Life and Health Insurance Guide Exam Flashcards
7 cards from real Life & Health Insurance Exam 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 Guide Exam flashcards as text
A policyholder converts a term life insurance policy to a permanent policy without providing evidence of insurability. This right is known as:
Answer: Conversion privilege
The conversion privilege allows a term policyholder to convert to permanent coverage without proving insurability, typically within a specified period.
Under the Affordable Care Act, what is the maximum percentage of household income that an individual's health insurance premium can cost before subsidies apply (affordability threshold)?
Answer: 9.12%
The ACA affordability threshold is 9.12% of household income for 2023; if employer coverage exceeds this, employees may qualify for marketplace subsidies.
A disability income policy pays 60% of pre-disability earnings. This percentage is referred to as the:
Answer: Replacement ratio
The replacement ratio is the proportion of pre-disability income that a disability policy replaces, typically ranging from 50–80%.
Which Medicare part covers outpatient prescription drugs?
Answer: Part D
Medicare Part D is the voluntary prescription drug benefit program administered through private insurance plans.
An insured under a whole life policy borrows against the cash value and dies before repaying the loan. The insurer will:
Answer: Deduct the outstanding loan balance plus interest from the death benefit
Policy loans reduce the death benefit paid to beneficiaries by the amount of the unpaid loan plus any accrued interest.
A health insurance policy that requires the insured to pay a fixed dollar amount per covered service, regardless of the total cost, is collecting a:
Answer: Copayment
A copayment (copay) is a fixed dollar amount paid by the insured each time a covered service is used.
The insuring clause in a life insurance policy specifies:
Answer: The insurer's promise to pay the death benefit upon the insured's death
The insuring clause is the fundamental promise of the policy, stating the insurer's obligation to pay the specified benefit upon the occurrence of a covered event.