Life and health insurance license, from course to renewal

In a sole proprietor's buy-sell plan, the life policy on the owner is usually owned by and payable to the:

1. Owner's spouse as the surviving heir of the business

   The spouse is a likely heir, not the purchaser; paying the heir would hand over money while nobody is obligated to take over the business.
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2. Sole proprietor's own estate

   The estate is the seller in this plan and receives the purchase price from the buyer; making it the beneficiary would leave the buyer with nothing to pay with.
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3. Business as a separate entity

   An entity plan needs a business that exists apart from its owner; a sole proprietorship cannot buy itself back, so this borrows a corporate setup that does not fit here.
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4. Person who agreed to buy the business

   A sole proprietorship has no existence apart from its owner, so the buyer named in the agreement owns the policy, pays for it and collects the proceeds to fund the purchase.
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Select an answer to record it. The card then marks the key and opens the reasoning under every choice.

A life insurer may postpone paying a cash surrender value or granting a policy loan (other than a premium loan) for up to:

1. 6 months

   Nonforfeiture law lets an insurer delay paying a cash surrender value, or granting a loan that is not for premiums, for up to six months after the request.
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2. 12 months

   A full year overstates the deferral; the permitted delay on cash values and non-premium loans is half that.
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3. 60 days

   Sixty days appears in other policy rules, such as the wait before a policyowner may sue on a health claim, and is shorter than the allowed deferral.
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4. 31 days

   Thirty-one days is the familiar grace period for paying a life premium, not the deferral allowed on surrender values.
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A medical plan requires approval before a nonemergency hospital admission. This cost-control feature is called:

1. Subrogation

   Subrogation lets the insurer recover what it paid from a third party who caused the loss, after the claim rather than before the admission.
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2. Assignment of benefits

   An assignment directs the plan to pay the provider instead of the insured; it controls who receives payment, not whether a stay is approved.
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3. Precertification

   Requiring approval before a planned admission is precertification, a utilization review step meant to prevent unneeded inpatient stays.
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4. Coordination of benefits

   Coordination of benefits decides which of two plans pays first when a person is covered twice; it has nothing to do with approving admissions.
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In most states, a producer who gives a prospect a promotional pen or calendar of small value while discussing a policy has:

1. Committed rebating, since any gift is an inducement

   This overstates the rule: rebating is an offer of something of value not stated in the policy, and most states carve out nominal advertising items.
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2. Acted lawfully, since such giveaways are allowed

   Most states permit promotional items of small value, so handing out a pen or calendar is lawful and is not a real inducement tied to the policy.
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3. Committed twisting, since the gift influences the sale

   Twisting means misrepresentation to induce a replacement; handing out a pen involves no false statement and no replacement.
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4. Acted lawfully only if the prospect declines the policy

   Whether the prospect buys does not decide the question; a small advertising item is permitted whether or not a sale follows.
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