NEVADA LIFE AND HEALTH 2026 STUDY GUIDE
QUESTIONS AND ANSWERS SURE A+
✔✔paid-up additions - ✔✔the dividends are used to purchase a single premium policy
in addition to the face amount of the permanent policy; each of these small single
premium payments will increase the death benefit of the original policy by whatever
amount the dividend will buy
*automatic if dividend option is not chosen
✔✔paid-up option - ✔✔the insurer first accumulates the dividends at interest and then
uses the accumulated dividends, plus interest, and the policy cash value to pay the
policy up early
✔✔one-year term option - ✔✔the insurance company uses the dividend to purchase
additional insurance in the form of one-year term insurance that increases the overall
policy death benefit
✔✔life settlement - ✔✔refers to any financial transaction in which the owner of a life
insurance policy sells a life insurance policy to a third party for some form of
compensation; would require absolute assignment of all rights to the policy
✔✔conversion privilege - ✔✔if an employee terminates membership in the insured
group, the employee has the right to convert to an individual policy without proving
insurability at a standard rate, based on the individual's attained age
- has 31 days after terminating to exercise this option, still covered under original group
policy
✔✔How many years must a group member need to be on a terminated plan to be able
to convert to individual permanent insurance of the same coverage? - ✔✔5 years
✔✔HR-10 or Keogh - ✔✔make it possible for self-employed person to be covered under
an IRS qualified retirement plan
,✔✔Simplified Employee Pension Plans (SEP) - ✔✔type of qualified plan suited for the
small employer or for the self-employed; an employee establishes and maintains an
individual retirement account to which the employer contributes
✔✔SIMPLE Plans - ✔✔available to small businesses that employ no more than 100
employees who receive at least $5,000 in compensation from the employer during the
previous year
✔✔estate creation - ✔✔the purchase of life insurance creates an immediate estate
✔✔Modified Endowment Contract (MEC) - ✔✔any life insurance policy that fails a 7-pay
test is classified as a modified endowment contract, and loses the standard tax benefits
of a life insurance contract
✔✔fully insured - ✔✔refers to someone who has earned 40 quarters of coverage (the
equivalent of 10 years of work), and is therefore entitled to receive Social Security
retirement, Medicare, and survivor benefits
✔✔currently insured - ✔✔individual has earned 6 credits (or quarters of coverage)
during the 13-quarter period
✔✔notice to the applicant - ✔✔informs the applicant that a credit report will be ordered
concerning his or her past history and any other health insurance for which they have
previously applied
✔✔Medical Expense Insurance - ✔✔basic hospital, surgical and medical policies, and
the major medical policies; provide benefits for the cost of medical care that results from
accidents or sickness
- referred to as first-dollar coverage because they do not usually require the insured to
pay a deductible
✔✔basic hospital expense coverage - ✔✔covers hospital room and board, and
miscellaneous hospital expenses while the insured is confined in a hospital
✔✔basic medical expense coverage - ✔✔provides coverage for nonsurgical services a
physician provides
✔✔basic surgical expense coverage - ✔✔pay for the cost of surgeons' services,
whether the surgery is performed in or out of the hospital; commonly written in
conjunction with hospital expense policies
, ✔✔relative value approach - ✔✔each surgical procedure will be assigned a number of
points that are relative to the number of points assigned to the maximum benefit;
assigned points are multiplied by a conversion factor
✔✔Major Medical Expense Policies - ✔✔offer a broad range of coverage under one
policy; usually carry deductibles, coinsurance requirements, and large benefit
maximums
✔✔2 types of Major Medical Policies - ✔✔1. Supplemental Major Medical Policies
2. Comprehensive Major Medical Policies
✔✔supplementary major medical policies - ✔✔after the basic policy pays, the
supplemental major medical will provide coverage for expenses that were not covered
by the policy, and expenses that exceed the maximum; if the time limitation is used up
in the basic policy, the supplemental coverage will provide coverage thereafter
- insured must pay corridor deductible before major medical coverage will pay benefits
✔✔health maintenance organizations (HMOs) - ✔✔provides benefits in the form of
services rather than in the form of reimbursement for the services of the physician or
hospital
- limited choice of providers, copayments, preventative care
✔✔primary care physician (PCP) - ✔✔aka gatekeeper, chosen when an individual
becomes a member of the HMO; refers member to specialist
✔✔preferred provider organizations (PPOs) - ✔✔physicians are paid fees for their
services rather than a salary, but the member is encouraged to visit approved member
physicians that have previously agreed upon the fees to be charged
✔✔point of service (POS) plans - ✔✔combination of HMO and PPO plans; individuals
can visit an in-network provider at their discretion but if they decide to use an out-of-
network physician, copays/coinsurance/deductibles may be substantially higher
✔✔PCP referral (gatekeeper PPO) - ✔✔in a PPO, all network providers are considered
"preferred," and you can visit any of them, even specialist, without first seeing a primary
care physician
✔✔flexible spending accounts (FSAs) - ✔✔form of cafeteria plan benefit funded by
salary reduction and employer contributions; employees are allowed to deposit a certain
amount of their paycheck into an account before paying income taxes, then during the
year, the employee can be directly reimbursed from this account for eligible health care
