Pass the Insurance Licensing Life - Accident - and Health Ok-Life-Accident-and-Health-or-Sickness-Producer Questions and answers with ValidTests

The clerical error provision in group health insurance policies is designed to protect employees from losing coverage due to administrative mistakes made by the employer or insurer. According to Oklahoma insurance regulations and standard group health insurance practices, if a clerical error results in an employee not being enrolled, the provision allows the error to be corrected by retroactively enrolling the employee, provided any past due premiums are paid. This ensures the employee is insured as if the error had not occurred, covering any claims that would have been eligible during the period of the error.

The Oklahoma Life, Accident, and Health or Sickness Producer Study Guide specifies that under the clerical error provision, "an employee who was eligible for coverage but was not enrolled due to an administrative error can be retroactively enrolled upon correction of the error, with coverage effective from the original eligibility date, provided all required premiums are paid." This aligns with option C, which states the employee will be allowed to submit an enrollment form and all past due premiums, and will be retroactively insured.

A deliberate lie by an insured to obtain a lower premium constitutesfraud, defined in Oklahoma’s Insurance Code (Title 36 O.S. § 1204) as an intentional misrepresentation of material facts to deceive the insurer. Fraud can lead to policy rescission or legal penalties.

Option A: Incorrect. Omission is failing to disclose information, not actively lying.

Option B: Correct. A deliberate lie to lower premiums is fraud.

Option C: Incorrect. Concealment is withholding material information, not providing false information.

Option D: Incorrect. Aleatory refers to the uncertain nature of insurance contracts, not misrepresentation.

Thecontestable periodfor a life insurance policy in Oklahoma, as mandated by Title 36 O.S. § 4004, is24 months(2 years) from the policy’s issuance. During this period, the insurer can contest the policy’s validity based on material misrepresentations in the application (e.g., health or lifestyle). After 2 years, the policy becomes incontestable except for non-payment of premiums or fraud in some cases.

Option A: Incorrect. 6 months is too short for the contestable period.

Option B: Incorrect. 12 months is insufficient; the standard is 24 months.

Option C: Correct. The contestable period is 24 months.

Option D: Incorrect. 36 months exceeds the standard period.

This question aligns with the Prometric content outline under “Provisions, Options, Exclusions, Riders, Clauses, and Rights,” which covers the incontestability provision.

Rebatingis the practice of offering or returning part of a commission, premium, or anything of value to an insured as an inducement to purchase an insurance policy. It is prohibited in Oklahoma under the Unfair Trade Practices Act (Title 36 O.S. § 1204) to ensure fair competition and prevent undue influence.

Option A: Incorrect. Coercion involves forcing someone to buy insurance, not offering inducements.

Option B: Incorrect. Defamation is making false statements harming reputation, not related to inducements.

Option C: Correct. Rebating involves giving value to induce a policy purchase.

Option D: Incorrect. Controlled business refers to writing insurance primarily for oneself or close associates, not inducements.

This question falls under the Prometric content outline section on “State Insurance Statutes, Rules, and Regulations,” which covers unfair trade practices.

Under Oklahoma’s Insurance Code (Title 36 O.S. § 1435.13), transacting insurance without a valid license, such as after revocation, is afelonypunishable by a fine of up to $5,000, imprisonment for up to 7 years, or both, depending on the severity and intent. This reflects the serious nature of unlicensed insurance activity.

Option A: Incorrect. The fine limit is $5,000 for a felony, not $10,000.

Option B: Correct. The violation is a felony with a fine up to $5,000.

Option C: Incorrect. The violation is a felony, not a misdemeanor, with higher penalties.

Option D: Incorrect. Imprisonment is up to 7 years, not 10 years.

According to IRS guidelines (Publication 525), disability benefits from a group policy paid for by the employer are consideredtaxable incometo the employee because the premiums were not included in the employee’s taxable income. If the employee paid the premiums with after-tax dollars, the benefits would be tax-free.

Option A: Incorrect. Benefits are taxable if the employer paid the premiums.

Option B: Incorrect. Disability benefits are not deductible from gross income.

Option C: Correct. The benefits are taxable income.

Option D: Incorrect. Benefits are subject to income tax, not just Social Security or FUTA taxes.

Aninsuredis the person covered by an accident and health insurance policy and entitled to reimbursement for covered health care expenses, as defined in Oklahoma’s Insurance Code (Title 36 O.S. § 4401). The insured (or their assignee, e.g., a provider) receives benefits for services like medical treatments or hospital stays.

Option A: Incorrect. An insurer is the company issuing the policy, not receiving reimbursement.

Option B: Correct. The insured is entitled to reimbursement for covered health care expenses.

Option C: Incorrect. A practitioner provides services, not receives policy reimbursements.

Option D: Incorrect. A PPO is a network of providers, not an individual entitled to benefits.

TheConsolidated Omnibus Budget Reconciliation Act (COBRA), as regulated under federal law (29 U.S.C. § 1161 et seq.), requires employers with20 or more employeesto offer continuation of group health insurance coverage to employees and their dependents after certain qualifying events (e.g., termination of employment). This applies to private-sector employers and is enforced in Oklahoma.

Option A: Correct. COBRA applies to employers with 20 or more employees.

Option B: Incorrect. 30 employees is not the threshold.

Option C: Incorrect. 31 employees is not the specific requirement.

Option D: Incorrect. 50 employees is unrelated to COBRA’s threshold.

This question aligns with the Prometric content outline under “State Insurance Statutes, Rules, and Regulations,” which covers federal laws like COBRA.

Thefree-look provision, required in Oklahoma for life and health insurance policies (Title 36 O.S. § 4007 for life, § 4405 for health), allows the policyowner to return the policy within a specified period (typically 10 days for life, 30 days for Medigap) from receipt for afull refundof premiums paid, no questions asked. This protects consumers by allowing time to review the policy.

Option A: Incorrect. The insurer cannot rescind during the free-look period; that right applies to contestability.

Option B: Incorrect. The refund is full, not partial, during the free-look period.

Option C: Correct. The policyowner can return the policy for a full refund within the specified period.

Option D: Incorrect. The insurer cannot unilaterally alter the policy during the free-look period.

This question aligns with the Prometric content outline under “Provisions, Options, Exclusions, Riders, Clauses, and Rights,” which covers free-look provisions.

Alife annuity(or straight life annuity) pays periodic payments to the annuitant until their death, at which point all payments cease, with no further benefits to beneficiaries. This contrasts with other annuity types, such as refund or joint-life annuities, which may continue payments or provide refunds.

Option A: Incorrect. “Terminal annuity” is not a standard insurance term.

Option B: Incorrect. “Finite annuity” is not a recognized annuity type.

Option C: Incorrect. A refund annuity provides a refund or continued payments to a beneficiary if the annuitant dies early.

Option D: Correct. A life annuity ceases payments upon the annuitant’s death.

This question falls under the Prometric content outline section on “Life Products,” which covers annuities and their features.