Practice Exam New Questions 2
Which of the following is NOT a function of the HICAP? A) Giving consumers advice about Medicare Advantage plans B) Offering to sell consumers more suitable Medicare plans C) Providing free counseling to individuals eligible for Medicare D) Organizing educational presentations for Medicare providers
B) Offering to sell consumers more suitable Medicare plans
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? A) Part A B) Part B C) Medicaid D) Medi-Cal
B) Part B
Health insurance rates may be based on all of the following EXCEPT A) Medical history B) Religion C) Gender D) Age
B) Religion
An adjustable life policy can assume the form of A) Only term insurance B) Only permanent insurance C) Either term of permanent insurance D) Neither term insurance not permanent insurance
C) Either term of permanent insurance
A married couple wants to include the entire family in their whole life policy under one rider. Which of the following riders will help them achieve that goal? A) Inclusive term B) Children's term C) Family term D) Other insured term
C) Family term
An annuity owner receives the same guaranteed payment every month. What type of annuity is it? A) Immediate B) Guaranteed C) Single D) Fixed
D) Fixed
Slippery floors, reckless driving, or providing false information are examples of A) Causes of loss B) Perils C) Hazards D) Pure risks
C) Hazards
HMOs are known as what type of plan? A) Health savings B) Consumer driven C) Reimbursement D) Service
D) Service
An insurer, by filing a notice of appointment on behalf of an applicant, shall be deemed to have declared that the applicant has had experience or instruction in insurance or that the necessary instruction will be given within A) 30 days after issuance of license B) 20 days after issuance of license C) 10 days after issuance of license D) 60 days after issuance of license
A) 30 days after issuance of license
When filling out an application for insurance, the applicant makes a mistake. If a fresh application were not available, what could the applicant do to properly correct the mistake? A) Cross out the incorrect answer, write the correct one beside it, and initial the answer B) Either white out the answer or cross it out and write the new answer beside it C) Nothing, A fresh application must be obtained D) White out the incorrect answer and write the new one over it
A) Cross out the incorrect answer, write the correct one beside it, and initial the answer
A "stop-loss" feature on a major medical policy is intended to A) Establish a maximum amount of out-of-pocket expense that an insured will have to pay for medical expenses in a calendar year B) Establish a maximum amount of out-of-pocket expenses that an insured will have to pay for medical expense for the life of a policy C) Discourage insured from making unnecessary appointments at the doctor's office D) Establish the number of claims that may be filed in a calendar year
A) Establish a maximum amount of out-of-pocket expense that an insured will have to pay for medical expenses in a calendar year
Which of the following is the cause of loss A) Peril B) Hazard C) Exposures D) Risk
A) Peril
Decreasing term insurance is often used to A) Liquidate an estate B) Build up cash values for retirement C) Pay estate taxes D) Cover a mortgage
D) Cover a mortgage
Which of the following is NOT true regarding term health coverage? A) The policy expires at the end of the term B) The policy could be written as accident only policy C) The owner may renew the policy for a specified term D) The policy is issued for a specified period of time only
C) The owner may renew the policy for a specified term
Insurance provides a means to A) Transfer a loss B) Retain a loss C) Avoid a loss D) Eliminate a loss
A) Transfer a loss
Under HIPAA portability, which of the following is NOT protected under requirements? A) Mentally ill B) Groups of one or more C) Self-employed D) Pregnant women
B) Groups of one or more
All of the following are consideration in an insurance policy EXCEPT A) The promise to pay covered losses B) The cash value in the policy C) The statements on the application D) The premium paid at the time of application
D) The premium paid at the time of application
How many tiers must be included in each treatment category of a Medicare prescription drug plan formulary? A) 1 B) 2 C) 3 D) 4
B) 2
A disability income policy has a waiting period of 7 days. If the insured is disabled for 15 days, how many days of benefits will the policy pay? A) 7 days B) 8 days C) 15 days D) 22 days
B) 8 days
During the accumulation period phase of a fixed annuity, the annuitant's interest rate is based on a minimum rate as specified in the contract, or the current interest rate, whichever is A) More beneficial to the insurer B) Higher C) Lower D) Specified in the annuity contract
B) Higher
In order to reinstate a life insurance policy the insured must do all of the following EXCEPT A) Repay any outstanding loans and interest B) Pay next year's premium in advance C) Pay back premiums D) Pay any interest due back on back premiums
B) Pay next year's premium in advance
Which rider, when added to a disability policy, pays income during the six-month waiting period before Social Security benefits can begin? A) Additional Monthly Benefit B) Cost of Living C) Waiver of Premium D) Coordination of Benefits
A) Additional Monthly Benefit
An insurer who transacts insurance in this state but whose articles of incorporation are registered in Canada is considered what type of insurer? A) Alien B) Unauthorized C) Surplus lines D) Foreign
