Life Insurance Exam

A core Medicare supplement policy (Plan A) will cover all of the following expenses EXCEPT... - 20% of Part B coinsurance amounts for Medicare-approved services - Part A coinsurance - Part A deductible - the first 3 pints of blood

Part A deductible

A stock insurer is defined as an insurer... - who pays dividends to is policyowners - owned by its stockholders - owned by its policyowners - that invests at least 20% of its premium in the stock market

owned by its stockholders

A warranty may relate to which of the following? - the past, the present and the future - the past experience only - only the time of application - only the past and present conditions

the past, the present and the future

Medicare is a health insurace program for all the following individuals EXCEPT... - those with low income and low assets - those 65 or over - those with permanent kidney failure - those who have been on SSD for 2 years

those with low income and low assets

To attain fully insured status under Social Security, an individual must have earned how many credits? - 6 - 10 - 20 - 40

40

Which of the following is true regarding speculative risk? - It has a chance of gain or loss - there is no chance of gain - it is insurable - it has a chance for loss only

It has a chance of gain or loss

Once the initial benefit limit in Medicare Part D is reached, how is the beneficiary affected? - Medicare Part A will cover all costs - The beneficiary is then responsible for a portion of prescription drug costs - the beneficiary is then responsible for 75% of prescription drug costs - the beneficiary is no longer responsible for prescription drug costs

The beneficiary is then responsible for a portion of prescription drug costs

What is the purpose of the gatekeeper in an HMO? - making sure that services are properly prepaid - controlling costs - making sure that patients do not go to physicians outside of the HMO's region - establishing strong preventaive care

controlling costs

Which of the following lossess would likely be covered under the Accidental Death Rider? - death resulting from a long-term disability - death caused by a head-on collision - suicide - mountain-climbing accident

death caused by a head-on collison

A policy that will pay the insured a flat daily rate for each day they are hospitalized is known as... - hospital confinement indemnity - long-term care - accidental death and dismemberment - medical expense

hospital confinement indemnity

All of the following must sign an application for health insurance EXCEPT the... - the proposed insured - applicant - producer - insurer

insurer

Who would be the insured in business disability insurance? - the insurer - the employer - key employees - all employees

key employees

Which if the following is NOT required to be included in a life insurance policy illustration... - page number showing the page's relation to the total number of pages in the illustration - page numbers - name of the insured - a statement that all the benefits shown in the illustration are guaranteed

a statement that all the benefits shown in the illustration are guaranteed

The federal law COBRA applies to employers with a minimum of... 10 employees 20 employees 50 employees 100 employees

20 employees

To be acceptable to insurnace companies, what percentage of eligible employees must be enrolled under a contributory group health insurance plan? - 100% - 50% - 65% - 75%

75%

Who makes up the Medical Information Bureau? - hospitals - insurance companies - physicians and paramedics - former insureds

Insurance companies

Which statement regarding insurable risks is NOT correct? The insurable risk needs to be statistically predictable An insurable risk must involve a loss that is definite as to cause, time, place and amount Insureds cannot be randomly selected Insurance cannot be mandatory

Insureds cannot be randomly selected

Which risk classification is representative of the majority of people in a certain age group and with similar lifestyles? - declined - preferred - standard - substandard

Standard

Which of the following bears the investment risk in a variable life insurance policy? - The agent - The insurer - The financial adviser - The policyowner

The policyowner

Which statement about Life Insurance Code and Ethics is NOT true? - The act of twisting could result in a license suspension for up to 3 years - marketing plans to offer free insurance as an inducement to buy or rent real property are prohibited - acts of fair and unfair discrimination are prohibited - agents are not permitted to advertise that an insurer is a member of any insurance guaranty association

acts of fair and unfair discrimination are prohibitied

Which of the following riders pays a beneficiary a death benefit that is double or triple the face amount if the insured's death was caused by an accident as defined in the policy? - a covered peril rider - an accidental death rider - a double indemnity rider - a guaranteed insurability rider

an accidental death rider

In addition to participation requirements, how does an insureer guard against adverse selection when underwriting group health? - by requiring that the insurance be incidental to the group - by having each enrollee undergo a paramedical examination - by obtaining MIB reports on each enrollee - by imposing case management provisions

by requiring that the insurance be incidental to the group

An employee has a Flexible Spending Account (FSA) witha $5,000 annual benefit. This year the employee used $3,000. What would be the amount of the benefit available to the employee next year? - 7,000 - 5,000 - 3,000 - 2,000

