Michigan LAH

A provision stating that the insured and the insurer will share covered losses in an agreed proportion is called Percentage sharing Co-insurance Stop-loss provision Comprehensive insurance

Co-insurance

Which of the following is a type of deductible that charges the insured after basic medical benefits have been paid and before other medical coverage begins? Out-of-pocket limit Calendar deductible Carry-over provision Corridor deductible

Corridor deductible

A person reaches the age of 65 and is currently covered under her employer's health plan. She elects to take Medicare coverage by rejecting her employer's plan. This still keeps the company plan primary. True False

False

Which of the following is a hazard ? a. A large number of similar exposure units b. A peril c. A condition that might increase the likelihood of a loss occurring d. A speculative risk

c. A condition that might increase the likelihood of a loss occurring

Under social security, the definition of disability is the inability to engage in a. An approved occupation b. An activity with a given level of compensation c. Any substantial gainful activity d. The person's chosen career

c. Any substantial gainful activity

All of the following statements about social security disability benefits are true, except a. Benefits are based on the level of a worker's earnings up to the time of the disability b. Benefits will continue only while the worker cannot work at all c. Benefits are designed to replace the entire amount of a worker's earnings d. Workers must be totally and permanently disabled for at least five months to be eligible for benefits

c. Benefits are designed to replace the entire amount of a worker's earnings

Which of the following is a generic consumer publication that explains life insurance policies in general terms to help the applicants make educated decisions? a. Insurance Index b. Policy Summary c. Buyer's Guide d. Illustrations

c. Buyer's Guide

What does "renewable" mean in a term insurance policy? a. Convert to permanent insurance without evidence of insurability b. Increase coverage by providing evidence of insurability c. Continue coverage for another term without evidence of insurability d. Extend coverage for a 1-year term

c. Continue coverage for another term without evidence of insurability

An insurance agent sold a health insurance policy to his sister. What type of transaction is this? a. Illegal b. Personal c. Controlled Business d. Business Buy-Sell

c. Controlled Business

The insured's policy has deductible that is applied between the exhaustion of basic plan limits and the commencement of excess coverage. This is called a: a. Family deductible b. Per cause deductible c. Corridor deductible d. Stop-loss limit

c. Corridor deductible

Under COBRA, a qualifying event ensures that an employee who loses coverage can a. Transfer coverage to another group b. Convert to an individual policy c. Elect to continue coverage d. Request a waiver of premium

c. Elect to continue coverage

When doing business in this state an insurance company that is formed under the laws of another state is known as which type of insurer? a. Alien b. Nonadmitted c. Foreign d. Domestic

c. Foreign

Events or conditions that increase the chances of an insured loss occurring are referred to as: a. Risks b. Exposures c. Hazards d. Perils

c. Hazards

Which of the following expenses is never covered by a LTC insurance policy ? a. Home health care b. Adult day care c. Hospital acute care unit d. Alzheimer's disease

c. Hospital acute care unit

Which of the following is the basis for a claim against an insurance policy? a. Material Change b. Misrepresentation c. Loss d. Hazard

c. Loss

Medicare Part A provides coverage for all of the following, except Home health care Hospice Hospitalization Physicians services

Physicians services

During the disability elimination period a. Residual benefits are payable b. Occupational claims are payable c. No benefits are payable d. All claims are payable

c. No benefits are payable

An out-of-state producer wants to start selling insurance in this state. What type of license should the producer obtain? a. Limited b. Temporary c. Nonresident d. Surplus lines

c. Nonresident

People commonly purchase an annuity to protect against the risk of: a. Dying before their home mortgage is paid off b. Becoming uninsurable c. Outliving their financial resources d. Dying too soon

c. Outliving their financial resources

An Agent who offers a cash reward to a prospect in exchange for the purchase of a policy is guilty of: a. Coercion b. Misrepresentation c. Rebating d. Controlled business

c. Rebating

Which of the following best describes the underwriting process for life insurance a. Issuance of policies b. Solicitation, negotiation and sale of policies c. Selection, classification, and rating risks d. Reporting and rejection of risks

c. Selection, classification, and rating risks

Which type of life insurance policy generates immediate cash value a. Decreasing Term b. Level Term c. Single Premium d. Continuous premium

c. Single Premium

n the Medicare system, the services provided by doctors and surgeons are covered by:1. Part A2. Part B3. There is no charge for coverage4. there is a charge for coverage 1 and 3 1 and 4 2 and 3 2 and 4

2 and 4

All of the following statements about survivorship life insurance are true, except: A. The policy face amounts are usually more than $1,000,000 B. The policy face amount is paid out only upon the death of the first insured to die C. It offers premiums that are quite low compared to what is charged on separate policies D. It is particularly well suited to meet the needs of estate taxes

B.