A) Alien
A Medicare supplement policy must have a free-look period of at least A) 10 days B) 15 days C) 30 days D) 45 days
C) 30 days
Where are premiums from fixed annuities invested? A) A hedge fund B) A separate account C) A general account D) A variable annuity
C) A general account
Which of the following is NOT normally an excluded cause of disability in an individual disability income policy? A) Injury resulting from illegal activity B) Suicide C) War D) Complications from pregnancy
D) Complications from pregnancy
What does application of contract adhesion mean? A) The holder of the contract has the ultimate power of promise B) The insurer may go to another for representation C) It makes sure that the insured does not get more than the value of the loss D) Since the insured does not participate in preparing the contract, any ambiguities would be resolved in favor of the insured
D) Since the insured does not participate in preparing the contract, any ambiguities would be resolved in favor of the insured
A life insurance policy qualifies a Modified Endowment Contract (MED) if the amount of premium paid exceeds the amount that would have provided paid-up insurance in how many years? A) 7 years B) The life of the policy C) 3 years D) 5 years
A) 7 years
Which of the following would be considered a peril? A) Playing golf in a thunderstorm B) Fire C) Smoking D) Driving too fast for conditions
B) Fire
Regarding health insurance, all of the following are tax deductible EXCEPT A) Employee paid group disability income B) Employer paid group insurance C) Employer paid group Long-Term Care D) Employer paid group Accidental Death and Dismemberment
A) Employee paid group disability income
A "person" that transacts insurance business may have the operations of its business seized and the Commissioner appointed a conservator under all of the following conditions EXCEPT A) Failure to obtain verbal consent from the Commissioner prior to transfer or merger of property to another "Person" for the purpose of reinsurance B) Being found to be a hazard to the public, policyholders, and creditors C) Failure to provide adequate records and documentation upon inspection by the Commissioner D) Neglect or refusal to observe required capital and reserve requirements
A) Failure to obtain verbal consent from the Commissioner prior to transfer or merger of property to another "Person" for the purpose of reinsurance
Regarding the PPACA health care tax credit, which of the following is true? A) Persons receiving Medicaid are not eligible B) Tax credits are based upon a taxpayer's or family's expected annual medical expenses C) All wage earners who purchase a health care insurance are eligible for the tax credit D) Tax credits are sent to the tax payer to reduce monthly insurance premiums
A) Persons receiving Medicaid are not eligible
In group insurance, the primary purpose of the Coordination of Benefits is to A) Prevent overinsurance B) Prevent lawsuits between insurance companies involved in the claim C) Ensure the payment of claims by all policies that are in effect at the time of the claim D) Encourage hospitals to keep charges reasonable
A) Prevent overinsurance
In whole life insurance when is the policy cash value scheduled to equal the face amount? A) At the insured's age 100 B) By the policy's 10th year C) When the insured paid up all policy loans D) It depends on the type of whole life purchased
A) At the insured's age 100
All of the following are general requirements of a qualified plan EXCEPT A) The plan must have a vesting requirement B) The plan's benefit cannot discriminate in favor of the "prohibited group" C) The plan must be temporary D) The plan must be approved by the IRS
C) The plan must be temporary
When an employee or dependent who is currently receiving benefits qualifies for an extension due to a discontinuance which was followed by a replacement, which of the following is responsible for that disabled person's continuance of benefits? A) The new insurer B) The old insurer C) Workers Compensation D) The Employer
C) Workers Compensation
The annual open enrollment period for state insurance exchanges runs from November through A) February B) March C) December D) January
D) January (November 1 - January 31st)
Which of the following is true regarding pure life annuity settlement option A) It guarantees income for a specified period of time B) It provides the highest monthly benefit C) It guarantees that all the proceeds will be paid out D) The beneficiary will receive a refund of the principal
B) It provides the highest monthly benefit
How does insurance distribute the financial consequences of individual losses? A) It transfers the risk to a small number of persons insured B) It transfers the risk to all persons insured C) It retains the financial consequences D) It transfers the risk to associates of the insured
B) It transfers the risk to all persons insured
In health insurance, what is coinsurance? A) A percentage of the cost of the service that the insured and the insurer share B) A portion of the deductible an insured must pay for treatment C) The amount the insurance company pays for the insured's treatment D) The amount the insured pays for treatment
A) A percentage of the cost of the service that the insured and the insurer share
Conrad receives $50,000 from a $100,000 Accidental Death and Dismemberment policy as a result of the loss of his left arm in an accident. Conrad has received the A) Capital Amount B) Contributory Amount C) Primary Amount D) Principal Amount
