A&H Chapter 8: California Laws and Ethics Pertinent to Insurance

Who does a life settlement broker represent? a.) Insurance company b.) Life agent c.) Private firm d.) Individual wanting to sell their life policy to a third party

d.) Individual wanting to sell their life policy to a third party

Which of the following is NOT protected under the California Life and Health Guarantee Association? a.) Policyowners b.) Insureds c.) Primary beneficiaries d.) Insurers

d.) Insurers

Which of the following is NOT a primary objective of insurance regulation? a.) Insurance Code enforcement b.) Licensing agents c.) Protect policyowners d.) Interpret policy provisions

d.) Interpret policy provisions

Which of the following is NOT an accurate description of Access for Infants and Mothers Program (AIM)? a.) Eligibility is based on income b.) Low-cost health care coverage for pregnant women c.) Only women who have private insurance plans with a maternity-only deductible or copayment greater than $500 are eligible d.) Only women who have private insurance plans with a maternity-only deductible or copayment greater than $1,500 are eligible

d.) Only women who have private insurance plans with a maternity-only deductible or copayment greater than $1,500 are eligible

According to the California Insurance Code, how is the word "may" interpreted? a.) Irrevocable b.) Mandatory c.) Voluntary d.) Permissive

d.) Permissive

The California Life and Health Insurance Guarantee Association covers all of these types of policies, EXCEPT: a.) Whole life b.) Immediate annuities c.) Disability d.) Self-funded plans

d.) Self-funded plans

What is an insurance solicitor authorized to do? a.) Settle life insurance claims b.) Manage an insurance agency c.) Solicit insurance d.) Help an agent or broker sell insurance

d.) Help an agent or broker sell insurance

According to the California Insurance Code, what is "insurance"? a.) A contract b.) A transfer c.) A hazard d.) An agreement

a.) A contract

What is the insurance term the State of California uses for an insurer that is eligible to transact business in this state? a.) Admitted b.) Eligible c.) Authorized d.) Valid

a.) Admitted

Which of the following is NOT considered to be an unfair claims settlement practice? a.) Advising a claimant to hire an attorney b.) Failing to provide a reasonable basis for the denial of a claim upon request c.) Failing to adopt and implement reasonable standards for prompt investigation and processing of insured's claims d.) Misrepresenting to insureds pertinent facts or policy provisions relating to coverage at issue

a.) Advising a claimant to hire an attorney

According to PPACA, what is a health benefits exchange? a.) An entity to which individuals and small businesses can have access to affordable health coverage b.) An entity where existing policies can be converted to newer policies c.) An entity that provides tax credits to employers for providing health insurance to their employees d.) An entity that offers affordable health coverage to only those with low incomes

a.) An entity to which individuals and small businesses can have access to affordable health coverage

According to the California Insurance Code, which of the following is NOT an example of an insurable event? a.) An insured suffers a financial loss in the state lottery b.) A guest is injured by a fall from the insured's driveway c.) An insured is sued for unintentional slander of another person d.) An insured is admitted to the hospital for delivery of a newborn

a.) An insured suffers a financial loss in the state lottery

In what order are people on the MRMIP waiting list allowed to enroll? a.) Based on the date an individual's application is received b.) Priority is given to California residents c.) Based on the individual's date of birth d.) Priority is given to those with the most serious health issues

a.) Based on the date an individual's application is received

Before an insurer is allowed to test an individual for HIV, what must be completed? a.) Consent form b.) Policy summary c.) Buyer's guide d.) Certification form

a.) Consent form

According to the California code governing claim settlement practices, which of the following is NOT considered to be an act of unfair discrimination? a.) Denial of a claim based on reckless behavior b.) Denial of a claim based on sexual orientation c.) Denial of a claim based on color d.) Denial of a claim based on blindness

a.) Denial of a claim based on reckless behavior

Which entity has jurisdiction over health care coverage providers? a.) Department of Insurance b.) HiCAP c.) MRMIP d.) California Life and Health Guarantee Association

