Pass the Insurance Licensing Nevada Insurance InsNV_Health02 Questions and answers with ExamsMirror

The correct answer is D, J only. A primary beneficiary has the first right to receive policy proceeds. J is named as K’s primary beneficiary and survives the accident. Therefore, the AD & D benefit is paid directly to J. The contingent beneficiary, L, would receive the proceeds only if the primary beneficiary had died before K or could not receive the benefit under the policy terms. Because J remains alive, L’s death does not change the payment outcome. The proceeds do not pass to K’s estate because a living named primary beneficiary exists. They also do not pass to L’s estate, because L never became entitled to the benefit; the contingency never occurred. Beneficiary designations control over general assumptions about family relationships or estates. The insured should keep beneficiary designations current after changes in family status, death, divorce, or estate-planning decisions. A simultaneous-death provision can alter outcomes if the beneficiary and insured die in the same event and survivorship cannot be determined, but the facts here identify K and L as deceased while J survives. Study Guide References/Topics: Group Health Insurance; Accidental Death and Dismemberment; Beneficiary Designations.

===============

A consumer’s pre-existing condition does not prevent enrollment in a Qualified Health Plan offered through the Exchange. Marketplace plans must cover treatment for pre-existing medical conditions and cannot reject an applicant, charge a higher premium, or refuse to pay Essential Health Benefits solely because of the applicant’s health history.

The producer should accurately explain that coverage is subject to the plan’s normal terms, provider network, formulary, deductibles, copayments, coinsurance, and out-of-pocket maximum. The prohibition against pre-existing-condition discrimination does not mean the consumer has no out-of-pocket costs. The insured may still have ordinary cost sharing for covered medical services, just as other enrollees do.

Option A is incorrect because Qualified Health Plans do cover pre-existing conditions. Option B is incorrect because a QHP may not impose a surcharge based on health status or medical history. Option C is incorrect because the Affordable Care Act’s protection against discrimination does not eliminate all deductibles, copayments, coinsurance, or other permitted cost sharing.

For exam purposes, remember the core rule: health status cannot be used to deny enrollment in a QHP or set a higher premium based solely on a pre-existing condition.

Study Guide references/topics: Affordable Care Act; Qualified Health Plans; guaranteed issue; pre-existing conditions; HealthCare.gov pre-existing-condition coverage .

The incontestability provision limits the insurer’s ability to contest the validity of a life insurance policy after it has been in force during the insured’s lifetime for the stated period, which Nevada law permits to be no longer than two years from issue. Once that period has passed, an insurer ordinarily cannot avoid the policy because of misstatements in the application, except as provided by the policy and law. The rule promotes certainty for beneficiaries and prevents an insurer from indefinitely reopening underwriting issues after accepting premiums for years.

Nonpayment of premiums remains an exception. Incontestability does not require an insurer to pay a claim on a policy that lapsed because required premiums were not paid. A policy can also contain provisions concerning total and permanent disability benefits or additional accidental-death benefits that are treated separately under the applicable statutory rule. In addition, an incontestability clause concerns contesting the policy’s validity; it does not automatically override every policy exclusion or restriction on coverage.

The producer should distinguish contestability from the grace period, reinstatement, and exclusions. Each provision serves a different function. For test purposes, the durable rule is that incontestability does not eliminate the insurer’s defense of nonpayment of premium.

References/topics from the Study Guide: Incontestability Clause; Premium Payment; Policy Lapse; NRS 688A.080.

===============

A domestic insurer in Nevada is an insurer formed under the laws of Nevada, unless it has converted to foreign-insurer status. Therefore, “the state of Nevada only” is the correct answer.

The terms domestic, foreign, and alien describe the jurisdiction in which an insurer is formed or domiciled; they do not describe the insurer’s size, financial condition, or whether it is authorized to do business in Nevada. A foreign insurer is formed under the laws of another jurisdiction, generally another U.S. state, but may be authorized to transact insurance in Nevada. An alien insurer is formed under the laws of a country other than the United States.

An insurer may be domestic in one state and foreign in every other state. For example, an insurer incorporated under Nevada law is domestic in Nevada but foreign in California, Arizona, or any other state. Conversely, a company formed in another state is foreign in Nevada even if it holds a Nevada certificate of authority.