A) Capital Amount
All of the following are ways to handle risk EXCEPT A) Transfer B) Elimination C) Avoidance D) Reduction
B) Elimination
What is the difference between a straight life and 20-pay whole life policy? A) The benefit settlement option B) The face amount and cash value C) Policy maturity date D) Premium payment period
D) Premium payment period
A dentist is off work for 4 months due to a disability. HIs dental assistant's salary would be covered by A) Key Employee Disability B) Partnership Disability C) Business Overhead Expense D) Disability Income
C) Business Overhead Expense
Which of the following would be an example of an insurer participating in the unfair trade practice of discrimination? A) Charging different premium rates to the insureds in different insuring classes B) Charging the insured higher premiums based on life expectancy C) Charging the insured higher premiums based on her race D) Making malicious statements about the insured based on race
C) Charging the insured higher premiums based on her race
What is it called when a Doctor accepts the Medicare approved amount? A) Consent B) Verification C) Acceptance D) Assignment
D) Assignment
According to the California Insurance Code, any person legally capable of making an insurance policy is considered A) An insurer B) An underwriter C) An agent D) A broker
A) An insurer
What type of insurer issues a formal sharing agreement? A) Mutual insurers B) Fraternal benefit societies C) Reciprocal insurers D) Stock insurers
C) Reciprocal insurers
Which of the following is NOT true regarding a deferred annuity? A) Income payments begin within 1 year from the date of purchase B) It is used to accumulate funds for retirement C) It can be purchased with a single premium D) The annuity grows tax deferred
A) Income payments begin within 1 year from the date of purchase
If a life insurance policy develops cash value faster than a seven-pay whole life contract, it is A) Modified endowment contract B) Accelerated benefit policy C) Endowment D) Nonqualified annuity
A) Modified endowment contract
Which of the following services will NOT be provided by an HMO? A) Inpatient hospital care outside the service area B) Unlimited coverage for treatment for drug rehabilitation C) Treatment of mental disorders D) Emergency care
B) Unlimited coverage for treatment for drug rehabilitation
What is the purpose of a gatekeeper in an HMO? A) Establishing strong preventative care B) Making sure that services are properly prepaid C) Controlling costs D) Making sure that patients do not go to physicians outside of the HMO's region
C) Controlling costs
For which of the following reasons may group coverage NOT be discontinued? A) Fraud B) The company's stock value lowers C) Nonpayment of premiums D) Movement outside the service area
B) The company's stock value lowers
When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option? A) Extended term B) Paid up additions C) Cash surrender value D) Reduced paid up
A) Extended term
When assessing needs for life insurance, an individual may use retention, which means A) Maintaining assets at death B) Keeping a life insurance policy until death B) Raising capital D) Purchasing life insurance
A) Maintaining assets at death
Cash value guarantees in a whole life policy are called A) Nonforfeiture values B) Living benefits C) Cash loans D) Dividends
A) Nonforfeiture values
Ed is covered under a health plan provided by his employer. He was told that his insurance would pay the majority of the covered expenses if he would choose to see a provider in his plan's list. If Ed chose to be treated by a provider who was not on the list, his portion of the bill would be greater. Ed is covered under a/an A) Preferred Provider Plan B) Coordinated Plan C) HMO Group Plan D) Limited health plan
A) Preferred Provider Plan
Which of the following is NOT a type of hazard? A) Morale B) Exposure C) Physical D) Moral
B) Exposure
Which of the following statements is NOT true regarding HICAP? A) It provides consumer counseling B) It works in conjunction with local area agencies on aging C) It exists to assist seniors who are not qualified to receive Social Security or Medicare D) It is overseen by The State Department of Aging
C) It exists to assist seniors who are not qualified to receive Social Security or Medicare
For an insurance contract, the principle of utmost good faith means A) The contract involves only the policyowner and the insurer B) Each party is equally responsible for the value of the policy C) The policyowner will be indemnified in case of loss D) Each party relies upon the truthfulness of the other
D) Each party relies upon the truthfulness of the other
Which of the following is the best definition of indemnification? A) The act of one person who agrees to restore an injured person to the condition he/she enjoyed prior to the loss B) A legal entity which acts on behalf of itself, accepting legal and civil responsibility for the actions it performs and making contracts in its own name C) A contract whereby the two parties involved agree to what things of value will be exchanged by the parties of the contract D) A contract whereby one undertakes to indemnity another against loss, damage, or liability arising from a contingent or unknown event
A) The act of one person who agrees to restore an injured person to the condition he/she enjoyed prior to the loss