a.) Department of Insurance

What prevents a life insurance policy from being rescinded by the insurer after being in force for two years? a.) Incontestability clause b.) Free-look provision c.) Grace period provision d.) Subrogation

a.) Incontestability clause

Which of the following does the California Insurance Code NOT require an insurance policy to specify? a.) Insurer's financial rating b.) Policy period c.) Premium d.) What or who is being insured

a.) Insurer's financial rating

Which word implies permissiveness according to the California Insurance Code? a.) May b.) Indemnity c.) Admitted d.) Shall

a.) May

Both the Federal and state governments jointly finance which health insurance entitlement program? a.) Medi-Cal b.) MRMIP c.) Medicare d.) Social Security

a.) Medi-Cal

People with low income can be provided with medical assistance through which program? a.) Medi-Cal b.) Social Security c.) HSA d.) Medicare

a.) Medi-Cal

Which of the following does the California Department of Insurance (CDI) have NO jurisdiction over? a.) Medicare b.) Health Maintenance Organizations c.) Preferred Provider Organizations d.) Life and health insurance companies

a.) Medicare

According to section 1729.2 of the California Insurance Code, which of these does NOT qualify as "background information"? a.) Misdemeanor charges filed, not resulting in a conviction b.) A breach of fiduciary duty c.) A filing of felony criminal charges in state or federal court d.) An administrative action regarding a professional or occupational license

a.) Misdemeanor charges filed, not resulting in a conviction

What is required after a life agent sells an insurance policy to an applicant without being appointed by the insurer? a.) Notice of appointment must be submitted to the Commissioner b.) Notice of appointment must be submitted to the insurer c.) Penalty is assessed to the insurer and life agent d.) Application is automatically turned away

a.) Notice of appointment must be submitted to the Commissioner

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? a.) Minimum of one activity of daily living b.) Minimum of two activities of daily living c.) Minimum of three activities of daily living d.) Minimum of four activities of daily living

b.) Minimum of two activities of daily living

What is the purpose of the Pre-Existing Condition Insurance Plan (PCIP)? a.) PCIP was created by the PPACA for people rejected by private health insurers due to pre-existing conditions b.) PCIP was created by the State of California for people rejected by private health insurers due to pre-existing conditions c.) PCIP was created by the PPACA for low income individuals hoping to obtain health insurance d.) PCIP was created by the State of California for low income individuals hoping to obtain health insurance

a.) PCIP was created by the PPACA for people rejected by private health insurers due to pre-existing conditions

When intentional concealment is involved, what course of action is the injured party entitled to? a.) Rescission of the contract b.) Punitive damages c.) Reduction in premium d.) Nothing

a.) Rescission of the contract

When an insurer has met the qualifications necessary to transact business in California, it is said to be: a.) admitted b.) valid c.) authorized d.) qualified

a.) admitted

MRMIP is a: a.) state program that offers health coverage to California residents who are not able to obtain coverage due to pre-existing conditions b.) state program that assists single parents obtain affordable health coverage for their children c.) Federal program that offers health coverage to California residents who are not able to obtain coverage due to pre-existing conditions d.) Federal program that gives tax credits to help offset the cost of health insurance

a.) state program that offers health coverage to California residents who are not able to obtain coverage due to pre-existing conditions