Study Guide references/topics: domestic insurers; foreign insurers; alien insurers; insurer domicile; NRS 679A.090 .

===============

Annual premium payment generally produces the lowest total cost over the policy year because the insurer receives the full annual premium at the beginning of the coverage period. Monthly, quarterly, and semiannual payment modes are convenient for budgeting, but they commonly include an additional charge or produce a higher total annual premium. The difference reflects the insurer’s additional administrative expense and the fact that the insurer receives portions of the premium later.

Premium mode does not change the policy’s face amount, underwriting classification, or contractual benefits. It changes only the schedule and total cost of paying the premium. A producer should present all available modes clearly and explain the actual amount due under each option. A consumer with predictable annual cash flow may prefer annual mode to reduce total cost, while a consumer who needs more frequent payments may choose a higher-cost mode to preserve affordability and avoid lapse.

This issue is distinct from the grace period. The grace period protects the policyowner after a premium due date by allowing a limited time to make payment before coverage lapses. Premium mode establishes how frequently the regular premium is due; it does not eliminate the policyowner’s obligation to pay.

References/topics from the Study Guide: Premium Payment; Premium Modes; Grace Period; Policy Lapse; Life Insurance Contract Provisions.

===============

When an insurer terminates the appointment, employment, or other relationship of a producer, it must notify the Nevada Insurance Commissioner. The notice must be made in the form prescribed by the Commissioner within 30 days after the effective date of termination.

An appointment is the insurer’s authorization for a licensed producer to act as its agent. Ending an appointment does not automatically cancel the producer’s underlying license. A producer may remain properly licensed and may be appointed by another insurer or operate as a broker when permitted by law. Therefore, option B is incorrect.

The insurer must provide the required notice to the Commissioner; it is not required to obtain a hearing before ending the appointment. The producer is sent a copy of the insurer’s notification after the Commissioner is notified, but the statute does not require the insurer to provide 30 days’ advance notice to the producer. The producer has an opportunity to file written comments concerning the report with the Commissioner.

The reporting rule supports regulatory oversight and helps the Division identify whether a termination involved conduct that may warrant disciplinary action.

Study Guide references/topics: producer appointments; appointment termination; insurer reporting duties; NRS 683A.331 .

===============

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.

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

===============

Coordination of benefits, or COB, establishes the order in which multiple health plans pay when an insured is covered by more than one plan. For a dependent child covered by both married parents’ group health plans, the common “birthday rule” generally makes primary the plan of the parent whose birthday occurs earlier in the calendar year. The rule compares the month and day of birth, not the year. If both birthdays are the same, the plan that has covered the parent longer is generally primary.

The primary plan pays first according to its own policy terms. The secondary plan then considers the remaining eligible expense and may pay an additional amount, subject to its coordination-of-benefits provision. COB is intended to prevent duplicate recovery exceeding the actual covered expense while still allowing the insured to receive the benefit of multiple coverages.

Special rules can apply in divorce, custody, court-order, active-versus-retired employee, Medicare, and other situations. The producer should never assume that one generic rule governs every family arrangement. Plan documents and applicable law control. For examination purposes, the birthday rule is the standard answer when the parents are married and no special circumstance is stated.

References/topics from the Study Guide: Coordination of Benefits; Primary and Secondary Coverage; Birthday Rule; Group Health Insurance; Dependent Coverage.

===============

Nevada requires an individual long-term care insurer to obtain a written designation of at least one additional person who will receive notice if coverage is about to lapse or terminate for nonpayment of premium. This protection is intended to reduce unintended lapses, particularly when an insured experiences cognitive decline, illness, disability, or another circumstance that interferes with managing premiums.

The applicant may instead submit a written waiver, dated and signed, stating that the applicant chooses not to designate another person. The waiver is not required to be notarized. Because option B incorrectly adds a notarization requirement, option A is the best answer as written.

The designated person does not become responsible for paying premiums and does not assume liability for the applicant’s care. The person’s role is simply to receive notice, allowing the person an opportunity to alert the insured or help address an overlooked payment. Payroll or pension deduction is not a required payment method.

Before an individual long-term care policy can lapse for nonpayment, notice requirements apply to both the policyholder and the designated person. This is a key long-term-care consumer-protection provision.

Study Guide references/topics: long-term care insurance; lapse protection; nonpayment of premium; designation of another person; NAC 687B.0681 .

===============