The Affordable Care Act mandates that insurers provide coverage for adult children of the insured up to the age of A) 21 B) 26 C) 28 D) 30
B) 26
All of the following could qualify as a group for the purpose of purchasing group health insurance EXCEPT A) Single employer with 13 employees B) An association of 35 people C) Labor union D) Multiple employer trust
B) An association of 35 people
When an insurer tries to discourage a policyholder from replacing an existing policy, this is called A) Adverse selection B) Conservation effort C) Negotiating D) Retention effort
B) Conservation effort
In health insurance, the length of the grace period varies according to A) Age of the insured B) Mode of premium payment C) Length of the waiting period D) Length of the benefit period
B) Mode of premium payment
Only the agent is involved in completing the agent's report. The agent's statement is A) Included in the "entire contract" B) Not included in the "entire contract" C) Only included in the "entire contract" if it provides information upon which the underwriting decision was made D) Usually included in the "entire contract"
B) Not included in the "entire contract"
The Human Life Value Approach to determining Life Insurance needs is based upon which of the following ideas? A) Specific needs for college education B) Retirement needs C) Loss of the breadwinner's income D) Replacement of assets
C) Loss of the breadwinner's income
A 25-year old full-time student is living off a trust fund. Why would he NOT qualify for an IRA? A) Because of his full-time student status B) He does not have enough income for qualified contributions C) He does not meet the age requirements D) He does not have earned income
D) He does not have earned income
The provision that sets forth the basic agreement between the insurer and the insured and states the insurer's promise to pay the death benefit upon the death is called the A) Payment of claims B) Declarations C) Consideration D) Insuring clause
D) Insuring clause
An aleatory contract is based on what kind of exchange? A) Equal amounts for pay in and pay out B) Balanced benefits C) Exchange of equal obligations D) Unequal exchange of values
D) Unequal exchange of values
An employee has a flexible spending account (FSA) with a $5000 annual benefit. This year the employee used $3000. What would be the amount of benefit available to the employee next year? A) $7000 B) $5000 C) $3000 D) $2000
B) $5000
If an insured pays a health insurance premium each month, how long would the grace period be under the policy? A) 7 days B) 10 days C) 14 days D) 25 days
B) 10 days
Which of the following used to be called Medicare + Choice Plans? A) Medicare Supplement Plans B) Original Medicare Plans C) Medicare Advantage Plans D) Medical Insurance
C) Medicare Advantage Plans
Which of the following best defines the unfair trade practice of rebating? A) Changing premium amounts in excess of the amount stated in the policy B) Making false statements that are maliciously critical and intended to injury another person in the business of insurance C) Offering an inducement of something of value not specified in the policy D) Making statements that misrepresent an insurance policy in order to induce an insured to replace the policy
C) Offering an inducement of something of value not specified in the policy
A loss resulting from which of the following would qualify for the accidental death rider coverage? A) A health condition B) A disability C) A hazardous hobby D) An automibile accident
D) An automibile accident
An employee becomes ineligible for group coverage because of termination of employment or change in status, must exercise extension of benefits under COBRA A) Within 30 days B) Before termination is complete C) Within 10 days D) Within 60 days
D) Within 60 days
An employee is covered under COBRA. His previous premium payment was $100 per month. His employer now collects $102 each month. Why does his employer collect an extra $2? A) To cover other employees who qualify to bypass premium payment B) To cover the employer's administration costs D) Premiums go up every year regardless of health conditions
B) To cover the employer's administration costs
An applicant for a disability insurance policy has a heart condition of which they are unaware and therefore they answer no to the question pertaining to the heart condition portion on their application. Their answer is considered to be a A) Concealment B) Fraudulent answer C) Representation D) Warranty
C) Representation
Which of the following is a permissible reason for an insurance company to contest payment of a claim based on statements in the application? A) The insurer has already paid out the expected amount of benefits of the year B) The application contains a correction C) The application contains material misstatements D) The insured died too soon after applying for the policy
C) The application contains material misstatements
What is the only difference between blanket insurance and group health insurance? A) Blanket insurance is not provided to schools B) Membership is not allowed to change in blanket insurance, except on a yearly basis C) The insured members are not named D) Group health insurance is provided on an employee-only basis
C) The insured members are not named
In a noncontributory group policy A) 75% of all employees must elect to join the plan B) 100% of employees must be allowed to participate C) 75% of eligible employees must elect to join the plan D) 100% of eligible employees must participate