$5,000

Core benefits are included in all Medicare supplemental policies. What percentage of Part B coinsurance is required? - 35% - 10% - 15% - 20%

20%

Joe, 63, was disabled and can no longer work. He meets the Social Security definiton of total disability. How many work credits must Joe have accumulated to have the status of fully insured? - 20 - 40 - 10 - 6

40

Which of the following meers the insured's personal needs, and is provided by nonmedical personnel? - skilled care - assisted living - intermediate care - custodial care

Custodial care

The elimination period (waiting period) in a disability income policy is most similar to... Deductible in a medical expense policy Free look Probationary period in a medical expense policy Grace period

Deductible in a medical expense policy

All of the follow are features of catastrophic plans EXCEPT... - out-of-pocket costs - high deductibles - essential benefits - high premiums

High premiums

If an annuity has a guaranteed minimum interest rate, this means... - there is not interest rate - the interest rate will never drop below the guaranteed minimum - the interest rate will never rise above the guaranteed minimum - the interest rate will no fluctuate

The interest rate will never drop below the guaranteed minimum

An applicant for a disabilty insurance policy has a heart condition of which they are unaware and therefore they answer no to the question pertaining to heart problems on their application. Their answer is considered to be a... - Representation - warranty - concealment - fraudulent answer

representation

If an insured purchases an insurance policy with a large deductibles, what risk management technique is the insured exercising? - retention - transfer only - avoidance - sharing

retention

HMOs are known as what type of plans? - consumer driven - reimbursment - service - health savings

service

If an individual willfully violates provisions of the Fair Credit Reporting Act, what is the maximum civil penalty? - 1,000 - 2,500 - 5,000 - 10,000

$2,500

Which plan will pay more for in-network services than for out-of-network services? - HDHP - HMO - PPO - HSA

PPO

The minimum number of employees which must be covered in a group life insurance plan in California is... - 2 - 10 - 20 - 50

10

Disability benefits under Social Security are paid to those expected to die or be disabled for at least... - 3 months - 6 months - 9 months - 12 months

12 months

In an insurance contract, a representation qualifies as which of the following... - an amendment - an express warranty - an implied warranty - a policy provision

An implied warranty

What is it called when a doctor accepts the Medicare approved amount? - Verification - Acceptance - Assignment - Consent

Assignment

When the insurer and the insured both share in covered losses, it is known as... - stop-lose - copayment - coinsurance - sharing

Coinsurance

A limited health insurance policy that will pay a lump sum to an insured diagnosed with a heart attack, stroke, or renal failure is known as... - dread disease insurance - critical illnes insurance - accidental death and dismemberment - hospital confinement indemnity

Critical illness insurance

A representation in an insurance contract qualifies as a(n)... - express warranty - policy provision - opinion - implied warranty

Implied warranty

Which of the following is provided by skilled medical personnel to those who need occasional medical assistance or rehabilitative care? - intermediate care - custodial care - home health care - skilled care

Intermediate care

If a corporation uses life insurance to buy shares under a buy-sell agreement, which of the following is true regarding taxation? The buyers basis will increase If the cross- purchase transfer is covered under an exemption under the transfer for value rule, the premiums paid are deductible Any death benefit used to purchase shares at taxable to the shareholders estate if they had any ownership in the policy It is treated as a loss or gain if they are common stock

It is treated as a loss or gain if they are common stock

Which of the following used to be called Medicare + Choice Plans? - Original Medicare Plan - Medicare Advantage Plans - Medical Insurance - Medicare Supplement Plans

