California Life, Accident, and health insurance Final Exam 150 Questions with Answers
According to the California Insurance Code, what term is used
... [Show More] to describe a fact so important it could affect the policy premium? - CORRECT ANSWER Materiality
Which of the following is NOT a life insurance settlement option? - CORRECT ANSWER Extended Term Option
True answer- Life income option, Fixed amount option, Lump Sum option
Major Medical expense plans typically use a cost containment measure for emergency care. This is refereed to as a - CORRECT ANSWER Deductible
Which type of risk is gambling? - CORRECT ANSWER Speculative risk
Who is NOT eligible for Social Security survivor benefits? - CORRECT ANSWER A deceased worker's dependent parents of any age.
correct answer- only dependent parents age 62 or older can receive survivorship benefits if they were dependent upon the deceased worker for at least half of their support.
What type of policy changes can be made to a guaranteed renewable health insurance policy? - CORRECT ANSWER The premium rates of the policy owner
After the annual deductible is met, a Medicare Part B will pay ___%_ of the remaining covered expenses - CORRECT ANSWER 20%
Insurer will paid %80
Who is eligible for retirement benefits under Social Security? - CORRECT ANSWER Fully insured workers
An insurer enters a contract with a third party to insure itself against losses from insurance policies it issues. What is this agreement called? - CORRECT ANSWER Reinsurance
Jerry is an insured who understated his age on his life insurance application, paying $12 per $1,000 of insurance instead of $15 per $1,000. If he dies, how will the adjusted death benefit be calculated? - CORRECT ANSWER 12/15th of the policies face amount
Cindy buys a 10-year certain annuity with an installment refund. After receiving monthly payments for 5 years, Cindy dies. How many remaining payments will the insurer make to her beneficiary? - CORRECT ANSWER 60 payments
5x12=60
The California Insurance Code allows an individual how many days to cancel a life policy for a full-refund? - CORRECT ANSWER Between 10 and 30 days
The California Insurance Code requires that an insurer must have enough assets to cover its liabilities and for reinsurance of all outstanding risks. To remain solvent, it must also possess additional assets equal to what amount. - CORRECT ANSWER Its paid-in capital
How is a Medicare claim submitted? - CORRECT ANSWER Expenses are submitted to Medicare by the health provider
What time period allows an insured's life insurance policy to remain in force even if the premium was not paid on the due date? - CORRECT ANSWER Grace Period
Allen has a disability income policy with a $2,500 monthly benefit and a 30-day elimination period. He is unable to work 90 days following an automobile accident. What will the policy pay? - CORRECT ANSWER $5,000
90 days- 30 day elimination period is 60 days (2 months). 2 months x $2,500/month benefit = $5,000 total benefit paid.
What prevents a life insurance policy from being rescinded by the insurer after being in force for two - CORRECT ANSWER Incontestability clause
According to PPACA, how long can an adult be covered as a dependent under their parents' insurance plan? - CORRECT ANSWER Up to age 26
In a modified endowment contract, the penalty tax imposed on premature withdrawals is - CORRECT ANSWER 10%
Individuals become eligible for Medicare Part A benefits at what age? - CORRECT ANSWER 65
Bruce is involved in an accident and becomes totally and permanently disabled. His insurance policy continues in force without payment of further premiums. Which policy provision is responsible for this? - CORRECT ANSWER Waiver of Premium Provision
What does the term "illustration" mean when used in the phrase "life insurance policy illustration", according to the California Insurance Code? - CORRECT ANSWER Presentation of policy features that includes non-guaranteed elements.
The Medical Information Bureau consists of - CORRECT ANSWER Life and Health Insurance companies
Under the Payment of Claims provision, when are benefits typically payable after proof of loss is received? - CORRECT ANSWER Immediately
A savings vehicle designed to first accumulate funds and then systematically liquidates the funds is called a - CORRECT ANSWER Deferred Annuity
According to the California Insurance code, how is the word "may" interpreted? - CORRECT ANSWER Permissive
John owns an insurance policy that gives him the right to share in the insurer's surplus. What kind of policy is this? - CORRECT ANSWER Participating
Which of the following is NOT a provision in a disability income policy? - CORRECT ANSWER Deductible and Coinsurance provision
When intentional concealment is involved, what course of action is the injured party entitled to? - CORRECT ANSWER Rescission of the contract.
