Nevada Insurance Licensing NV Accident and Health InsNV_Health02 Exam Questions

Answer : A

Major medical coverage pays covered medical expenses resulting from accidental injury or sickness, subject to the policy's stated exclusions and limitations. The facts establish reckless and criminal conduct, but they do not establish an intentional self-inflicted injury or identify a policy exclusion that removes coverage. Therefore, choice A is the best answer: the insurer will pay the covered benefits according to the policy. Insurance examination questions require careful separation of criminal conduct from intentional injury. Reckless driving and a resulting conviction do not automatically mean that the insured intended to injure himself. A health insurer may deny a claim only when a valid policy exclusion, limitation, misrepresentation defense, or other contract basis applies. The insurer does not reduce benefits merely to ''partial benefits'' because of the conviction, and it does not return all premiums after denying a properly covered accidental-injury claim. The controlling analysis is the policy language, including exclusions for intentional self-inflicted injury, war, occupational losses, or other listed circumstances. Study Guide Reference/Topics: Policy Provisions, Clauses, and Riders; Major Medical Insurance; Exclusions and Limitations.

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Answer : C

A group health policy that terminates dependent-child coverage at a stated limiting age must continue coverage for an eligible dependent child who remains incapable of self-sustaining employment because of a qualifying disability and who remains dependent on the insured group member for support and maintenance. To preserve that continuation right, the required proof must be furnished within 31 days after the child reaches the policy's limiting age.

This is a time-sensitive protection. The purpose is to prevent automatic termination of coverage solely because a dependent reaches the normal age limit when the child remains disabled and financially dependent. After initial proof is provided, the insurer may require continuing proof of incapacity and dependency, but it may not demand that proof more often than permitted by law.

The 31-day rule should be distinguished from notice periods for newborn coverage, conversion rights, premium grace periods, and claim notices. Each insurance provision may use a different time period, so examination questions often test the exact statutory deadline.

Study Guide references/topics: group health dependents; limiting age; continuation of coverage; NRS 689B.035.

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Answer : B

A waiver-of-premium rider keeps qualifying life insurance coverage in force by waiving required premiums when the insured becomes totally disabled as defined in the rider. The rider protects against the risk that disability will interrupt income and make premium payments unaffordable. Once the rider's requirements are satisfied, the insurer pays or waives the premium according to the policy terms, allowing the coverage and any applicable cash-value features to continue.

The definition of total disability, the waiting period, the age limitation, proof-of-disability requirements, and the duration of the waiver are contractual matters. The rider does not usually mean that premiums are waived for every illness, injury, or temporary work interruption. The insured must meet the stated definition and provide required evidence. Some riders also require that disability begin before a specified age.

This rider should not be confused with disability-income insurance. Disability income pays a periodic benefit to replace a portion of income. Waiver of premium does not provide an income payment; it protects the life policy from lapse due to qualifying disability. It also differs from a payor-benefit rider, which is commonly used with juvenile policies and protects the policy when the premium-paying adult dies or becomes disabled.

Reference/topics from the Study Guide: Waiver of Premium Rider; Total Disability; Disability Income; Payor Benefit Rider; Policy Continuation.

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Answer : B

A long-term care insurance policy may be returned within 30 days after delivery for a full premium refund if the applicant is dissatisfied for any reason. This is known as a free-look or right-to-return provision. It gives the insured time to examine the contract after delivery and determine whether the coverage is appropriate.

The right is especially important in a direct-response sale, where the consumer may not have met face-to-face with a producer. Long-term care policies can contain detailed provisions concerning benefit triggers, elimination periods, activities of daily living, cognitive impairment, benefit periods, inflation protection, exclusions, premium changes, and nonforfeiture benefits. The 30-day review period allows a buyer to examine those terms without forfeiting premium.

The policy must prominently disclose the right to return the contract and receive a refund. The insurer must make the refund within the required period after the policy is returned. This rule differs from other health-insurance free-look, cancellation, grace-period, and reinstatement provisions, which can use different deadlines.

Study Guide references/topics: long-term care insurance; direct response solicitation; free-look provision; return of policy; NAC 687B.060.

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Answer : C

Variable life insurance is permanent life insurance with cash values invested in separate-account investment options. Because the value of those investments can rise or fall, the policyowner bears the investment risk. The policy's cash value may fluctuate based on market performance, and the death benefit may vary above a guaranteed minimum amount, subject to policy provisions. The insurer does not guarantee the investment performance of the separate account.

Variable life insurance differs from whole life, where the insurer's general account supports guaranteed cash values and fixed premiums. It also differs from universal life, which emphasizes flexible premiums and adjustable death-benefit structures. Variable universal life combines flexible-premium features with separate-account investment options. All such products must be described accurately because the potential for growth is accompanied by potential loss.

Because variable life is a security as well as an insurance product, a producer generally needs appropriate securities registration and authorization in addition to life insurance licensing. Suitability is especially important. The product may be appropriate only for a consumer with a long time horizon, tolerance for market volatility, and a need for permanent life insurance. It should not be sold as a guaranteed investment or as equivalent to a fixed life policy.

Reference/topics from the Study Guide: Variable Life Insurance; Separate Accounts; General Accounts; Securities Registration; Investment Risk; Suitability.

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Answer : B

Gain from a nonqualified annuity is generally taxed as ordinary income when distributed. The owner's investment in the contract, often called the cost basis, is not taxed again because it was paid with after-tax dollars. However, the growth above that basis is tax-deferred only while it remains inside the annuity. When the owner surrenders the contract or receives a taxable distribution, the gain is subject to ordinary-income treatment rather than the preferential capital-gains treatment that may apply to certain investments.

A nonqualified annuity is funded with after-tax money and is not held inside a qualified retirement arrangement such as an IRA or employer plan. The contract's tax deferral can be valuable for long-term planning, but it does not mean that every distribution is tax free. In addition, distributions before age 59 may be subject to an additional federal tax penalty unless an exception applies. A full surrender may also trigger a surrender charge under the contract if it occurs during the surrender-charge period.

The producer should never present an annuity as tax avoidance. The accurate explanation is tax deferral, possible ordinary-income taxation of gain upon distribution, potential penalties for early distributions, and the importance of consulting a qualified tax adviser for individual circumstances.

Reference/topics from the Study Guide: Annuity Taxation; Nonqualified Annuities; Cost Basis; Tax Deferral; Surrender Charges.

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Answer : C

COBRA generally gives qualified beneficiaries the right to continue employer-sponsored group health coverage after certain qualifying events. For termination of employment, other than gross misconduct, or a reduction in work hours, the standard maximum continuation period is generally 18 months. Other qualifying events, such as death of the covered employee, divorce, legal separation, or a dependent child's loss of dependent status, may result in a longer maximum continuation period, commonly 36 months.

Continuation coverage is not free coverage. The qualified beneficiary typically pays the full group premium plus a permitted administrative charge. COBRA can preserve the same group coverage and provider access for a limited time, but it may be expensive because the employer is no longer subsidizing premiums. Enrollment deadlines, election notices, payment rules, and employer-plan size requirements are important.

COBRA should not be confused with conversion coverage or an Affordable Care Act marketplace plan. Conversion coverage is an individual policy issued after group coverage ends under stated conditions. Marketplace coverage is a separate individual-market option that may be available following loss of employer-sponsored coverage. Producers should explain options carefully and avoid presenting one continuation route as automatically best for every consumer.

Reference/topics from the Study Guide: COBRA; Group Health Continuation; Qualifying Events; Conversion Privilege; Employer-Sponsored Health Insurance.

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