Medicare Advantage Plans

Which of the following is a daily nursing and rehabilitative care that can only be provided by medical personnel, under the direction of a physician? - intermediate care - custodial care - assisted living - skilled care

Skilled care

What is the goal of the HMO? Early detection through regular checkups Providing free health services Limiting the deductibles and coinsurance to reduce costs Providing health services close to home

Early detection through regular checkups

Which of the following is true regarding the health insurance Marketplace? More state have their own state-run marketplace All states must participate in the federally facilitated marketplace States must have their own state-run marketplace More states participate in the federally facilitated marketplace

More states participate in the federally facilitated marketplace

According to the life insurance replacement regulations, which of the following would be an example of policy replacement? - a lapsed policy is reinstated within a specific timeframe - a policy is reissued with a reduction in cash value - a term policy expires, and the insured buys another term life policy - term insurance is changed to a whole life policy

a policy is reissued with a reduction in cash value

An individual is approaching retirement age and is concerned about having proper coverage should he have to be placed in a LTC facitilty. His agent told him the LTC policies would provide necessary coverage at all of the following levels EXCEPT... - acute - custodial - intermediate - skilled

acute

In some cases, in order for an insurer to legally disclose privileged information to appropriate sources, the insured must sign an authorized form. What is the maximum amount of time that can legally pass between the completion of the form and the disclosure of information? - 1 Month - 6 month - 1 year - 2 years

1 year

Policy loan requests, except for loan requests for payment of due premiums, may be deferred for a period of up to... - 30 days - 90 days - 6 months - 9 months

6 months

In the Social Security blackout period, the surviving spouse will not receive benefits until the age of... - 59.5 - 60 - 65 - 70.5

60

a life insurance policy qualifies as a Modified Endowment Contract (MEC) if the amount of premium paid exceeds the amount that would have provided paid-up insurance in how many years? - 3 years - 5 years - 7 years - the life of the policy

7 years

An employee dies having 6 quarters of coverage during the previous 13-quarter period. What status of coverage does the employee have under Social Security? - Conditionally insured - Currently insured - Fully insured - Uninsured

Currently insured

Gross premium for a life insurance policy is determined by adding which two components?

Net premium and expenses

Cash Value guarantees in a whole life policy are called... - Living benefits - Cash Loans - Dividends - Nonforfeiture values

Nonforfeiture values

To be eligible for cost-sharing reductions, the policy must be purchased on the Exchange, and be what level plan? - gold - silver - catastrophic - bronze

Silver

What does the application of contract of adhesion mean? - The insurer may go to another for representation - It makes sure that the insured does not get more than the value of the loss - since the insured does not participate in preparing the contract, any ambiguities would be resolved in favor of the insured - the holder of the contract has the ultimate power of promise

Since the insurance does not participate in preparing the contract, any ambiguities would be resolved in favor of the insured.

A comprehensive long-term care (LTC) insurance policy covers all of the following EXCEPT... Adult day care Skilled nursing facility Hospice Respite care

Skilled nursing facility

All of he factors are FALSE when used to provide data and statistics to an insurer in order to project losses and the subsequent cost of insuring risks in a group disability policy, EXCEPT... Experience, expenses, and interest of a particular carrier's premiums The number of eligible participants in the group The number of group carriers Stability, price, longevity with a particular carrier

Stability, price, longevity with a particular carrier

If a basic medical insurance plan's benefits are exhausted, what type of plan will then begin covering those losses? - Social security - Supplementary major medical - Supplementary basic medical - None. Once benefits are exhausted for a given benefit period, the insurer is responsible for covering the remainder of the expenses.