Moral Hazard is described as the - CORRECT ANSWER Increased chance of a loss because of an insured's dishonest tendencies.
What does a Hospital Confinement Indemnity policy pay for? - CORRECT ANSWER Pays a specified daily amount while the insured is confined to a hospital
A beneficiary receives only the death benefit earnings in which settlement option? - CORRECT ANSWER Interest Option
Which of the following is NOT included under long-term care insurance? - CORRECT ANSWER Hospital acute care (pneumonia or influenza where the body can fully recover with proper medical attention.
Scott has purchased a new house. He is now shopping for a life insurance policy that provides a death benefit that matches the project outstanding debt of his mortgage. Which life policy would best suit his needs? - CORRECT ANSWER Mortgage Redemption
An agent's attempt to stop the replacement of an existing life insurance policy is known as - CORRECT ANSWER Conservation
Employer-provided group term life insurance is exempt from income taxation up to - CORRECT ANSWER $50,000
Which of the following types of life insurance is normally associated with a mortgage loan? - CORRECT ANSWER Decreasing Term
In a renewable term life insurance policy, the contract will usually - CORRECT ANSWER require a higher premium payable at each renewal
Which of the following does the California Insurance Code NOT require insurance policy to specify? - CORRECT ANSWER Insurers' financial rating
true answer- Premium, What or who is being insured, Policy Period
Which entity has jurisdiction over health care coverage providers? - CORRECT ANSWER Department of Insurance
Which Social Security status does a worker with 6 quarters of coverage during the last 13-quarter period have? - CORRECT ANSWER Currently Insured
Which of the following is considered to be any situation that has the potential for loss? - CORRECT ANSWER Loss exposure
Which of the following is Not a primary objective of insurance regulation? - CORRECT ANSWER Interpret policy provisions
True answer- Protect policy owners, licensing agent, Insurance Code enforcement
How is an agent's first year commission calculated for a replacement long-term policy? - CORRECT ANSWER based on the difference between the new and original policy annual premiums.
Health Insurance policies typically contain a provision stating that insureds and their insurer will share losses in an agreed proportion. What provision does this refer to? - CORRECT ANSWER Coinsurance
Coinsurance is a sharing of expenses by the insured and the insurer.
According to the California Insurance Code, what is the maximum penalty per violation for anyone who unwillfully commits an unfair method of competition? - CORRECT ANSWER $5,000
How many "activities of daily living" must an insured be UNABLE to perform in order to meet the chronically ill requirement of a Long-Term Care policy? - CORRECT ANSWER minimum of two activities of daily living
What does the guaranteed insurability option allow an insured to do? - CORRECT ANSWER Purchase additional coverage with no evidence of insurability required
What is required after a life agent sells an insurance policy to an applicant without being appointed by the insurer? - CORRECT ANSWER Notice of appointment must be submitted to the Commissioner
Key person insurance is intended to - CORRECT ANSWER Cover business losses due to the death of a key employee
The objective of underwriting is to - CORRECT ANSWER avoid selecting a disproportionate number of bad risks
Which provision will pay a portion of the death benefit prior to the insured's death due to a serious illness - CORRECT ANSWER Accelerated death benefit
Before an insurer is allowed to test an individual for HIV, what must be completed? - CORRECT ANSWER Consent form
Which of the following would NOT be accomplished with the purchase of an insurance policy? - CORRECT ANSWER Risk is eliminated
true answer- Greater Peace of mind, payments made for covered losses, uncertainty is reduced.
