws take precedence over any federal insurance laws that are already in place. Each state has its own group that regulates insurance, and many of these are called the "Department of Insurance."

Which division of an insurance firm approves or denies applications and assigns risk categories?

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While certain life insurance policies and coverage amounts are deemed "guaranteed issue" (as is frequently the case with employer-sponsored plans), others require that life insurance applications undergo "underwriting."

An underwriter will analyze health and lifestyle facts during this procedure. After looking over the applications, the underwriters will either accept or reject them. Those who are accepted will get a rate based on their risk factor category.

(The rate is used to compute premiums.)

With a high-deductible health plan (HDHP), which savings plan is most often offered?

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Most of the time, high deductible health insurance has a lower premium, but it also has a higher out-of-pocket risk. A Health Savings Account (HSA) lets employees save money before taxes to pay for out-of-pocket medical costs they might have during the plan year.  Employers can also donate.

The deductible for John's major medical plan is $2500, and the coinsurance is divided 80/20. John gets a bill for $1000 from a provider. How much will he need to pay the provider directly?

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Coinsurance only applies to medical costs that are more than the insured person's plan deductible. Since John's bill is less than his plan's deductible, the insurance company won't pay any more benefits. Because of this, John would have to pay the full $1,000 to his health care provider.

A person with insurance can only make changes to their plan outside of the initial enrollment period or the annual enrollment period when:

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You can only buy health insurance during open enrollment periods, which usually happen once a year. Unless a qualifying event occurs, individuals are prohibited from purchasing insurance, adding or removing dependents, canceling insurance, or changing plan levels outside of an enrollment period. Before they can make changes to their insurance, people who are covered must show proof that a qualifying event has happened. This could be a marriage certificate, letter of termination from work, divorce decree, court order, etc.

Which of the following suggestions would be the LEAST useful when advising customers on choosing a medical insurance plan?

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If you choose the wrong health insurance plan, it could cost you. Regular medication users should examine the plan's prescription drug formulary (list of pharmaceuticals and coverage levels) to see which prescriptions are covered and how much.

It's also very important for clients to check network/primary care provider lists to make sure their doctors are covered ""in-network."" ""Out of network"" coverage costs more, and in some cases, the plan may not cover medical care received outside of the network at all.

High medical plan deductibles can also be expensive for people and families who use their plans a lot. Because of this, it's important for clients to know what their out-of-pocket costs might be.

A is the least important advisor recommendation.

Co-insurance is the proportion of the cost of healthcare that an insured person pays after the insured:

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Co-insurance is the amount of a person's health care costs that an insurer will pay for after the deductible has been met. For example, if a person's medical plan has a deductible of $2,500, that person will have to pay 100% of the first $2,500 in medical costs. (Copays are not applied to deductibles.)

After the deductible is paid, the insurance will pay a percentage of each covered medical expense up to a plan-year maximum. With an 80/20 plan, the insurance company would pay 80% of a $100 claim and the insured person would pay 20%.

Which of the following is not one of the Affordable Care Act's 10 categories of "minimum essential coverage (MEC)":

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The Affordable Care Act sets up ten categories of "Minimum Essential Coverage" (MEC) that every Qualified Health Plan must have. Outpatient care, emergency services, hospitalization, pregnancy, maternity, and newborn care, mental health and substance use disorder treatments, prescription pharmaceuticals, rehabilitation services and equipment, and laboratory services are included. Services for prevention, health, and long-term illness Pediatric care.

One of the 10 MEC categories is NOT cosmetic surgery.

Which of the following concerns is NOT a life insurance plan rider example?

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A policy with a waiver of premium for disability insurance riders will not be canceled if the policyholder is disabled and fails to pay the premium.
Child insurance riders cover costs related to the death of a child, like funeral costs. The cost of a child insurance rider can be less than the cost of a child life insurance policy that stands on its own.
The return-of-premium rider says that any premiums paid by an insured person who outlives the end of her term life coverage will be returned. Since insurers are not likely to provide a delayed acceptance rider, the correct choice is option A.

The legislation that rules and regulates the insurance business is known as:

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NAIC model law is a set of suggested laws that, if implemented by individual states on their own, the NAIC thinks would be good for everyone. The NAIC, on the other hand, does not have the power to regulate insurance. It only gives advice. The insurance industry is run and controlled by the Insurance Regulatory Law.

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