An insurer that has been found using higher rates based on race, religion, or ethnicity is said to be engaging in: a.) unfair discrimination b.) rebating c.) twisting d.) defamation

a.) unfair discrimination

According to the California Insurance Code, what is the maximum penalty per violation for anyone who unwillfully commits an unfair method of competition? a.) $1,000 b.) $5,000 c.) $7,000 d.) $10,000

b.) $5,000

How long must a policy be in force before an insurer is prohibited from denying claims based on misstatements made on the health policy application? a.) 1 year b.) 2 years c.) 3 years d.) 4 years

b.) 2 years

When selling a long term care insurance rider to an applicant, a life agent must take into consideration all of these factors EXCEPT: a.) Ability to pay b.) Attending physician's statement c.) Needs of the client d.) Goals of the client

b.) Attending physician's statement

Which of the following actions is NOT allowed by Health Insurance Counseling and Advocacy Program (HiCAP) counselors? a.) Medical record keeping assistance b.) Charge a fee c.) Assist in policy evaluation d.) Assist in understanding Medicare Supplements

b.) Charge a fee

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? a.) 50% of its stock value b.) Its paid-in capital c.) $10,000,000 d.) Amount determined by the Insurance Guarantee Association

b.) Its paid-in capital

Jim is applying to become an insurance agent and has a past misdemeanor conviction that was later expunged due to California Penal Code 1203.4. Which of the following statements is correct? a.) Jim is not required to disclose the conviction on his insurance license application b.) Jim must still disclose the conviction on his insurance license application c.) Only convictions that have been expunged within the last 3 years need to be reported on an insurance license application d.) Only expunged felonies are required to be reported on an insurance license application

b.) Jim must still disclose the conviction on his insurance license application

MRMIP stands for: a.) Minor Risk Medical Insurance Program b.) Major Risk Medical Insurance Program c.) Major Rehabilitation Medical Indemnity Plan d.) Minor Rehabilitation Medical Insurance Plan

b.) Major Risk Medical Insurance Program

According to the California Insurance Code, what term is used to describe a fact so important it could affect the policy premium? a.) Guarantee b.) Materiality c.) Absolute d.) Warranty

b.) Materiality

When handling premiums for an insured, an agent is acting in which capacity? a.) Representative b.) Proxy c.) Manager d.) Fiduciary

d.) Fiduciary

Which of the following is NOT a valid reason to replace an existing long-term care policy? a.) New policy has better benefits b.) New policy has higher premium with fewer benefits c.) New policy has lower premium d.) Insured's condition has materially improved

b.) New policy has higher premium with fewer benefits

What effect did the Pregnancy Discrimination Act have on the health industry? a.) Pregnancy qualifies a woman for paid leave from work b.) Pregnancy must be treated as any other medical condition c.) Pregnancy benefits can no longer be forced on employers d.) No effect on the health industry

b.) Pregnancy must be treated as any other medical condition

A person who asserts a right of recovery under an insurance policy is called: a.) tertiary b.) claimant c.) insured d.) agent

b.) claimant

In California, an insurer organized under the state laws of Oregon is called a(n): a.) unauthorized insurer b.) foreign insurer c.) alien insurer d.) domestic insurer

b.) foreign insurer

According to the PPACA, the medical enrollment tier that has 80% actuarial value is called: a.) platinum b.) gold c.) silver d.) bronze

b.) gold

Anyone employed in California to assist an insurance agent in transacting insurance is called an insurance: a.) assistant b.) solicitor c.) manager d.) consultant

b.) solicitor

Any changes in background information that occur after a producer application has been submitted or a license has been issued MUST be reported to the Insurance Commissioner within: a.) 10 days b.) 20 days c.) 30 days d.) 40 days

c.) 30 days

The free-look period for life insurance policyowners age 60 or older is: a.) 10 days b.) 15 days c.) 30 days d.) 60 days

c.) 30 days

How long must life agents keep their transaction records? a.) 3 years b.) 4 years c.) 5 years d.) 6 years

c.) 5 years

What is an "insurance broker" according to California Insurance Code? a.) A person who offers or attempts to negotiate life settlement contracts between an owner and providers b.) A person authorized to assist a broker or agent in transacting insurance c.) A person compensated for transacting insurance on behalf of another person d.) A person who requires a license and charges a fee to review an insured's existing life or disability policy