Supplementary major medical

Noncontributory employee group insurance premiums are paid by employers on behalf of their employees are... Taxable to the employer but tax free to employees Tax deductible for the employer and tax free to the employees Taxable to both the employer and the employees Tax deductible for the employer but taxable to employees

Tax deductible for the employer and tax free to the employees

Medicare Part B covers all the following EXCEPT... - long-term care services - doctor's services - home health visits - outpatient hospital services

long-term care services

What is the maximum loan amount a policyowner may withdrawal from a variable universal life insurance policy? - An amount equal to the first year of premium payments - An amount not exceeding the cash value - An amount up to the face amount of the policy - Nothing; loans are not allowed under variable universal life

an amount not exceeding the cash value

Which of the following terms refers to the nontaxable portion of each annuity benefit payment? - principal - cost base - tax base - interest

cost base

During policy solicitation, an insurer exaggerates the financial condition of one of its competitors and makes it sound worse than it is. This is an example of an unfair trade practice of... - Twisting - False advertising - misrepresentation - defamation

defamation

All of the following are features of a health insurance plan purchased on the health insurance marketplace EXCEPT... - dollar limits on essential benefits - guaranteed renewability - coverage for emergency services - coverage for pre-existing conditions

dollar limits on essential benefits

When a disability income policy provides coverage for injuries that occur on and off the job, it is referred to as a(n)... - occupational policy - 24-hour policy - nonoccupational policy - wraparound policy

Occupational policy

If a person receives benefits for long term care from Medi-Cal, when that recipient dies, the state may... Pursue asset recovery against the estate of the recipient Pursue asset recovery against the heirs of the recipient Both 1 and 2 Neither 1 nor 2

Pursue asset recovery against the estate of the recipient

An insured purchased a health insurance policy with a renewability clause that state 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 - Dies - Reaches age 100 - Becomes disabled

Reaches age 65

An insured recently had a new home built and insisted on having smoke detectors installed in multiple places in the house. What method of handling risk is the insured using? - Sharing - Reduction -Retention - Avoidance

Reduction

Which of the following statements is incorrect regarding the PPACA? - there can be no limit on benefits for essential health coverage - premiums may be based upon a person's plan category - as of 2014, there is an individual mandate that requires every person residing in the US, age 18 or older, to have health insurance or pay a penalty on their tax return - individual medical expense policies may contain a probationary period of up to 6 months

individual medical expense policies may contain a probationary period of up to 6 months

Which of the following best describes pure life annuity? - It is also known as refund life annuity - it guarantees to pay out all the proceeds - it provides the highest monthly benefits - it continues payments to the beneficiary when the annuitant dies

it provides the highest monthly benefits

What does an annuity protect the annuitant against? - estate taxes - the financial impact caused by premature death - living linger than expected - leaving beneficiary without income

living linger than expected

Which dividend option will increase the death benefit? - paid-up addition - accumulation - extended term - reduced paid up

paid-up additions

What is the purpose of key-person insurance? - to cover decreased business revenues as a result of the death of a key employee - to provide key employees with life insurance coverage - to provide retirement benefits to key employees - to give senior managers the ability to purchase shares in the business

to cover decreased business revenues as a result of the death of a key-employee

Which of the following becomes part of the contract, is guaranteed to be true, and if untrue, may be grounds for rescinding the policy? - consideration - facility of payment clause - contract of adhesion - warranty

warranty

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 30 days - before termination is complete - within 10 days - within 60 days

within 60 days

Only the agent is involved in completing the agent's report. The agent's statement is... - included in the "entire contract" - not included in the "entire contract" - only included in the entire contract if it provides info upon which underwriting decision was made - usually included in the 'entire contract'

not included in the "entire contract"

Agents who sell Long Term Care (LTC) must meet which of the following LTC continuing education requirements in California? 8 hours ever licensing period 8 hours every year 8 hours every year for the first 4 years, then 8 hours each licensing period 8 hours every year for the first 4 years, the 20 hours each licensing period

8 hours every year for the first 4 years, then 8 hours each licensing period

Insurance policy is Any method used to transfer or avoid catastrophic A written instrument in which a contract of insurance is set forth A statement of insurable interest A verbal or written agreement between two parties to transfer risk

A written instrument in which a contract of insurance is set forth

Which of the following is another term for an authorized insurer? Licensed Legal Admitted Certified

Admitted

In a variable life insurance policy, all of the following assets are held in the insurance company's general account EXCEPT... - incidental benefit amounts - cash surrender values - mortality reserves - face amount reserves