Retirement plans cannot favor highly compensated employs. The government regulation that prevents this from happening is called - CORRECT ANSWER Nondiscrimination
What does the term coinsurance refer to? - CORRECT ANSWER After the deductible is satisfied, the percentage paid by the insured for the remaining covered expenses
A life insurance policy's limit of liability would be - CORRECT ANSWER the policy's face amount
Anyone employed in California to assist an insurance agent in transacting insurance is called an insurance - CORRECT ANSWER Solicitor
A situation in which there is ONLY a chance of loss or no loss is a - CORRECT ANSWER Pure risk
Which of the following is NOT typically covered under vision care insurance - CORRECT ANSWER Eye Surgery
A terminated employee that has exercised the conversion privilege is able to covert - CORRECT ANSWER term insurance into permanent insurance
Paul has an existing annuity and is sold a new one, in which the new policy holds no greater financial benefit to him than the existing contract. This is considered a(n) - CORRECT ANSWER unnecessary replacement
The free-look period for life insurance policyowners age 60 or older is - CORRECT ANSWER 30 days
Which of the following pieces of information is NOT gathered during the personal financial planning process? - CORRECT ANSWER an individual's civic organization memberships
True-
An individual assets, an individual's expenses, an individual's income
Which of the following does specified disease insurance NOT cover? - CORRECT ANSWER Costs covered by medical expense insurance
True answer- incidental costs, out-of-pocket expenses, medical expenses that are noncovered
An employee for XYZ Corp is injured on the job. Where does coverage for the employee's injuries come from? - CORRECT ANSWER Workers' Compensation
Which of the following is NOT considered to be insurer expenses? - CORRECT ANSWER Policy Premium
True Answer- Utilites, Policy Premium, Employees' salaries
An individual who transacts life, disability, or life and accident insurance on behalf of an insurer is called an - CORRECT ANSWER Life Agent
How is the cost of employer-provided group life insurance with coverage amounts above $50,000 treated for tax purposes? - CORRECT ANSWER Taxable income to the employee
All of these are examples of cost sharing in the health insurance policy except - CORRECT ANSWER Coordination
True answer-
Coinsurance, Copayments, deductibles
Which of these is NOT a relevant factor in the health insurance principle of morbidity? - CORRECT ANSWER Intelligence
correct answer- health, occupation, age.
An insurer can be protected from adverse selection with which policy provision? - CORRECT ANSWER Suicide Clause
Restoring an insured to the same condition as before a loss is known as - CORRECT ANSWER Indemnity
Who would be most likely to submit a Medicare Part A claim? - CORRECT ANSWER Hospital
Mike and Ike are 30 year old identical twins. Both are excellent health. Each brother purchases a life policy that has a $750 annual premium. Mike buys a 10-year renewable term policy. Ike purchases a whole life policy. All of the following statements are true EXCEPT - CORRECT ANSWER Mike has the option of using his cash value to purchase a reduced amount of paid-up whole life insurance
Individual health insurance coverage typically excludes injuries at an employee's workplace because - CORRECT ANSWER its covered by the state Workers' Compensation program
Who is financially liable for the payment of covered claims in a fully insured group health plan? - CORRECT ANSWER Insurer
A worker is entitled to Social Security disability benefits if all of the following are true, EXEPT for: - CORRECT ANSWER Worker cannot perform his or her current job, but is actively seeking other employment
correct answer- disability is expected to continue for 12 months or result in death, worker is insured for disability benefits, worker is under 65
Which statement is correct when described a contract of adhesion? - CORRECT ANSWER Contract may be accepted or rejected by the insured
Which of the following is a type of insurance where an insurer transfers loss exposures from policies written for its insureds? - CORRECT ANSWER Reinsurance
Which word implies permissiveness according to the California Insurance Code? - CORRECT ANSWER May
When selling a long term care insurance rider to an applicant, a life agent must take into consideration all of these factors EXCEPT - CORRECT ANSWER Attending physician's statement
correct answer- ability to pay, needs of the client, goals of the client
Which of the following risk classifications charges the lowest premium? - CORRECT ANSWER Preferred
Which course of action is the insurer entitled to when deliberate concealment is committed by the insured? - CORRECT ANSWER Rescinding the contract
Under a long-term care insurance policy, adult day care coverage will provide for - CORRECT ANSWER Part time care at a facility for elderly individuals who live at home.
According to section 1729.2 of the California Insurance Code, which of these does NOT qualify as "background information" - CORRECT ANSWER Misdemeanor charges filed, not resulting in a conviction
A spendthrift clause is a life insurance policy - CORRECT ANSWER Restricts the ability of the beneficiary to assign benefits.
Coverage is limited for vision and dental insurance in all of the following ways EXCEPT - CORRECT ANSWER Specific dollar amount for examinations
correct answer- Number of X-Rays performed per year, number of teeth cleanings per year, and dollar amount for eyeglass frames.
In California, an insurer organized under the state laws of Oregon is called a - CORRECT ANSWER Foreign Insurer
An annuitant would like to determine the amount of an annuity distribution that is exempt from taxation. What is used to calculate this? - CORRECT ANSWER Exclusion ratio
Which of the following is NOT a component of determining policy premiums? - CORRECT ANSWER Dividends
Which of the following is NOT a factor in determining the morbidity of a group of individuals? - CORRECT ANSWER Race
correct answer- occupation, age, health
Non-deductible contributions are typically associated with a - CORRECT ANSWER Roth IRA
Why is a life insurance policy's delivery date important? - CORRECT ANSWER the free-look period begins on the policy delivery date.
