NCE PRACTICE EXAM

A beneficiary and the underwriter are not parties to a life insurance contract. An insured may be, but is not necessarily a party. A wife (owner) can take a policy out on her husband (insured), yet the husband is not a party to the insurance contract.

In addition to the information about the applicant for insurance, underwriters will also look at the named beneficiary in the policy in order to determine whether or not there is an insurable interest. If there is not, the application for life insurance could be rejected.

Given Jack's temporary need for 15 years of coverage to pay off the mortgage balance, the best choice for Jack would be a 15-year term life insurance policy as the premiums would likely be far less than a permanent policy, and once the mortgage is paid off in 15 years, this particular need for Jack will no longer exist.

Because the underlying investments are equities such as mutual funds, variable life insurance policies are considered to be securities. As these investments move up and down with the movements of the equities market, variable life insurance is considered to be more risky than other types of policies as there is the probability that the value of the policy's investment component could decrease.

Underwriters look at many factors that can deem an applicant for life insurance as being more or less risky. These criteria can include hobbies, occupation, lifestyle, gender, age, income, and many more.

The person or entity that is the policy beneficiary will have an effect on the acceptance of the policy. This is because the beneficiary must be at risk of suffering some type of loss should the insured pass away.

The law of agency regulates the relationship between agents and principals as well as agents and third parties with whom they deal on the principal's behalf.

While a new job with a drastic change in income and / or hazardous duties could result in a change of life insurance coverage needs, simply changing job titles will not.

Permanent life insurance should be used with buy / sell agreements in order to ensure that the insured will not need to re-qualify for life insurance after a certain amount of time elapses.

There are many purposes in which the proceeds of corporate owned life insurance may be used.

While there are many different options and riders on life insurance, all policies possess a death benefit.

Permanent life insurance policies consist of both a death benefit component and a cash value component.

The death benefit is the amount that is paid to the policy beneficiary upon the death of the insured. Should a permanent life insurance policy holder decide to cancel the policy prior to the insured's death, they will receive the amount of the cash surrender value.

Although it typically takes approximately two weeks to settle death benefit claims, insurance companies are required to settle such claims within 30 days. Some claims may require additional time if they require additional investigation. Here, there is nothing suspicious about John's death.

A living benefit on a life insurance policy is typically a policy rider that allows an insured who has a qualifying terminal illness to access some or all of the death benefit proceeds in order to pay medical bills or other financial obligations. The death benefit proceeds on the policy will be reduced by the amount that is accessed by the insured.

The living benefits that are accessed from a life insurance policy can typically be taken out either in one lump sum amount or they could be received via regular installments. With the installment method, the insured may wish to use these funds to pay his or her ongoing monthly bills.

If a contract contains unclear wording, then a court will interpret the language used against the writer of the contract - unless the wording that is used is required by law to be stated in a specific way.

This promise of covering losses is in exchange for the premium that is paid by the insured and the compliance with the policy terms.

All of the above are types of health insurance policies.

Health savings accounts (HAS) are used with high deductible health insurance policies. With an HSA, money that is saved on the premium may be put into the account and then funds are used for certain medical fees. Because the funds in the HSA account can be used for medical services, participants often use them for un-covered procedures such as chiropractic visits or other health-related services that are not covered by their insurance policy.

Own occupation is a type of benefit trigger that is found in a disability insurance policy, not in long-term care insurance policies. An elimination period in a long-term care insurance policy is the number of days that an insured must pay for their care after a qualifying claim, but before benefits begin to pay (such as with a deductible). The benefit duration in a long-term care policy states how long benefits will be paid to an insured, and the benefit amount may be stated either as a daily or monthly amount. (Some recent long-term care insurance plans also offer a lump-sum benefit payout option).

While major medical insurance policies typically have high deductibles, these must be established in the policy as well as the maximum amount of out-of-pocket costs that will be paid by the policy holder. The elimination period is not part of a major medical insurance policy.

Rebating is the act of offering an applicant an inducement to purchase insurance. It is prohibited as an unfair trade practice. Another example would be returning a portion of the applicant's policy premium from the agent's commission.

Twisting involves an agent suggesting that an individual let their current insurance coverage lapse in order to purchase a new policy, typically with similar benefits. It is a prohibited activity. In this case, the new policy does not necessarily benefit the client, however, the agent will likely receive a commission on the sale of the new policy.

A copayment is the amount or portion of the total cost that is the patient's responsibility upon receiving a medical service such as an annual check-up.

A long-term care insurance policy's elimination period is the number of days that the insured must pay for services out-of-pocket until the insurance coverage begins to pay.

Each CPT also corresponds to one or more International Classification of Diseases (ICD-9) codes. For example, 99214 may be used for a physical and 90658 indicates a flu shot.

A MSN, or Medicare Summary Notice, can also be checked for any changes to a patient's claims.

Own occupation offers the most liberal definition of disability as the insured is considered to be totally disabled if he or she is unable to engage in the principal duties of his or her own occupation.

Although Social Security may provide disability benefits, in the majority of cases, these benefits are inadequate. Therefore, Social Security disability benefits should only be used to supplement an individual disability income policy.