Pass The South Carolina Life & Health Insurance Test

A “free-look” provision allows a policyholder to purchase a life insurance policy with the option to continue to shop around and change policies if a better policy is found. These policies typically provide a ten to thirty day review period following the actual delivery of the policy. During the review period, the insured can do more research into other policies to determine if the insured wants to stick with the current policy or return it and get a full premium refund. The free look review period starts once the policyholder receives actual physical delivery and the premium is paid. Also, before the free look period can begin, a delivery receipt is issued, dated, and signed by the insured and witnessed by the agent. As long as the premium is paid and the policy is delivered, coverage is in effect.

Adjustable life policies are more flexible compared to other types of policies. In fact, the flexibility it provides is the main reason why adjustable life insurance policies exist. Adjustable life policies allow changes to the main features of the policy, such as the premiums paid and the face value. An ordinary policy is used as a foundation to build upon, and then the features can be adjusted to the needs of the insured. The insured can seek a certain premium payment schedule and amount. In addition, changes can be made to the period of protection and face amount. By using an adjustable policy, the insured gets more flexibility, while the insurer can charge a higher premium versus a whole or term life policy.

Stranger originated life insurance (“STOLI”) is a policy where the beneficiary does not know the insured before the policy is purchased and does not have an insurable interest in the insured. They are not illegal under federal law, but state insurance laws may restrict STOLI policies. STOLI is primarily purchased as an investment for the benefit of the beneficiary, rather than to provide protection to the insured and those close to the insured. STOLI’s are subject to abuse by unscrupulous individuals seeking to take advantage of the elderly.

A viatical settlement is the process whereby a policyholder sells a policy for less than the amount of the death benefit to a private individual. While the insured receives less than the death benefit amount, the insured receives more than the amount of its cash surrender value, so it can be an attractive option when the policyholder is chronically or terminally ill, since it enables the insured to obtain a lump sum settlement payment to live out the remainder of the insured’s life without worrying about finances. The purchaser of the policy becomes the new policyholder and as long as the purchaser continues to make the required premium payments, the purchaser will receive the entire death benefit once the insured dies.

An actuary is a mathematician who calculates the likelihood that certain events will occur and prices the policy of insurance based on the likelihood that the events will happen.

A spouse term insurance rider allows an insured with a whole life policy to obtain term coverage for a spouse. The term policy usually pays a small death benefit. It could also include an option to convert the term policy without having to prove insurability at certain ages reached by the spouse, as defined in the insurance agreement (e.g., 50, 60, 65). Another available feature is that if the insured dies while the premium-paying period is still in effect, the spouse’s coverage will become term coverage, without requiring any further premium.

With a term life insurance policy, the premium is fixed and the policy is for a limited term. Term life riders provide term coverage for a fixed period (e.g. 10, 15, or 20 years), in addition to the permanent whole coverage in the main policy. When the life rider is made part of a permanent life policy, the insured is permitted to convert the term life insurance coverage into permanent life insurance at some later date. By having a portion of the coverage as term, the insured saves money on the premiums at the beginning of the policy term. Notably, if a conversion is performed, an additional underwriting process and medical exam are not required.

Ordinary life insurance may also be referred to as whole life insurance or straight life insurance. Ordinary life insurance is a life insurance policy that is guaranteed to remain in full force for the lifetime of the insured, as long as the premiums are paid, or until the policy maturity date. A life insurance policy is a contract between the insured and insurer that requires the insurer to pay the death benefit of the policy to the policy’s beneficiaries when the insured dies, assuming that the contractual terms are met. Because whole life policies are guaranteed to remain in force as long as the required premiums are paid, the premiums are typically much higher than those of term policies. Whole life premiums are fixed, based on the age of issue, and usually do not increase with age. The insured party normally pays premiums until death, except for limited pay policies which may be paid-up in 10 years, 20 years, or at age 65. Whole life insurance belongs to the cash value category of life insurance, which also includes universal life, variable life, and endowment policies.

An insurance company is permitted to restrict or exclude a life insurance death benefit pay out if the death is caused by an inherently dangerous activity, such as engaging in a motorcycle race. However, for temporary participation in a dangerous activity, a short term Accidental Death and Dismemberment policy is an option.