D) 100% of eligible employees must participate
Which of the following best defines the Probationary Period in group health policies? A) The number of days the insured has to determine if he/she will accept the policy as received B) The stated amount of time when benefits may be reduced under certain conditions C) The number of days that must expire after the onset of an illness before benefits will be earned D) A specified period of time that a person joining a group has to wait before becoming eligible for coverage
D) A specified period of time that a person joining a group has to wait before becoming eligible for coverage
On an Accidental Death and Dismemberment (AD&D) policy, the death benefit payable is known as the A) Face amount B) Capital sum C) Policy limit D) Principal sum
D) Principal sum
Under the Affordable Care Act, when would pregnancy be considered a pre-existing condition? A) Never B) Only if specifically excluded by the insurer C) Always D) If it begins before the coverage takes effect
A) Never
All of the following statements about mutual insurance companies are correct EXCEPT A) Policy dividends issued by mutual companies are guaranteed and not taxable B) Dividends allow policyholders to share in a mutual company's divisible surplus C) Dividends are a return of unused premiums D) The beneficiary is then responsible for 75% of prescription drug costs
A) Policy dividends issued by mutual companies are guaranteed and not taxable
An individual purchases a life insurance policy and lists his parents as the beneficiaries. He is able to change beneficiaries at any time. What type of beneficiary designation does he have? A) Contingent B) Primary C) Revocable D) Irrevocable
C) Revocable
The notice about policy cancellation delivered to senior citizens must include all of the following information EXCEPT A) Time limit for cancellation B) To whom to return the policy C) Possible surrender charge D) Explanation of where the premiums have been invested
D) Explanation of where the premiums have been invested
An insured's hospital policy states that it will pay him a flat fee of $75 per day for each day he is hospitalized. The policy pays benefits on what basis? A) Reimbursement B) Expense C) Service D) Indemnity
D) Indemnity
Medicare Part A services do NOT include which of the following? A) Post hospital Skilled Nursing Facility Care B) Hospitalization C) Hospice Care D) Private Duty Nursing
D) Private Duty Nursing
Considering the principles of liquidity, how would the policyowner use today's cash values in a life insurance policy? A) Use it for emergency services B) Secure a car loan next year C) Make a down payment on a home in 5 years C) Fund a retirement
A) Use it for emergency services
If the policy summary for a life insurance policy is not given when the application is taken, when must the policy summary be given to the policyowner? A) When the policy is delivered B) Within 15 days of the application C) Within 30 days of the policy issue D) When the policy is issued
A) When the policy is delivered
In contrasting stock insurers with mutual insurers, which statement is true? A) Nonparticipating policies can pay out dividends to the policyholders B) Mutual insures are owned by the shareholders and issue participating stocks C) Stock insurers are owned by the shareholders and issue nonparticipating policies D) Stock dividends are tax free while policy dividends are taxable
C) Stock insurers are owned by the shareholders and issue nonparticipating policies
The elimination period in a disability income policy is better known as A) The Corridor deductible B) The period of time an insured has to review the policy and return in for a full refund of the premium it dissatisfied C) The period of time an insured must wait after the onset of an illness or injury before benefits begin D) The Probationary Period
C) The period of time an insured must wait after the onset of an illness or injury before benefits begin
Whose responsibility is it to ensure that the application for health insurance is complete and accurate? A) The policyowner's B) The underwriter's C) The applicant's D) The agent's
D) The agent's
An employee that becomes ineligible for group coverage because of termination of employment or change in status, must exercise extension of benefits A) Within 30 days B) Before termination us complete C) Within 10 days D) Within 60 days
D) Within 60 days
All of the following are features on a health insurance plan purchased on the health insurance marketplace EXCEPT A) Dollar limits on essential benefits B) Guaranteed renewability C) Coverage for emergency services D) Coverage for pre-existing conditions
A) Dollar limits on essential benefits
Underwriters use all of these methods to protect the insurer against adverse selection EXCEPT A) Only accepting a small percentage of applicants B) Accepting certain risks only at a higher rate C) Restricting coverage D) Refusing to accept a risk
A) Only accepting a small percentage of applicants
Which of the following Medicare parts provides prescription drug benefit? A) Part D B) Part A C) Part B D) Part C
A) Part D
All of the following are characteristics of group insurance plans EXCEPT A) The parties hold a group health insurance contract are the employees and the employer B) The cost of insuring an individual is less than what would be charged for comparable benefits under an individual plan C) Employers may require the employees to contribute to the premium payments D) The benefits under a group plan are more extensive than those under individual plans
