Guaranteed Exam #2
If an insured pays a health insurance premium each month, how long would the grace period be under the policy?
10 days
Within how many days after the application was submitted must an insurer file a notice of agent appointment with the Commissioner if the insurer issues a policy written by the agent who is not specifically appointed by that insurer?
14 days
A Medicare Supplement policy must have a free look period of at least
30 days
What is the elimination period for Social Security disability benefits?
5 months
What are the continuing education requirements for agents who market long term care insurance policies?
8 hours of long term care specific education included in the regular CE requirements
Which of the following statements is INCORRECT concerning Modified Endowment Contracts (MECs)
An MEC must always pass the 7 pay test
Under HIPAA, which of the following is INCORRECT regarding eligibility requirements for conversion to an individual policy?
An individual who was previously covered by a group health insurance for 6 months is eligible
In which of the following situations is it legal to limit coverage based on marital status?
It is never legal to limit coverage based on marital status
Which of the following statements pertaining to Medicare Part A is correct?
Medicare Part A is automatically provided when an individual qualifies for Social Security benefits at age 65
Which of the following statements is INCORRECT?
Medicare and Medigap policies provide coverage for long term custodial or nursing home care
All of the following are true regarding key person disability income insurance EXCEPT
Premiums are tax deductible as business expense
According to the life insurance replacement regulations, which of the following would be an example of policy replacement?
a policy is reissued with a reduction in cash value
A deductible is
a specified dollar amount that the insured must pay first before the insurance company will pay the policy benefits
Life settlement contracts are put into effect by which of the following?
an absolute assignment
An agent solicited a policy for a client who originally qualified for standard premiums. During the underwriting process, the applicant was rated as a substandard risk and assigned a higher premium. Upon policy delivery, the agent failed to mention that the premiums would be higher, and the client filed a lawsuit against the insure. This is an example of
an omission and will be covered by an Errors & Omissions policy
Which statement below is INCORRECT regarding the type of term insurance that fits best with the applicants needs?
applicants who may require a larger death benefit in the future should buy convertible term insurance
What is it called when a doctor accepts the Medicare approved amount?
assignment
Which of the following is NOT normally an excluded cause of disability in an individual disability income policy?
complications from pregnancy
For a retirement plan to be qualified, it must be designed for the benefit of
employees
When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option?
extended term
Under which installments option does the annuitant select the amount of each payment, and the insurer determines how long they will pay benefits?
fixed amount
What kind of policy does NOT typically require proof of insurability?
group insurance
All of the following are features of catastrophic plans EXCEPT
high premiums
Under which of the following conditions would life insurance proceeds be taxable by the federal government?
if there is a transfer for value
Hazards are conditions or situations that
increase the likelihood of a loss occurring
Restoring an insured financially after a claim is known as
indemnity
To purchase insurance, the policyowner must face the possibility of losing money or something of value in the event of loss. What is this concept called?
insurable interest
The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose?
interest only option
Which of the following is provided by skilled medical personnel to those who need occasional medical assistance or rehabilitative care?
intermediate care
What is the benefit of choosing extended term as a nonforfeiture option?
it has the highest amount of insurance protection
You're client wants to provide a retirement income for his elderly parents in case something happens to him. He wants to make sure that both beneficiaries are guaranteed an income for life. Which settlement option should this policyowner select?
joint and survivor
Who would be the insured in business disability insurance?
key employee
An annuitant pays the annuity premium on the 14th of each month. Which of the following best describes this arrangement?
level
A policyowner no longer needs a life insurance policy and agrees to sell it to a third party for more than its cash value. This type of transaction is called a
life settlement
What does an annuity protect the annuitant against?
living longer than expected
In a disability income policy, all of the following are considered presumptive disabilities EXCEPT
loss of one eye
Which of the following is NOT a component of an insurance policy premium?
number of beneficiaries
Among people in the same class and life expectancy, which of the following factors can be used to influence premium rates?
occupation
An example of "adverse underwriting decisions" in a policy involving individually underwritten coverage would be
placing coverage with a residual marketing mechanism such as an unauthorized insurer that offers other than preferred and standard rates
Policies written on a third-party ownership basis are usually written to cover which of the following?