c.) A person compensated for transacting insurance on behalf of another person

How is an agent's first year commission calculated for a replacement long-term policy? a.) Based on the new policy's annual premium b.) Based on the original policy's annual premium c.) Based on the difference between the new and original policy annual premiums d.) The new policy's commission minus a penalty

c.) Based on the difference between the new and original policy annual premiums

The California Insurance Code allows an individual how many days to cancel a life policy for a full refund? a.) Up to 10 days b.) Between 15 and 20 days c.) Between 10 and 30 days d.) Between 30 and 45 days

c.) Between 10 and 30 days

Where must you specifically reside to qualify for MRMIP? a.) North America b.) United States c.) California d.) California and its reciprocal states

c.) California

An insurance policy issued in California may be called a comprehensive long-term care insurance policy if benefits are provided for: a.) Respite care only b.) Home care only c.) Institutional (nursing facilities) and home care d.) Loss of life

c.) Institutional (nursing facilities) and home care

According to the California Insurance Code, who is responsible for submitting a life agent's appointment? a.) Life agent b.) Commissioner c.) Insurer d.) State

c.) Insurer

The California Insurance Code has authorized standards for names used by life insurance agents. Which of the following, if any, are automatically acceptable for Lance Manyon, a holder of the CLU designation? a.) Lance Manyon Insurer b.) Lance Manyon Best Buy Insurance Company c.) Lance Manyon Insurance Services d.) Manyon Indemnity Company

c.) Lance Manyon Insurance Services

What type of license is required for an individual who charges a fee to review an insured's existing life insurance policy? a.) Adjuster b.) Life and disability counselor c.) Life and disability analyst d.) Life agent

c.) Life and disability analyst

Which of the following acts is NOT a Federal offense committed by an insurance agent? a.) Embezzlement b.) Insurance fraud c.) Misrepresentation on an insurance application d.) Falsify records

c.) Misrepresentation on an insurance application

Which type of jurisdiction requires an insurer to have its rates accepted by the Insurance Department prior to using them? a.) Prior acceptance b.) File and use c.) Prior approval d.) State approval

c.) Prior approval

Kimberly is an employee on leave under the Family and Medical Leave Act (FMLA). What will happen to her group health coverage? a.) She will have to purchase short-term health coverage through the State while on leave b.) Her coverage will be temporarily suspended while she is on leave c.) She continues to be enrolled during the leave d.) She will be forced to convert her group plan to an individual plan

c.) She continues to be enrolled during the leave

Which of the following does NOT have to be included on life insurance policy illustrations? a.) Age of the insured b.) Name of the agent c.) Statement that all values and benefits are guaranteed d.) Name of the insurer

c.) Statement that all values and benefits are guaranteed

In California, the elderly can receive information about health related issues from? a.) Medi-cal b.) Medicare c.) Major Risk Medical Insurance Program (MRMIP) d.) Health Insurance Counseling and Advocacy Program (HiCAP)

d.) Health Insurance Counseling and Advocacy Program (HiCAP)

Why is a life insurance policy's delivery date important? a.) The probationary period begins on the policy delivery date b.) The elimination period begins on the policy delivery date c.) The free-look period begins on the policy delivery date d.) The grace period begins on the policy delivery date

c.) The free-look period begins on the policy delivery date

All of these are reasons the Commissioner may disapprove a licensee's request to use a fictitious name EXCEPT: a.) The name is too similar to a name already filed and in use by another licensee b.) The use of the name may mislead the public in any respect c.) The name is the licensee's actual name d.) The name states, infers or implies that the licensee is an insurance company

c.) The name is the licensee's actual name

Under the California Insurance Code, a licensee's license number must be printed at what size on all price quotes, business cards, and printed material? a.) Minimum 8 point font b.) Small print added as a footnote at the bottom of the material c.) The same size print as the licensee's phone number, fax number or address d.) There are no requirements for the license number to be printed on any printed material

c.) The same size print as the licensee's phone number, fax number or address

What does the term "indemnity" mean as it pertains to insurance? a.) To over-insure b.) To award punitive damages c.) To make whole d.) To assume risk