A) The parties hold a group health insurance contract are the employees and the employer
Which of the following is NOT a standard exclusion in life insurance policies? A) Hazardous occupation B) War and military service C) Aviation D) Disability
D) Disability
An insured decides to surrender his Whole Life insurance policy. The cash value is higher than the premiums paid into the policy, due to interest. What part of the surrender value would be income taxable? A) The difference between the premiums paid and the cash value B) Nothing C) The amount equal to the premiums paid D) The entire cash value amount
A) The difference between the premiums paid and the cash value
Who makes up the Medical Information Bureau? A) Former insureds B) Hospitals C) Insurance companies D) Physicians and paramedics
C) Insurance companies
An insured was seriously injured in a skiing accident that required him to be hospitalized 5 weeks. His medical expense policy covered all of the following EXCEPT A) Necessary medicine and medical supplies B) Surgical expense C) Hospital room and board D) Loss of income while hospitalized
D) Loss of income while hospitalized
An insurer can decide to not renew an Optionally Renewable policy A) At any point. There are no specific dates B) On the 15th of every month C) On the 1st of every month D) On premium due dates
D) On premium due dates
A warranty may relate to which of the following? A) Only the past and present conditions B) The past, the present, and the future C) The past experience only D) Only the time of application
B) The past, the present, and the future
A comprehensive medical expense insurance policy combines which of the following coverages in a single contract? A) Basic hospital and surgical coverage with major medical B) Disability income and accidental health C) Disability income with basic hospital and surgical coverage D) Major medical and accidental death and dismemberment
A) Basic hospital and surgical coverage with major medical
Which of the following is provided by skilled medicare personnel to those who need occasional medical assistance with rehabilitative care? A) Skilled care B) Intermediate care C) Custodial care D) Home health care
B) Intermediate care
Medicare Part B covers all of the following EXCEPT A) Outpatient hospital services B) Long-term care services C) Doctor's services D) Home health visits B) Long-term care services
B) Long-term care services
In insurance, what is the term used for the cause of loss? A) Hazard B) Peril C) Causative factor D) Material fact
B) Peril
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? A) Assisted living B) Skilled care C) Intermediate care D) Custodial care
B) Skilled care
Which of the following is NOT true regarding an optionally renewable policy? A) Nonrenewal can happen on the policy anniversary date B) Policy premiums can increase at renewal C) Insurer can only cancel the policy for reasons stipulated in the contract D) Renewability is at the option of the insurer
C) Insurer can only cancel the policy for reasons stipulated in the contract
The purpose of the Fair Credit Reporting Act is to A) Ensure the consumers receive a copy of investigative consumer reports B) Ensure coverage for all applicants C) Protect consumers against the circulation of inaccurate or obsolete personal of financial information D) Protect the insurer from adverse selection
C) Protect consumers against the circulation of inaccurate or obsolete personal of financial information
What are the continuing education requirements for agents who market long-term care insurance policies? A) 4 hours of long-term care education every year B) 4 hours of long-term care education every 4 years C) 8 hours of long-term care specific education in addition to the regular CE requirements D) 8 hours of long-term care specific education included in the regular CE requirements
D) 8 hours of long-term care specific education included in the regular CE requirements
All of the following statements are true regarding an Ordinary Life policy EXCEPT A) It is funded by a level premium B) It builds cash value C) If the insured lives to age 100, the policy matures, and the face amount is paid to the insured D) It does not have a guaranteed death benefit
D) It does not have a guaranteed death benefit
A core Medicare supplement policy (Plan A) will cover all of the following expenses EXCEPT a) Part A deductible b) The first 3 pints of blood c) 20% if Part B coinsurance amounts for Medicare-approved services d) Part A coinsurance
a) Part A deductible
If an insured purchases an insurance policy with a large deductible, what risk management technique is the insured exercising? A) Sharing B) Retention C) Transfer only D) Avoidance
B) Retention
All the 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 A) The number of group carriers B) Stability, Price, Longevity with a particular carrier C) Experience, Expenses and Interest of a particular carrier's premiums D) The number of eligible participants in the group
B) Stability, Price, Longevity with a particular carrier
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? A) Avoidance B) Sharing C) Reduction D) Retention
C) Reduction
All of the following are advantages of a qualified retirement plan EXCEPT A) The funds grow tax deferred B) The income at retirement is tax free C) The contribution is deductible to the employer D) The contribution is not taxable to the employee when made