Adjustable life policies are ________ compared to other types of policies. Strict Flexible Risky Illegal

B. Flexible Adjustable life policies are more flexible compared to other types of policies. In fact, the flexibility it provides is the main reason why adjustable life insurance policies exist. Adjustable life policies allow changes to the main features of the policy, such as the premiums paid and the face value. An ordinary policy is used as a foundation to build upon, and then the features can be adjusted to the needs of the insured. The insured can seek a certain premium payment schedule and amount. In addition, changes can be made to the period of protection and face amount. By using an adjustable policy, the insured gets more flexibility, while the insurer can charge a higher premium versus a whole or term life policy.

Ken wants to purchase a life insurance policy as soon as possible, but he also wants the option to continue to shop around and have the ability to change policies if he finds a better policy. What provision will benefit Ken? a. Sample period b. Free look c. First look d. Tryout clause e. Review period

B. Free Look

What is the primary purpose of a STOLI? Insurance for the protection of loved ones An investment vehicle To help the elderly To adhere to federal law To make an insurance product cocktail

B. an Investment vehicle

In the event of an accidental death, the principal sum in a disability policy will be paid a. Over the course of a set period b. On a sliding schedule c. In one lump sum d. As a monthly indemnity

C. In one lump sum

All advertisements, regardless of their source, are the responsibility of the: A. Advertising Agency B. Publisher C. Insurer D. Department of Insurance

C. Insurer

The Insured is totally and permanently disabled. The insured's policy continues in force without the payment of a premium because the policy contains a: A. Grace period provision B. Guaranteed insurability provision C. Reinstatement provision D. Waiver of premium provision

D

The insured, aged 65, owns a $100,000 non-participating whole life policy. The policy is paid-up as of today. When would the cash value reach $100,000? a. Today b. Age 85 c. Never d. Age 100

D. Age 100

Which of the following statements about the HICAP program is false? a. Stands for Health Insurance Counseling Advocacy Program b. Serves people needing information about Medicare c. Does not sell or endorse any specific types of insurance d. Provides assistance for a fee based upon ability to pay

D. Provides assistance for a fee based upon ability to pay

Upon policy delivery, the agent must confirm that all of the following are received, EXCEPT: A. Statement of good health B. Payment of premium C. Correct and signed application D. Signed waiver of premium

D. Signed waiver of premium

Why is having a large number of similar exposure units important to insurers ? a. The greater the number insured, the more premium is collected to offset fixed costs b. The insurer increases its market share with every insured c. The greater the number insured, the greater the amount of premiums collected to help cover losses d. The greater the number insured, the more accurately the insurer can predict losses and set appropriate premiums

D. The greater the number insured, the more accurately the insurer can predict losses and set appropriate premiums

What type of income continues even if an insured is unable to work? Contingency Adhesion Earned Unearned

D. Unearned

Which of these statements concerning Medicare is not true ? Part A provides hospital care Part B provides doctors and physicians services Part C provides long-term care benefits It is part of the Social Security program

Part C provides long-term care benefits

While an insurer is paying the premium for a life insurance policy under the waiver of premium rider The insurer is named as the primary beneficiary The cash value does not increase The dividend payments cease The policy remains in full force in every respect

The policy remains in full force in every respect

Peril is most easily defined as: a) The cause of loss insured against. b) An unhealthy attitude about safety. c) The chance of a loss occurring. d) Something that increases the chance of loss.

a) The cause of loss insured against. Perils are the causes of loss insured against in an insurance policy.