c.) To make whole

Which of the following is NOT covered by the Family and Medical Leave Act (FMLA)? a.) Pregnancy b.) Adoption c.) Traveling overseas with a spouse d.) Attending to the serious health condition of a parent

c.) Traveling overseas with a spouse

According to PPACA, how long can an adult be covered as a dependent under their parents' insurance plan? a.) Up to age 18 b.) Up to age 21 c.) Up to age 26 d.) Up to age 30

c.) Up to age 26

An insurance company entitled to transact business in California is called a(n): a.) authorized carrier b.) permitted carrier c.) admitted carrier d.) valid carrier

c.) admitted carrier

An agent's attempt to stop the replacement of an existing life insurance policy is known as: a.) preservation b.) prevention c.) conservation d.) concealment

c.) conservation

An individual who transacts life, disability, or life and accident and health insurance on behalf of an insurer is called a(n): a.) adjuster b.) analyst c.) life agent d.) insurance solicitor

c.) life agent

A representation may be altered or withdrawn: a.) anytime with the applicant's initials b.) anytime with the insurer's approval c.) only before the insurance is in effect d. only after the policy has been issued

c.) only before the insurance is in effect

An agent has advertised that the insurer to which the agent is appointed with is a member of the Insurance Guarantee Association. This agent has committed a(n): a.) felony b.) misdemeanor c.) unfair method of competition d.) unauthorized trade practice

c.) unfair method of competition

The California Insurance Code defines "policy" as a(n): a.) accepted offer b.) promissory arrangement c.) written contract d.) written quotation

c.) written contract

ABC Insurance Company paid an insured $30,000 in lost wages, $35,000 for hospital costs, and $20,000 for physical therapy treatments. ABC later discovers this was a fraudulent claim. How much may the insured be fined? a.) $65,000 b.) $85,000 c.) $150,000 d.) $170,000

d.) $170,000

According to the PPACA, an adult can be covered by a parent's health care plan until what age? a.) Age 18 b.) Age 21 c.) Age 25 d.) Age 26

d.) Age 26

Failure to report background changes within 30 days as required under section 1729.2 of the California Insurance Code could subject a license or applicant to: a.) Fine b.) Suspension c.) Denial d.) All of these

d.) All of these

Life insurance surplus must be distributed to policyowners at what frequency? a.) Monthly b.) Quarterly c.) Semi-annually d.) Annually

d.) Annually

What does the term "illustration" mean when used in the phrase "life insurance policy illustration," according to the California Insurance Code? a.) Publication designed to help an applicant reach an informed decision about which coverage is appropriate b.) A copy of the sales materials used in an insurance transaction c.) A copy of the terms given for the free-look period d.) Presentation of policy features that includes non-guaranteed elements

d.) Presentation of policy features that includes non-guaranteed elements

Which of the following is NOT considered to be an act of insurance solicitation? a.) An agency sending out direct mail for a promotion b.) An agent giving a rate quotation c.) Airing a television commercial recommending an insurance product d.) Publishing a magazine where one of the advertisers is an insurer

d.) Publishing a magazine where one of the advertisers is an insurer

Pete is a life agent who has misappropriated fiduciary funds to his own use. What is Pete guilty of? a.) Fiduciary misappropriation b.) Rebating c.) Mishandling d.) Theft

d.) Theft

Insurance agents and brokers must make their insurance records available to the Commissioner: a.) only during the first month of the year b.) only during the last month of the year c.) only at the agent/broker's convenience d.) at all times

d.) at all times

The cost of services charged by the Health Insurance Counseling Advocacy Program (HiCap) is: a.) $25 per appointment b.) $50 per appointment c.) $75 per appointment d.) no cost

d.) no cost

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): a.) illegal transaction b.) immediate annuity c.) deferred annuity d.) unnecessary replacement

d.) unnecessary replacement