Insurance Licensing NV Accident and Health InsNV_Health02 Exam Questions

Answer : B

In a cross-purchase buy-sell agreement, each business owner purchases, owns, and is beneficiary of life insurance on the other owner or owners. If one owner dies, the surviving owner receives the policy proceeds and uses them to purchase the deceased owner's business interest from the estate or designated successor. The arrangement provides liquidity and a predetermined method for transferring ownership, helping the business continue without forcing a sale of assets or requiring the surviving owner to obtain financing at a difficult time.

An entity-purchase agreement differs because the business itself owns policies on each owner and uses the proceeds to redeem the deceased owner's interest. The number of policies can be an important distinction. With two owners, a cross-purchase arrangement usually requires two policies. With several owners, each may need policies on all other owners, which can become administratively complex.

The agreement should be drafted and reviewed by qualified legal and tax professionals. The insurance policy alone does not create the buy-sell obligation; the written agreement establishes the purchase terms, valuation method, triggering events, and funding mechanism. The producer's role is to help identify appropriate funding, not to draft legal agreements.

Reference/topics from the Study Guide: Buy-Sell Agreements; Cross-Purchase Plans; Entity-Purchase Plans; Business Continuation; Life Insurance Funding.

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Answer : B

A mutual insurance company is an incorporated insurer without capital stock that is owned by its policyholders. Its governing body is elected by policyholders rather than by outside shareholders. Therefore, option B is the best description of a mutual insurer.

A stock insurer, described in option A, has capital divided into shares and is owned by stockholders. Stockholders elect the board of directors and may receive dividends based on corporate profitability. Policyholders of a stock insurer are customers, not owners, unless they separately own stock in the company.

Options C and D describe characteristics associated with a reciprocal insurer or interinsurance exchange. A reciprocal is an unincorporated aggregation of subscribers who insure one another through an attorney-in-fact. Subscribers are both insureds and insurers of one another in that arrangement.

The mutual-company structure matters because policyholders may participate in governance and may receive policyholder dividends when declared. Those dividends are not guaranteed and are different from investment dividends paid to stockholders of a stock insurer.

Study Guide references/topics: insurer ownership; mutual insurers; stock insurers; reciprocal insurers; Nevada domestic insurer law.

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Answer : B

Medicare is a federal social insurance program that provides hospital and medical expense coverage to eligible persons. Therefore, choice B is correct. Medicare Part A primarily covers inpatient hospital care, skilled nursing facility care under qualifying conditions, hospice care, and certain home health services. Medicare Part B primarily covers physician services, outpatient care, preventive services, durable medical equipment, and other medically necessary services. Choice A describes Medicaid, which is a needs-based medical assistance program jointly administered by federal and state governments. Choice C is incorrect because Medicare also serves people age 65 or older and individuals with qualifying end-stage renal disease or ALS; it is not limited to totally disabled persons. Choice D is incorrect because physician bills are generally associated with Part B, not Part A. Medicare beneficiaries may also choose Medicare Advantage plans, which provide Medicare-covered benefits through private plans, and may obtain prescription drug coverage under Part D. Study Guide Reference/Topics: Social Insurance Programs; Medicare Parts A and B; Federal Health Programs.

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Answer : A

In Nevada, an insurer appointing a producer as its agent must generally file a notice of appointment with the Commissioner within 15 days after the agency contract is executed or the first application for insurance is submitted, whichever event triggers the statutory timing. The appointment establishes the producer's authority to act as the insurer's agent for the applicable business. An agent is a producer compensated by the insurer who sells, solicits, or negotiates insurance for that insurer.

A producer who is not acting as an insurer's agent may act as a broker, subject to the statutory definition and applicable requirements. The distinction matters because an agent represents the insurer in the agency relationship, while a broker acts on behalf of the insured or prospective insured and lacks authority to bind an insurer through the broker's own actions.

The appointment requirement does not replace the producer-license requirement. Before selling, soliciting, or negotiating a class of insurance in Nevada, the person must hold the appropriate line of authority. A life or health producer must therefore have the relevant licensing authority and, when acting as an insurer's agent, be properly appointed.

Examination questions often test both the 15-day filing timeline and the difference between an agent and a broker.

Reference/topics from the Study Guide: Producer Appointments; Agent and Broker Distinction; Insurer Appointments; Nevada Producer Licensing; NRS 683A.321.

Answer : B

Level term life insurance is the appropriate recommendation because it provides a stated death benefit for a stated period, such as 20 years. It is designed for temporary protection where the financial need has a known end date---for example, the remaining duration of a mortgage, a child's dependency period, or a short-to-medium-term income-replacement need. The premium is generally level for the selected term period, while the death benefit remains level if the policy stays in force.

Whole life insurance provides permanent protection and cash-value accumulation, but its premium is ordinarily higher because the insurer expects coverage to continue for the insured's lifetime. Universal life offers flexible premiums and adjustable death-benefit structures, but it is not the simplest match when the client's purpose is fixed, time-limited mortgage protection. Variable life has investment risk because policy values depend on separate-account performance and is not selected merely to obtain low-cost temporary coverage.

The producer should confirm that the term period aligns with the mortgage obligation and explain that coverage normally ends at the term's expiration unless the policy is renewed, converted, or otherwise continued under its provisions.

Reference/topics from the Study Guide: Types of Life Insurance; Term Life Insurance; Needs Analysis; Mortgage Protection.

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Answer : A

The Affordable Care Act established Essential Health Benefits as the minimum categories of benefits that qualifying individual and small-group health plans must cover. These required benefit categories create a baseline of comprehensive coverage rather than allowing a major medical plan to omit fundamental types of care.

Essential Health Benefits include ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance-use-disorder services, prescription drugs, rehabilitative and habilitative services and devices, laboratory services, preventive and wellness services, chronic-disease management, and pediatric services, including oral and vision care.

Gold and Silver are metal-level plan categories. They describe the general actuarial value of a plan---the approximate division of covered health-care costs between the insurer and enrollees---not a separate legal list of mandatory minimum benefits. A Gold plan generally pays a larger share of covered costs than a Silver plan, but both must include the applicable Essential Health Benefits. ''Silver Saver Value'' and ''Medicaid Buy-Back'' are not the ACA's required minimum-coverage terminology.

For examination purposes, distinguish the benefit package itself---Essential Health Benefits---from plan metal levels and from public programs such as Medicaid.

Study Guide references/topics: Affordable Care Act; individual health insurance; qualified health plans; Essential Health Benefits; HealthCare.gov coverage protections.

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Answer : B

The correct answer is B, Medicare. A person with end-stage renal disease---permanent kidney failure requiring regular dialysis or a kidney transplant---may qualify for Medicare regardless of age, provided the applicable work or family eligibility requirements are met. The employee's status as full-time does not prevent Medicare eligibility based on end-stage renal disease. Medicaid is a needs-based program and is not the best answer solely from the facts given. Workers' compensation would apply only to a qualifying work-related injury or illness. Social Security Disability benefits can provide income support to qualifying disabled persons, but they are not the medical coverage program identified in the question. Medicare coverage for dialysis-related services is subject to eligibility and enrollment rules, and an employer group health plan may coordinate with Medicare during the ESRD coordination period. Medicare confirms that people with permanent kidney failure requiring regular dialysis or a transplant can qualify for coverage before age 65. See Medicare's ESRD eligibility guidance. Study Guide Reference/Topics: Social Insurance Programs; Medicare; End-Stage Renal Disease.

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