and dependent care expenses
QUESTIONS AND ANSWERS SURE A+
✔✔paid-up additions - ✔✔the dividends are used to purchase a single premium policy
in addition to the face amount of the permanent policy; each of these small single
premium payments will increase the death benefit of the original policy by whatever
amount the dividend will buy
*automatic if dividend option is not chosen
✔✔paid-up option - ✔✔the insurer first accumulates the dividends at interest and then
uses the accumulated dividends, plus interest, and the policy cash value to pay the
policy up early
✔✔one-year term option - ✔✔the insurance company uses the dividend to purchase
additional insurance in the form of one-year term insurance that increases the overall
policy death benefit
✔✔life settlement - ✔✔refers to any financial transaction in which the owner of a life
insurance policy sells a life insurance policy to a third party for some form of
compensation; would require absolute assignment of all rights to the policy
✔✔conversion privilege - ✔✔if an employee terminates membership in the insured
group, the employee has the right to convert to an individual policy without proving
insurability at a standard rate, based on the individual's attained age
- has 31 days after terminating to exercise this option, still covered under original group
policy
✔✔How many years must a group member need to be on a terminated plan to be able
to convert to individual permanent insurance of the same coverage? - ✔✔5 years
✔✔HR-10 or Keogh - ✔✔make it possible for self-employed person to be covered under
an IRS qualified retirement plan
,✔✔Simplified Employee Pension Plans (SEP) - ✔✔type of qualified plan suited for the
small employer or for the self-employed; an employee establishes and maintains an
individual retirement account to which the employer contributes
✔✔SIMPLE Plans - ✔✔available to small businesses that employ no more than 100
employees who receive at least $5,000 in compensation from the employer during the
previous year
✔✔estate creation - ✔✔the purchase of life insurance creates an immediate estate
✔✔Modified Endowment Contract (MEC) - ✔✔any life insurance policy that fails a 7-pay
test is classified as a modified endowment contract, and loses the standard tax benefits
of a life insurance contract
✔✔fully insured - ✔✔refers to someone who has earned 40 quarters of coverage (the
equivalent of 10 years of work), and is therefore entitled to receive Social Security
retirement, Medicare, and survivor benefits
✔✔currently insured - ✔✔individual has earned 6 credits (or quarters of coverage)
during the 13-quarter period
✔✔notice to the applicant - ✔✔informs the applicant that a credit report will be ordered
concerning his or her past history and any other health insurance for which they have
previously applied
✔✔Medical Expense Insurance - ✔✔basic hospital, surgical and medical policies, and
the major medical policies; provide benefits for the cost of medical care that results from
accidents or sickness
- referred to as first-dollar coverage because they do not usually require the insured to
pay a deductible
✔✔basic hospital expense coverage - ✔✔covers hospital room and board, and
miscellaneous hospital expenses while the insured is confined in a hospital
✔✔basic medical expense coverage - ✔✔provides coverage for nonsurgical services a
physician provides
✔✔basic surgical expense coverage - ✔✔pay for the cost of surgeons' services,
whether the surgery is performed in or out of the hospital; commonly written in
conjunction with hospital expense policies
, ✔✔relative value approach - ✔✔each surgical procedure will be assigned a number of
points that are relative to the number of points assigned to the maximum benefit;
assigned points are multiplied by a conversion factor
✔✔Major Medical Expense Policies - ✔✔offer a broad range of coverage under one
policy; usually carry deductibles, coinsurance requirements, and large benefit
maximums
✔✔2 types of Major Medical Policies - ✔✔1. Supplemental Major Medical Policies
2. Comprehensive Major Medical Policies
✔✔supplementary major medical policies - ✔✔after the basic policy pays, the
supplemental major medical will provide coverage for expenses that were not covered
by the policy, and expenses that exceed the maximum; if the time limitation is used up
in the basic policy, the supplemental coverage will provide coverage thereafter
- insured must pay corridor deductible before major medical coverage will pay benefits
✔✔health maintenance organizations (HMOs) - ✔✔provides benefits in the form of
services rather than in the form of reimbursement for the services of the physician or
hospital
- limited choice of providers, copayments, preventative care
✔✔primary care physician (PCP) - ✔✔aka gatekeeper, chosen when an individual
becomes a member of the HMO; refers member to specialist
✔✔preferred provider organizations (PPOs) - ✔✔physicians are paid fees for their
services rather than a salary, but the member is encouraged to visit approved member
physicians that have previously agreed upon the fees to be charged
✔✔point of service (POS) plans - ✔✔combination of HMO and PPO plans; individuals
can visit an in-network provider at their discretion but if they decide to use an out-of-
network physician, copays/coinsurance/deductibles may be substantially higher
✔✔PCP referral (gatekeeper PPO) - ✔✔in a PPO, all network providers are considered
"preferred," and you can visit any of them, even specialist, without first seeing a primary
care physician
✔✔flexible spending accounts (FSAs) - ✔✔form of cafeteria plan benefit funded by
salary reduction and employer contributions; employees are allowed to deposit a certain
amount of their paycheck into an account before paying income taxes, then during the
year, the employee can be directly reimbursed from this account for eligible health care
and dependent care expenses