What is a definition of a unilateral contract? a. A contract under which only one party makes an enforceable promise b. A contract that is prepared by one party and accepted by the other party as is c. A contract under which the parties exchange unequal values d. A contract under which each party must meet specific conditions

a. A contract under which only one party makes an enforceable promise

When must insurable interest exist in a life insurance policy a. At the time of application b. At the time of loss c. When there is a change of beneficiary d. At the time of policy delivery

a. At the time of application

Which of the following documents is issued by the state department of insurance to give an insurer permission to write insurance contracts in that state? a. Certificate of Authority b. Binder c. Express Authority d. Certificate of Insurance

a. Certificate of Authority

Common life insurance policy riders include all of the following, except: a. Extended term b. Guaranteed insurability c. Accidental death d. Waiver of premium

a. Extended term

Events or conditions that increase the chances of an insured loss occurring are referred to as: a. Hazards b. Exposures. c. Perils d. Risks

a. Hazards

If an insurer is not able to meet financial obligations when due, the insurer would be considered a. Insolvent b. Unauthorized c. Impaired d. Non-admitted

a. Insolvent

How does reinsurance benefit the insurer? a. It helps protect against catastrophic losses. b. It helps differentiate between policies c. It frees the insurer from its liabilities d. It allows the insurer to collect higher premiums

a. It helps protect against catastrophic losses.

All of the following is included in the definition of "transacting insurance" EXCEPT: a. Obtaining an insurance license b. Soliciting a policy c. Advising a policyowner regarding a claim d. Negotiating coverage conditions

a. Obtaining an insurance license

The Employee Retirement Income Security Act of 1974 (ERISA) mandates requiring plan sponsor to provide participants with a. Plan descriptions and benefit statements b. Reports of tax qualification fulfillment c. Trust and solvency reports d. Annual financial statements

a. Plan descriptions and benefit statements

If an agent fails to obtain an applicant's signature on the application, the agent must a. Return the application to the applicant for a signature b. Sign the application for the applicant c. Sign the application, stating it was by the agent d. Send the application to the insurer with a note explaining the absense of signature

a. Return the application to the applicant for a signature

The adjustments that an insurer makes in a cash value account in a universal life policy each time a payment is made includes all of the following, except a. Subtract from mortality and general expense charges b. Add the current interest c. Substract the policy surrender charges d. Add the current premium paid

a. Substract the policy surrender charges

Which of the following determines the cash value of a variable life policy? a. The performance of a separate account b. The premium mode c. The policy guarantees d. the company's general account

a. The performance of a separate account

What makes up the entire contract in a life insurance policy ? a. The policy, and when attached, the application b. The policy, and any sales literature presented by the agent of the policy holder c. The policy, the application, and any verbal understandings d. The policy by itself, but never the application

a. The policy, and when attached, the application

Which of the following is a true statement regarding the social security (OASDHI) program ? a. The program provides only a minimum floor of income. Individuals are expected to supplement this with their own personal programs. b. The actuarial value of each person's contributions are closely related to the actuarial value of each person's benefits c. With only a few exceptions, this is a voluntary program d. The program is fully funded

a. The program provides only a minimum floor of income. Individuals are expected to supplement this with their own personal programs.

Which of the following life insurance policies has two death benefits options? a. Universal life b. Adjustable life c. Whole life d. Increasing term

a. Universal life

Grant is terminally ill, but has a life insurance policy with a cash surrender value and he wants to sell his policy to a private individual. Yodel is interested in purchasing the policy, but is only willing to pay less than the face value of the policy. What is the name of the process of selling the policy for less than the amount of the death benefit? Viatical settlement Conversion transfer Cash out sale Settlement of cash value

a. Viatical settlement

In order to receive the principal sum benefit for death from a disability policy, the death must occur a. Within a specified number of days after injury b. Any time during a rehabilitation period c. Any time during a total dismemberment period d. Within the policy period from any cause

a. Within a specified number of days after injury

What type of life insurance is most commonly used for group plans? a. annually renewable term b. Whole life c. Flexible premium whole life d. decreasing term

a. annually renewable term

Which of the following is NOT a type of hazard a. Exposure b. Moral c. Physical d. morale

a. exposure

A measure for rating an individual's need for LTC benefits is called: a. Case management b. Activities of daily living c. The gatekeeper mechanism d. Co-insurance

b. Activities of daily living

If an insurer makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered a. A required disclosure b. An unfair trade practice c. A legal representation of the Association d. A misrepresentation

b. An unfair trade practice

An insurer wants to begin underwriting procedures for an applicant. What source will it consult for the majority of its underwriting information? a. Interviews b. Application c. Medical Records d. Agent's report

b. Application

Representations are statements made by the applicant for insurance that are: a. Guaranteed to be true. b. Considered to be true to the best of the applicant's knowledge. c. Immaterial to the actual acceptability of the contract. d. The same as warranties.

b. Considered to be true to the best of the applicant's knowledge.