C) The contribution is deductible to the employer
A guarantee universal life policy has all of the following features EXCEPT A) Lower premiums B) Coverage up to a certain age C) Death benefit D) Cash value
D) Cash value
Which of the following is NOT a typical type of coverage of Long-term coverage? A) Skilled nursing care B) Residential care C) Home health care D) Child day care
D) Child day care
An insured bought an insurance policy that requires him to pay $150 in premiums on the 15th of each month. He then takes an extended vacation and forgets to pay the premium. Ten days later, the policy is still in effect and has not lapsed. Which policy provision allowed for this? A) Waiver of premium B) Automatic premium loan C) Incontestability D) Grace period
D) Grace period
Which of the following riders provides for the payment of part of the policy death benefit if the insured is diagnosed with a terminal illness that will result in death within 2 years? A) Long-term care rider B) Cost of living rider C) Accidental death rider D) Living needs rider
D) Living needs rider
If the annuitant dies before the annuity date, which of the following is true? A) The interest will not be tax deferred B) The interest is tax free if the beneficiary is a spouse C) The interest is nontaxable D) The interest is taxable
D) The interest is taxable
All of the following are true regarding waiver of cost insurance rider EXCEPT A) The rider waives insurance costs in the event the insured becomes disabled B) The rider is only applicable to universal life policies C) The rider cannot waive the cost of premiums that accumulate cash value D) The rider expires when the insured reaches age 60
D) The rider expires when the insured reaches age 60
Which of the following terms refers to the nontaxable portion of each annuity benefit payment? A) Principal B) Cost base C) Tax base D) Interest
B) Cost base
All of the following actions can be described as twisting EXCEPT A) Explaining to client the advantages of permanent insurance over term and suggesting changing policies B) Misrepresenting the terms and conditions of the existing policy to make the new one more attractive C) Embellishing the terms of the proposed policy in order to convince the insured to switch D) Making an incomplete comparison between the existing and proposed policies
A) Explaining to client the advantages of permanent insurance over term and suggesting changing policies
When can an insurer insert information into an application without first obtaining the consent of the applicant? A) When the information would not influence the underwriting process B) Under no circumstances C) For administrative purposes only, as long as it is clear that the insurer made the note D) When the information is not present in any other part of the application but is crucial for underwriting process
C) For administrative purposes only, as long as it is clear that the insurer made the note
What does Basic Medical Expense cover? A) All office visits, under any circumstances B) Surgery C) Nonsurgical services a physician provides D) X-ray charge
C) Nonsurgical services a physician provides
To be acceptable to insurance companies, what percentage of eligible employees must be enrolled under a contributory group health insurance plan? a) 65% b) 75% c) 100% d) 50%
b) 75%
The Family Term rider incorporates A) Key person whole life and dependents term B) Cost of living rider and family protection rider C) Spouse term and children's term D) Whole life and other-insured term
C) Spouse term and children's term
What is the exclusion ratio used to determine? A) The interest base and the payout base B) The benefit amounts to be paid to the annuitant C) The annuity benefit to be excluded from taxes D) The premium amounts to be included in taxes
C) The annuity benefit to be excluded from taxes
Once the initial benefit limit in Medicare Part D is reached, how is the beneficiary affected? A) The beneficiary is no longer responsible for prescription drug costs B) Medicare Part A will cover all costs C) The beneficiary is then responsible for a portion of prescription drug costs D) The beneficiary is responsible for 75% of prescription drug costs
C) The beneficiary is then responsible for a portion of prescription drug costs
If an individual willfully violates provisions of the Fair Credit Reporting Act, what is the maximum civil penalty? A) $1000 B) $2500 C) $5000 D) $10,000
B) $2500
In order for an alumni association to be eligible to purchase group health insurance for its members, all of these statements must be true EXCEPT when the association A) Has a constitution, by-laws, and must hold annual meetings B) Is organized for reasons other than buying insuranceC ) Has at least 100 members D) Has been active for five years minimum
D) Has been active for five years minimum
A life settlement broker A) Sells single premium immediate annuities to seniors B) Assists beneficiaries in filing a claim on a life insurance policy C) Places insurance with nonadmitted carriers D) Negotiates life settlement contracts between the owner and providers
D) Negotiates life settlement contracts between the owner and providers
Which statement best describes agreement as it related to insurance contracts? A) All parties must be capable of entering into a contract B) Each party accepts the exact terms of the other party's offer C) The intent of the contract must be legally acceptable to both parties D) One party accepts the exact terms of the other party's offer