Cash surrender values

The rehabilitation benefit under disability income insurance is designed to... - pay the insured a specific lump-sum for accidental loss of limb - pay the disabled insured's loss of income while rehabilitating - pay for necessary vocational training to help the insured resume his normal occupation or prepare for a new career - pay medical expenses of the insured while rehabilitating

Pay for necessary vocational training to help the insured resume his normal occupation or prepare for a new career

All of the following are true regarding key person disability income insurance EXCEPT - The employee is the insured - Prems are tax deductible as a business expense - The employer receives the benefits if the key person is disabled - The employer pays the prem

Premiums are tax deductible as a business expense

Which of the following is NOT provided by an HMO? Patient care Reimbursement Services Financing

Reimbursement

Which statement accurately describes group disability income insurance? There are no participation requirements for employees Short term plans provide benefits for up to 1 year The extent of benefits is determined by the insured's income In long term plans, monthly benefits are limited to 75% of the insured's income

The extent of benefits is determined by the insured's income

Which of the following best describes what the annuity period is? The period of time from the effective date of the contract to the date of its termination The period of time which accumulated money is converted into income payments The period of time from the accumulation period to the annuitization period The period of time during which money is accumulated in an annuity

The period of time which accumulated money is converted into income payments

An agent who knowingly misrepresents material information for the purpose of inducing an insured to lapse, forfeit, change or surrender a life insurance policy or annuity has committed an illegal practice known as... - fraud - concealment - misrepresentation - twisting

Twisting

An annuity funded by a separate account in which the annuitant purchases accumulations units is called a... - qualified annuity - fixed annuity - variable annuity - flexible annuity

Variable annuiyy

What specific kind of insurance is often written in conjunction with hospital expense policies and incles suregeons' and anestheioslogists' fees? - basic medical insurance - personnel insurance - practitioner's insurance - basic surgical expense insurance

basic surgical expense insurance

Which of the following is NOT a characteristic of variable insurnace and annuities? - cash values accumulates based on the performance of stocks - benefits are not guaranteed - cash value is adjusted for inflation - benefits are determined soley based on the policy premium

benefits are determined soloey based on the policy premium

When selling long-term care (LTC) policy, agents must give clients a disclosure document stating that premiums... - may be deductible from both state and federal income taxes - may be partially tax deductible - are never tax deductible - may be deductible from state income taxes

may be deductible from both state and federal income taxes

Underwriters use all of these methods to protect the insurer against adverse selection EXCEPT... - accepting certain risks only at a higher rate - restricting coverage - refusing to accept a risk - only accepting a small percentage of applicants

only accepting a small percentage of applicants

A return of premium rider does which of the following? - allows the insured to receive a full refund of the premium paid if the policy is returned within 85 days of issue - allows the insured to receive a full refund of the premium paid if the policy is surrender at any point after 3 years - waives the premium while the insured is disabled - provides a return of a percentage of the premium paid periodically

provides a return of a percentage of the premium paid periodically

The Guaranteed Insurability Rider allows the owner to purchase additional amounts of the life insurance without proof of insurability at all of the following EXCEPT... - purchase of a new home - approximately every 3 years between the ages of 25 and 40 - birth of a child - marriage

purchase of a new home

All of the following are true about key-person insurance EXCEPT... - the business is the beneficiary - the death benefit is taxable to the business - the business is the applicant and owner - the employee must give written consent by signing the application

the death benefit is taxable to the business

All of the following are advantages of a qualified retirement plan EXCEPT.. - the income at retirement is tax free - the contribution is deductible to the employer - the contribution is not taxable to the employee when amde - the funds grow tax deferred

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 coverages of the applicant will become effective when... - the applicant signs the conditional receipt - the producer delivers the policy - the insurance company accepts the risk - the insurance company requests a medical examination

the insurance company accepts the risk

If a person returns a variable annuity invested in mutual funds during the free look what return will they receive? - the value of the date of the cancellation minus the surrender charge - the premium minus an administrative fee - the premium paid only - the value of the account on the date of cancellation

the value of the account on the date of cancellation