When an accidental death benefit is added to a whole life policy, how does this affect the policy's cash value? - CORRECT ANSWER Policy's cash value is not affected
When handling premiums for an insured, an agent is acting in what capacity? - CORRECT ANSWER Fiduciary
The elimination period in a disability income policy serves the same purpose as - CORRECT ANSWER A deductible
When an insurance company requests an attending physician's report, the request must be accompanied by a - CORRECT ANSWER copy of the signed authorization
What is an "insurance broker" according to California Insurance Code? - CORRECT ANSWER A person compensated for transacting insurance on behalf of another person with an insurer
What distinguishes a deferred annuity from an immediate annuity? - CORRECT ANSWER The time at which benefit payments start
John and Mary have a handicapped child that is financially dependent upon them. The death of one of the parents would not be financially disastrous, however the death of both likely would be. Which policy would be best suited for them? - CORRECT ANSWER Second-to-die policy
This covers two lives, but the benefit is paid upon the date of the last surviving insured.
The insurer has the option of terminating a health insurance policy on a date stated in the contract. What type of policy is this? - CORRECT ANSWER Optionally renewable
A health insurance policy paid on a quarterly basis has a grace period - CORRECT ANSWER 31 days
Who are the parties to the master contract in a group life insurance policy? - CORRECT ANSWER Insurer and employer
Elements of Insurable Risk - CORRECT ANSWER 1. Due to chance
2. Definite and measurable
3. Predictable
4. Not catastrophic
5. Loss exposure to be insured must be large
6. Insurance must not be mandatory
Which of the following is NOT true regarding a family policy that covers children? - CORRECT ANSWER Conversion of children coverage to permanent insurance requires evidence of insurability
Not true because is does NOT require evidence of insurability.
What of the following is NOT considered a definition of risk? - CORRECT ANSWER The cause of loss
correct answers-
uncertainty, the potential for loss, exposure to danger.
something that Causes loss such as an earthquake or a tornado, is called a peril
Which of the following is NOT a true description of non-medical life insurance? - CORRECT ANSWER Applicants are not required to answer medical questions on the application
correct answers-
- Applicants can be required to answer medical questions on the application
- demand on the medical profession reduced
- quicker processing of life insurance application
- less cost involved with underwriting the application
During the underwriting process for a group health policy, it was discovered that 15 out of 50 members of the group have major health issues. How would the insurer handle this? - CORRECT ANSWER Accept or reject the whole group
A report which is based on creditworthiness and personal characteristics that influences an insurance applicant's eligibility for life and health insurance is called a - CORRECT ANSWER consumer report
Bob and Tom are partners in a business. If one of them were to die, which of the following would guarantee a market for each of their share of the business? - CORRECT ANSWER Buy-Sell agreement
An insurer owned by its policyholder is called a - CORRECT ANSWER mutual insurer
Christine has a health insurance policy that has been in force beyond the incontestable period. The insurer has discovered that a fraudulent statement was made on the application. What would the insurer have to pay on a claim, assuming this wasn't a guaranteed renewable policy? - CORRECT ANSWER Nothing
Nothing will be paid because fraud was committed during the application process
Which of the following is not covered by the Family and Medical Leave Act (FMLA) - CORRECT ANSWER Traveling overseas with a spouse
it does cover
Pregnancy, Attending to the serious health condition of a parent, adoption
Medicare Part B has an initial enrolled period. How many months after an individual 65th birthday month does this enrollment period end? - CORRECT ANSWER 3 months
Which of the following is Not an important reason for a life insurance application? - CORRECT ANSWER The beneficiary must sign the application before the insurer will issue the policy
correct answers-
The beneficiary must sign the application before the insurer will issue the policy, statements made in the application are considered to be representations, if the proposed insured is someone other than the applicant, both the proposed insured and the applicant must sign the applicant.