Other dangerous activities include auto racing, mountain climbing, hang gliding or cliff diving. Other policy exclusions include: 1) Suicide, though the limitation may be limited to the first one or two years (depending on the state) of the policy period; 2) An act of war exclusion, such as if the death occurs while serving in the military or during wartime; and 3) A drug or alcohol abuse exclusion and an exclusion for participating in illegal activities.

A child who is a dependent, unmarried child of a worker that is deceased, disabled or retired can obtain Social Security benefits once that child turns 18 years old and becomes disabled before the age of 22.

Vesting is associated with an insured’s withdrawal of the balance of an annuity before the contractual term of the annuity ends. The vesting period can vary. Typically, the percentage that vests increases on a graduated scale as the end of the annuity term approaches. Once the term ends, the vested amount is 100 percent. To illustrate, a 10 year annuity could vest 10% per year at the end of each year for the duration of the 10 year term. At the end of the 10 year term, the annuity is 100% vested. Here, the vesting schedule is 20% per year (100% / 5 years), so at the end of 3 years, 60% would be vested (3 x 20%).

Reina has purchased a policy with a “free-look” provision, which allows a policyholder to purchase a life insurance policy with the option to continue to shop around and change policies if a better policy is found. These policies typically provide a ten to thirty day review period following the actual delivery of the policy. During the review period, the insured can do more research into other policies to determine if the insured wants to stick with the current policy or return it and get a full premium refund.

The free look review period starts once the policyholder receives actual physical delivery and the premium is paid. Also, before the free look period can begin, a delivery receipt is issued, dated, and signed by the insured and witnessed by the agent. As long as the premium is paid and the policy is delivered, coverage is in effect. The free look review period starts once the policyholder receives actual physical delivery and the premium is paid. Also, before the free look period can begin, a delivery receipt is issued, dated, and signed by the insured and witnessed by the agent. As long as the premium is paid and the policy is delivered, coverage is in effect.

Medicaid is a federal-state partnership government program available in all states. It provides free or low-cost health care to people who meet the requirements. The federal and state governments share the funding. The level of benefits is determined by each state, and coverage and costs vary by state, but Medicaid programs have to adhere to federal guidelines. Depending on the specific program, payments can be made directly to the medical provider or a third-party administrator or insurance companies could manage the Medicaid program. Under the PPACA states had the option to expand coverage to additional persons in accord with federal guidelines.

A certificate of insurance (COI) is issued by an insurance company to provide proof that insurance coverage is in effect. The document also provides the coverage provisions, including the type of policy, the coverage terms, effective date of coverage and any limitations or exclusions. The COI could be used to provide proof that a certain type of medical procedure is covered.

An independent medical examination (IME) may be requested by an insurer to verify claims of an insured’s personal doctor. The IME doctor has not treated the insured before the IME. It is a second opinion.

A point of service plan (POS) combines characteristics of a health maintenance organization (HMO) and the preferred provider organization (PPO). In a Point-of-Service plan, members who obtain health services from plan providers are typically reimbursed 90-100% of the cost versus a non-plan provider where reimbursement is approximately 70%. The difference in the cost and reimbursement amount is paid by the insured. A POS is a type of managed care that offers less medical expense, but in exchange for limited choice of providers.

The main job function of underwriters, especially for accident or disability policies, is to evaluate and analyze the risk and exposures of applicants. Underwriters review several factors, including an applicant’s medical history, to determine the applicant’s risk level. The underwriter next determines the level of coverage to offer the applicant, and then rates the policy. The premium rate is then determined. Lastly, the policy is issued, which typically involves sending all plan documents, including the certificate of insurance (COI), to the selling agent. The agent then provides the documents to the applicant.