D) One party accepts the exact terms of the other party's offer
The policyowner of an Adjustable Life policy wants to increase the death benefit. Which of the following statements is correct regarding this change? A) The death benefit can be increased only when the policy has developed cash value B) The death benefit can be increased only by exchanging the existing policy for a new one C) The death benefit can be increased by providing evidence of insurability D) The death benefit cannot be increased
C) The death benefit can be increased by providing evidence of insurability
What is the purpose of a disability buy-sell agreement? A) To help the business meet overhead expenses in case of the owner's disability B) To protect individuals against loss of income due to a disability C) To allow the business buyout in case of the owner's disability D) To reimburse the business in case of a key employee's disability
C) To allow the business buyout in case of the owner's disability
Core benefits are included in all Medicare supplemental policies. What percentage of Part B coinsurance is required? A) 20% B) 35% C) 10% D) 15%
A) 20%
How long is the grace period for an individual life insurance policy in California? A) 60 days B) 1 month C) 7 to 10 business days D) 3 months
A) 60 days
Which of the following is NOT a feature of a guaranteed renewable provision? A) The insurer can increase the policy premium on an individual basis B) The insured has a unilateral right to renew the policy for the life of the contract C) Coverage is not renewable beyond the insured's age 65 D) The insured's benefits cannot be reduced
A) The insurer can increase the policy premium on an individual basis
Which of the following best describes the difference between joint life and joint and survivor annuity payment options? A) Joint and survivor pays out a smaller benefit B) In joint life option, the benefits stop after the first death C) Joint life covers two or more annuitants D) Joint and survivor is a life contingency option
B) In joint life option, the benefits stop after the first death
Which of the following best describes the type of care provided by HMOs? A) Fee-for-service B) Preventative C) Elective D) Major medical B) Preventative
B) Preventative
All of the following are a consideration in an insurance policy EXCEPT A) The promise to pay covered losses B) The cash value in the policy C) The statements on the application D) The premium paid at the time of application
B) The cash value in the policy
Life insurance creates an immediate estate. Which of the following best explains this statement? A) The death benefit will always be paid to the estate of the insured B) The face value of the policy is payable to the beneficiary upon the death of the insured C) The policy has cash values and nonforfeiture value D) The policy generates immediate cash value
B) The face value of the policy is payable to the beneficiary upon the death of the insured
According to the Common Disaster Clause, if the insured and primary beneficiary are both killed in the same accident and it cannot be determined who died first, which of the following will be assumed? A) The insured died before the primary beneficiary B) The primary beneficiary died before the insured C) The death occurred at the same time D) The estate of the primary beneficiary and the contingent beneficiary split benefits equally
B) The primary beneficiary died before the insured
Medicare is a health insurance program for all of the following individuals EXCEPT A) Those who have been on Social Security Disability for 2 years B) Those with low income and low assets C) Those 65 or older D) Those with permanent kidney failure
B) Those with low income and low assets
Which of the following becomes part of the contract, is guaranteed to be true, and if untrue, may be grounds for rescinding a policy? A) Contract of adhesion B) Warranty C) Consideration D) Facility of payment clause
B) Warranty
When is an insurance license considered inactive? A) When it's a temporary license B) When no company appointment is in effect for the license C) When the agent is not conducting business with the general public D) When renewal fees are not paid
B) When no company appointment is in effect for the license
An individual is approaching retirement age and is concerned about having proper coverage would he have to be placed in Long-Term Care (LTC) facility. His agent told him that LTC policies would provide necessary coverage at all of the following levels EXCEPT A) Intermediate B) Skilled C) Acute D) Custodial
C) Acute
An underwriter is reviewing an applicant with an extensive medical history. Which of the following would give the underwriter a better understanding of how the applicant has been treated for various illnesses? A) Policy application B) Medical exam C) Attending physician's statement D) MIB report
C) Attending physician's statement
Which of the following describes the relationship between a capital sum and a principal sum? A) Capital sums vary, while principal sums do not B) Principal sums are percentages of capital sums C) Capital sums are percentages of principal sums D) Principal sums vary, while capital sums do not
C) Capital sums are percentages of principal sums
What is a penalty tax for nonqualified distributions from a health savings account? A) 8% B) 10% C) 12% D) 20%
D) 20%
To attain "fully insured" status under social security, an individual must have earned how many credit? A) 6 B) 10 C) 20 D) 40
D) 40