A key person insurance policy can pay for which of the following? a. Loss of personal income b. Costs of training a replacement c. Workers compensation d. Hospital bills of the key employee

b. Costs of training a replacement

What does "level" refer to in level term insurance? a. Interest Rate b. Face amount c. Cash Value d. premium

b. Face amount

Which of the following requires a reporting company to respond to a consumer's complaint that his file contains inaccurate information about them a. Unfair Practices Act b. Fair Credit Reporting Act c. COBRA d. Medical Information Act

b. Fair Credit Reporting Act

Concerning Part B of Medicare, which of the following is incorrect? There is an annual deductible and co-payment It is paid entirely by FICA (social security) payroll taxes An individual must sign a form rejecting Part B or they will be enrolled in it It provides some coverage and benefits for most medical expenses not covered by Part A

b. It is paid entirely by FICA (social security) payroll taxes

Which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices a. Stating that the insurance policy is a share of stock b. Making comparisons between different policies c. Exaggerating the benefits provided in the policy d. Overstating returns on policy dividends

b. Making comparisons between different policies

In a single employer group plan, what is the name of the policy issued to the group sponsor? a. Employer-insurer contract b. Master contract c. Certificate of insurance d. Certificate of Authority

b. Master contract

What does the Insurance Commissioner have the right to do if an agent lacks authority from an insurer named on a binder for coverage a. Fine the insurance company for non-compliance b. Suspend or revoke the license of the agent c. Authorize the agent with a certificate of convenience d. Request a certificate of authority be issued immediately

b. Suspend or revoke the license of the agent

Hospice care provides services to patients who are: In a hospital and expected to recover Terminally ill Receiving respite care through Medicare None of the above

b. Terminally ill

When a licensed agent submits a renewal applications with applicable fee on or before the expiration date a. The agent will be able to operate if a receipt for payment is returned prior to the license expiration date b. The agent will be able to operate for up to 60 days after the specified expiration date c. The agent will be able to operate if the agent goes in person to the insurance department to receive a temporary extension of the license d. The agent will be able to continue to operate after a 30 day extension to operate without receipt if requested and approved

b. The agent will be able to operate for up to 60 days after the specified expiration date

Which of the following is NOT the consideration in an insurance policy a. The premium paid by the insured b. The application given to a prospective insured c. The promise to pay covered losses d. Something of value exchanged between parties

b. The application given to a prospective insured

For the purpose of insurance, risk is defined as a. An event that increases the amount of loss b. The chance of loss c. The certainty of loss d. The cause of loss

b. The chance of loss

A hospital confinement indemnity insurance policy pays a. An indemnity to the insured for all expenses incurred when the insured is confined to a hospital b. The daily benefit coverage amount stated in the policy for each day the insured is confined in the hospital c. 100% of the covered medical expenses less the deductible and co-insurance percentage d. The amount of the actual hospital expenses

b. The daily benefit coverage amount stated in the policy for each day the insured is confined in the hospital

According to the CA insurance code, an insured's policy must specify all the of the following, except: a. The risks insured against b. The financial rating of the insurer c. The property or life being insured d. The policy period

b. The financial rating of the insurer

Which of the following is a correct statement about life insurance policy types ? a. Group life insurance is offered only to employees who provide evidence of insurability b. The initial premium for term insurance is lower than the initial premium for whole life insurance c. Limited payment whole life policies stay in effect only for as long as the premium is paid d. Universal life policies have a structured premium payment schedule that must be followed during the entire contract period

b. The initial premium for term insurance is lower than the initial premium for whole life insurance

Two individuals are in the same risk and age class, yet they are charged different rates for their health insurance policies based on marital status. What is this practice called? a. Adverse selection b. Unfair discrimination c. Twisting d. Underwriting

b. Unfair discrimination

Which definition of disability is the most difficult for an injured worker to satisfy? a. The own-occupation definition used by the Social Security Administration b. The typical definition of partial disability used by disability income policies c. The total disability definition used by the Social Security Administration d. The typical definition of temporary disability used by disability income polices

c. The total disability definition used by the Social Security Administration

In a survivorship life policy, when is the death benefit paid? a. Half at the first death, and half at the second death b. Upon the first death c. Upon the second death d. If the insured survives to age 100

c. Upon the second death

What type of policy provides permanent protection? a. Survivorship life b. Group life c. Whole life d. Term life