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) provides employees and their dependents in a group health plan with the ability to access health insurance coverage for up to 18 months or more after leaving their employer if specific factors apply, so an employee who has left their employer can choose COBRA continuation benefits and get the same coverage if the employee is entitled to it. It is not the employers choice. Continuation coverage is allowed a “prequalifying event” occurs that results in a loss of coverage. Those “qualifying events” are:

-involuntary or voluntary termination or reduced working hours
-death of an insured
-legal separation or divorce resulting in the termination of coverage of the ex-spouse
-when a dependent child “ages out” (is too old) of coverage eligibility
“The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) provides employees and their dependents in a group health plan with the ability to access health insurance coverage for up to 18 months or more after leaving their employer if specific factors apply, so an employee who has left their employer can choose COBRA continuation benefits and get the same coverage if the employee is entitled to it. It is not the employers choice. Continuation coverage is allowed a “”prequalifying event”” occurs that results in a loss of coverage. Those “”qualifying events”” are:

-involuntary or voluntary termination or reduced working hours
-death of an insured
-legal separation or divorce resulting in the termination of coverage of the ex-spouse
-when a dependent child “”ages out”” (is too old) of coverage eligibility

To obtain an extension of COBRA continuation coverage for 18 additional months once the initial 18 months ends, a second qualifying event needs to occur or the qualified beneficiary must be found to be disabled by Social Security. Aside from the above qualifying events, an extension is available if the covered employee becomes eligible for Medicare. To obtain an extension, the qualified employee must notify the plan administrator and provide proof of the reason or of the disability determination by the social security administration.

Unearned Income is a person’s income that continues even if the person cannot work, such as investment income or interest payments. Unearned income may be used to determine the amount of disability benefits someone can receive.

A contract of adhesion is a contract that is provided on a “take-it-or leave-it” basis by an insurance company, though it is not a term limited to the insurance industry. Such a contract allows the insured to either accept or reject the contract. However, as a general rule of contract construction, any ambiguities in the contract are construed against the drafter of the contract (the insurance company) and in favor of the insured, meaning that the insured wil get the benefit of the doubt in the event that there is any confusion as to what a policy provision is supposed to mean. Such a theory encourages insurance companies to ensure that the policy terms are as clear as possible.

Gender should not be considered when determining a health insurance policy premium. Age, weight and tobacco use may result in higher premiums. Premiums will generally be lower for young people in good health, who are not obese and do not smoke. The specific factors and the importance of each factor are determined by the insurance company.

Since her condition is covered by workers’ compensation, Rainer can ask to stay on her employer’s group health insurance policy while she is unable to work, but her employer’s health provider must still approve her request. If approval is not provided, coverage may still be available. She may be able to obtain coverage through COBRA or the Family and Medical Leave Act (FMLA) depending upon her condition.

A rider is an extra part of the insurance contract that could expand or reduce a policy’s benefits, conditions or coverage. A rider is part of the contract, which is a legally binding document.

Programming is a method used to calculate the amount of disability coverage that an individual requires.

An actuary is a mathematician who calculates the likelihood that certain events will occur and prices the policy of insurance based on the likelihood that the events will happen.

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) provides employees and their dependents in a group health plan with the ability to access health insurance coverage for up to 18 months or more after leaving their employer if specific factors apply, so an employee who has left their employer can choose COBRA continuation benefits and get the same coverage if the employee is entitled to it. COBRA continuation coverage is allowed if a “prequalifying event” occurs that results in a loss of coverage. Those “qualifying events” are:

-involuntary or voluntary termination or reduced working hours
-death of an insured
-legal separation or divorce resulting in the termination of coverage of the ex-spouse
-when a dependent child “ages out” (is too old) of coverage eligibility

To obtain an extension of COBRA continuation coverage for 18 additional months once the initial 18 months ends, a second qualifying event needs to occur or if the qualified beneficiary must be found to be disabled by Social Security. Aside from the above qualifying events, an extension is available if the covered employee become eligible for Medicare. To obtain an extension, the qualified employee must notify the plan administrator and provide proof of the reason or of the disability determination by the social security administration.

A beneficiary is named by the policyholder to receive the benefits or a payout from an insurance policy. The three general types of beneficiaries are:

-Primary (a spouse) is the main beneficiary and is given priority over all other beneficiaries to receive the benefits or proceeds from the policy
-Secondary (a child) can receive the benefits or proceeds in the event that the primary beneficiary is deceased when the insured dies
-Tertiary (a grandchild) can receive the benefits or proceeds in the event that both the primary and secondary beneficiaries are deceased when the insured dies