policyowner's minor children or business associates
Certain conditions, such as dismemberment or total and permanent blindness, will automatically qualify the insured for full disability benefits. Which disability policy provision does this describe?
presumptive disability
The Guaranteed insurability rider allows the owner to purchase additional amounts of life insurance without proof of insurability at all of the following EXCEPT
purchase of a new home
An insured purchases a health insurance policy with a renewability clause that states the policy is "Guaranteed Renewable" This means that as long as the required premiums are paid, the policy will continue until the insured
reaches age 65
Policy dividends issued by mutual companies can be described as
refunds
If a basic medical insurance plans benefits are exhausted, what type of plan will then begin covering those losses?
supplementary major medical
Upon the surrender of a life insurance policy, any cash value accumulated in excess of the premium payments is
taxed as ordinary income
Which of the following is a permissible reason for an insurance company to contest payment of a claim based on statements in the application?
the application contains material misstatements
Once the initial benefit limit in Medicare Part D is reached, how is the beneficiary affected?
the beneficiary is then responsible for a portion of prescription drug costs
All of the following are true of a Multiple employer Trust (MET) EXCEPT
the employee has a right of conversion upon leaving the group coverage
All of the following are advantages of a qualified retirement plan EXCEPT
the income at retirement is tax free
An applicant completes an application for a disability policy and pays the initial premium. The producer gives the applicant a conditional receipt. Insurance coverage for the applicant will become effective when
the insurance company accepts the risk
An insured is anxious to get treatment for a health condition, and is convinced that a specialist is needed to cure the condition. If the insured has a PPO plan, which of the following is true??
the insured can select any specialist, but non network specialists will have higher out of pocket costs
Considering the California Insurance Code's definition of an insurable event, which of the following statements is true?
the more predictable a loss, the more insurable it is
Which of the following is NOT true regarding term health coverage?
the owner may renew the policy for a specified term
All of the following are characteristics of group health insurance plans EXCEPT
the parties that hold a group health insurance contract are the employees and the employer
Who is the annuity owner
the person who purchases the annuity
All of the following are true regarding the waiver of cost insurance rider EXCEPT
the rider expires when the insured reaches age 60
All of the following are true regarding copayments, EXCEPT
they are expressed as a percentage of the cost
How are contributions to a tax-sheltered annuity treated with regards to taxation?
they are not included as income for the employee but are taxable upon distribution
Medicare is a health insurance program for all of the following individuals EXCEPT
those with low income and low assets
Which of the following types of insurance is investment based, has a level fixed premium, and a nonguaranteed cash value?
variable whole life
Which of the following becomes part of the contract, is guaranteed to be true, and if untrue, may be grounds for rescinding the policy?
warranty
All of the following are available under Social Security EXCEPT
welfare benefits
Which of the following types of insurance policies would perform the function of cash accumulation?
whole life
An employee that becomes ineligible for group coverage because of termination of employment or change in status, must exercise extension of benefits under COBRA
within 60 days
Which of the following is provided by an HMO?
1 & 2
The Probationary Period is
A specified period of time that a person joining a group has to wait before becoming eligible for coverage.
Gross premium for a life insurance is determined by adding which two components?
Net premium and expenses
A qualifying retiree has access to all parts of the Social Security Medicare program. Which of these parts requires a monthly payment from the insured?
Part B
Which of the following is the cause of loss?
Peril
Regarding the PPACA health care tax credit, which of the following is true?
Persons receiving Medicaid are not eligible
If an insured purchases an insurance policy with a large deductible, what risk management technique is the insured exercising?
Retention
In contrasting stock insurers with mutual insurers, which statement is true?
Stock insurers are owned by the shareholders and issue nonparticipating policies
What is the main purpose of Medi-Cal?
To provide coverage for medical services for individuals with limited income
Group members that are covered by group life insurance policies will be issued which of the following?
a certificate of insurance
Medicare Part B covers all of the following EXCEPT
long term care services
The legal term "nolo contendere" means
no contest
Which of the following terms describes the specified dollar amount beyond which the insured no longer participates in the sharing of expenses?
stop loss limit