c. Whole life

Which of the following persons would be required to hold a producer license? a. A salaried employee who creates insurance advertisements b. A director of the insurer who administers employee benefits c. An agent's administrative assistant who takes messages related to claims d. A nonresident agent who negotiates insurance contracts

d. A nonresident agent who negotiates insurance contracts

Which of the following are commonly covered by medical expense policies ? a. Elective cosmetic surgeries b. Pre-existing conditions c. Expenses covered by a workers compensation policy d. Accidental injuries

d. Accidental injuries

When transacting insurance business in this state, an insurer formed under the laws of another country is known as what type of insurer a. Foreign b. Limited c. Nonadmitted d. Alien

d. Alien

From the list of descriptions below, select the one that is not eligible for Medicare A person who has been entitled to Social Security disability benefits for 24 months A person who has reached 65, is willing to pay a premium but is not eligible for Social Security, A person who has reached 65 and is eligible for Social Security. All the above are eligible

d. All the above are eligible

Each of the following terms is an important characteristic of a major medical policy, except a. Deductible b. Co-insurance c. Maximum amounts d. Capitation

d. Capitation

Under an individual health guaranteed renewal contract, the insurer has the right to a. Discontinue coverage on the basis of employment b. Cancel the policy for health reasons c. Make unilateral benefit changes d. Change premiums for the same class insured

d. Change premiums for the same class insured

A provision stating that health insured's and their insurers will share covered losses in an agreed proportion is called a. The stop-loss provision b. Comprehensive insurance c. Percentage insuring d. Co-insurance

d. Co-insurance

An insurer who deliberately makes a malicious statement about another insurance company is guilty of an illegal trade practice called.. a. Slandering b. False advertising c. Twisting d. Defamation

d. Defamation

What would we call a representation which fails to correspond with its stipulations or assertions ? a. Fatal b. Fraud c. Frivolous d. False

d. False

Which of the following is an example of a peril? a. Smoking b. Death c. Gambling d. Fire

d. Fire

With regards to insurance contracts, an agent is deemed to represent which of the following? a. Insured b. Department of Insurance c. Policy owner d. Insurer

d. Insurer

what type of policy shortens the premium paying period but allows the coverage to continue to age 100? a. Continuous premium b. Decreasing term c. Convertible term d. Limited pay

d. Limited pay

Term insurance is typically characterized by a. Low premiums and high cash value b. High premiums and no cash value c. High premiums and high cash value d. Low premiums and no cash value

d. Low premiums and no cash value

Which of the following premium modes would result in the highest annual cost for a life insurance policy a. Semi-annual b. Quarterly c. Annual d. Monthly

d. Monthly

A health insurance deductible is: a. The insured's payment for healthcare that is not considered a covered expense b. The cost of a covered expense minus the office co-payment c. The portion of insurance premium paid for coverage by the insured d. The amount of covered expense that the insured pays before the insurer pays

d. The amount of covered expense that the insured pays before the insurer pays

In insurance, an offer is usually made when a. The insurer approves the application and receives the initial premium b. An agent explains a policy to a potential applicant c. The agent hands the policy to the policyholder d. The application is submitted

d. The application is submitted

A $50,000 whole life policy with a cash value of $10,000 has been in force for 11 years. The policy owner is unable to continue the premium payments. Which of the following describes the reduced paid-up non-forfeiture option a. The policy owner begins to receive $200 monthly payments from the insurer that will continue for life b. The policy is surrendered and the policy owner is paid $10,000 by the insurer c. The cash value is used to purchase a $50,000 term policy that is paid-up for 10 years d. The cash value is used to purchase a $20,000 paid-up policy

d. The cash value is used to purchase a $20,000 paid-up policy

Which of the following is NOT a characteristic of an insurable risk? a. The loss must be due to chance b. The loss exposure must be large c. The loss must be measurable d. The loss must be catastrophic

d. The loss must be catastrophic

Which of the following statements about LTC is correct: a. In 1990, the average annual cost for a nursing care home was approximately $10,000 per year b. The need for LTC coverage can arise only after age 50 c. Medi-Cal is one of the most commonly sold LTC policies. It is designed to protect the assets of middle-class californians d. The very poor and the very rich probably do not need LTC coverage

d. The very poor and the very rich probably do not need LTC coverage

Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract? a. Consideration b. Representation c. Indemnity d. Warranty

d. Warranty

When agents are acting within the scope of their contract, their actions will be assumed to be the acts of the: a. Department of Insurance b. Policyowner c. Insured d. Insurer

d. insurer