Coverage for care received from a network provider pays more than care received from a non-network provider in what type of health plan? - CORRECT ANSWER PPO
Which of the following is NOT characteristic of a preferred provider organization (PPO)? - CORRECT ANSWER Primary Physicians serve as gatekeepers
This is NOT true
At what age is a surviving spouse without dependents eligible for Social Security survivor benefits? - CORRECT ANSWER 60
What type of coverage pays a benefit for part-time nursing care that can be provided in a patient's home? - CORRECT ANSWER Home health care
An annuity which is backed by a life insurer's separate account is called a(n) - CORRECT ANSWER Variable Annuity
Considered an activity of daily living under a long term care policy? - CORRECT ANSWER Bathing
The probability of death, listed by year, are demonstrated in - CORRECT ANSWER Mortality Tables
Which of the following could lower the premium of a proposed disability income policy? - CORRECT ANSWER Increase in the elimination period
According to the California code governing claim settlement practices, which of the following is NOT considered to be an act of unfair discrimination? - CORRECT ANSWER Denial of a claim based on reckless behavior
People with low income can be provided with medical assistance through which program? - CORRECT ANSWER Medi-Cal (Medicaid Health)
Minimum participation standards exist for group health insurance plans in order to - CORRECT ANSWER Prevent adverse selection
When an applicant applies for insurance, the process by which the insurer determines whether to issue a policy is called - CORRECT ANSWER Underwriting
Medicare Part A covers what type of care? - CORRECT ANSWER Skilled nursing facility care
Which of the following does NOT have to be included on life insurance policy illustrations? - CORRECT ANSWER Statement that all values and benefits are guaranteed
what does- age of the insured, name of the agent, name of the insurer
How are Roth IRA's treated for tax purposes? - CORRECT ANSWER Non-deductible contributions and tax-free distributions
A unilateral contract is one in which - CORRECT ANSWER only one party (the insurer) makes any kind of legally enforceable promise
According to the California Insurance Code, who is responsible for submitting a life agent's appointment? - CORRECT ANSWER The insurer
Which of the following is NOT a requirement for a terminated employee that has exercised the conversation privilege? - CORRECT ANSWER Provide proof of insurability
- A terminating employee must convert within 31 days, premium must be paid, convert up to the previous amount of group coverage.
Which of the following is not a requirement of a contract? - CORRECT ANSWER Equal consideration is required between the involved parties
- it is not required
Which of the following is NOT a common life insurance policy rider? - CORRECT ANSWER Extended term
common ones- automatically premium loan, accidental death, waiver of premium
How long is a person expected to be disabled in order to receive Social Security disability - CORRECT ANSWER 12 months
Kim is insured under a disability income insurance policy with an "own-occupation" clause. She recently injured in an automobile accident and can no longer perform the tasks of her job. Kim is now considered to - CORRECT ANSWER Totally disabled
Which principle is accurately described with the statement "insureds are entitled to recover an amount NOT greater than the amount of their loss"? - CORRECT ANSWER Indemnity
How is a life insurance policy dividend legally defined? - CORRECT ANSWER A return of excess premium and not taxable
Which statement regarding Medicare is true? - CORRECT ANSWER Benefits for diagnostic tests and X-rays performed on an outpatient basis are provided by Part B.
Which of the following actions is NOT allowed by Health Insurance Counseling and Advocacy Program (HiCAP) counseling? - CORRECT ANSWER Charge a fee
- HICAP (the health insurance counseling & advocacy program) provides free and objective information and counseling about Medicare.
Which of the following is NOT a required uniform provision in individual health policies? - CORRECT ANSWER Change of occupation
The cost of services charged by the Health Insurance Counseling Advocacy Program (HiCap) is - CORRECT ANSWER no cost
In what order are people on the MRMIP waiting list allowed to enroll? - CORRECT ANSWER Based on the date an individual's application is received
What is considered the most common type of specified disease insurance policy? - CORRECT ANSWER Cancer
Which of the following is NOT a characteristics of reinsurance? - CORRECT ANSWER Increases the unearned premium reserve
Correct reinsurance features- Protects against a very large claim, enables insurer to meet certain objectives, a specialized branch of the insurance industry
Pam is the primary beneficiary of a life insurance policy and wants to let the death benefit accumulate and receive only the monthly investment proceeds. Which settlement option should she choose? - CORRECT ANSWER Interest Optionn
Which of the following describes the increase in the probability of a loss due to an insured's dishonest tendencies? - CORRECT ANSWER Moral Hazard
What area of group health insurance is regulated under the Employee Retirement Security Act of 1974 (ERISA)? - CORRECT ANSWER Disclosure and reporting [Show Less]