Final #1
Life insurance illustrations showing premiums, values, credits or charges that are not determined at issue are demonstrating:
Non-guaranteed elements
all of the following are eligible for dependent coverage under an employer's group health insurance policy EXCEPT:
all unmarried grandchildren under age 21 who live with the covered employee
all of the following are considered insurance transactions EXCEPT:
an agency installs new premium accounting software
upon notification of a claim, a claimant may have access to the California fair claims settlement practices regulations through all of the following means EXCEPT:
an interview appointment with the agent of record
how often MUST life insurance surplus be distributed to policy owners?
annually
which contract provides for the systematic liquidation of a fund
annuity
the insurance code requires insurance companies selling term life insurance to individual 55 or older must inform the consumer that:
benefits and limitations should be considered prior to purchase
In a noncontributory group disability income insurance plan, what is the tax treatment of benefits received by an employee?
benefits are included in the employee's gross income
if an employer wants to provide their own coverage, but does not have the staff or expertise to administer the coverage. which option is available?
establish a self-funded plan and hire a third party administrator
What is PPACA?
federal statute (Patient Protection & Affordable Care Act) involving major reforms to health care
when notifying the insured of a policy information change, the California Insurance Code rules that notification must be sent by:
from lowest to highest, which is the CORRECT order of initial premiums for life insurance policies
modified premium, ordinary life, single premium
Insurance solicitation includes all of the following activities EXCEPT:
publishing a newspaper in which one of the advertisers is an insurance agent
if an insurer indicates that an illustration will be used, they must do which of the following?
send a summary status report to the policy owner annually
an agent who sells long-term care insurance owes his policyholders and prospective clients all of the following EXCEPT:
sincerity
rehabilitation benefits in a disability income policy may cover all of the following EXCEPT:
six months' rent for a new office
in the workers' compensation policy, part one, workers' compensation, pays for
sums the insured is required to pay under state workers' compensation law
according to California insurance code, an illustration used to sell life insurance must include all of the following information EXCEPT:
the probability that illustrated non-guaranteed scenarios will occur
the California insurance code dictates good faith communication in insurance contracts and claims. the parties to the contract include all of the following, EXCEPT:
the state
a policy holder stops making payments on a 20-pay life policy and converts the cash surrender value to extended term insurance. all of the following statements are true, EXCEPT:
the term policy will have the same loan value as the original policy
Qualifying events that would result in the loss of coverage under COBRA include all of the following EXCEPT:
the termination of an employee for gross misconduct
What does the statement "Life insurance creates an immediate estate" mean?
the total cash value is available immediately
which statement is included in all qualified long-term care policies?
this contract may qualify you for federal and state tax benefits
according to the California insurance code, if a company's certificate of authority is revoked, the commissioner may do any of the following EXCEPT:
use Guarantee Association funds to pay salaries
a product provides annuity benefits that may vary according to any separate account or accounts maintained by the insurer. this describes:
variable annuity
what is an aleatory contract? a contract
which the performance of one or both parties to the contract are based upon the occurrence of a particular event
an insured has a disability income policy that pays $1500/month with a 30-day elimination period. he is disabled for 120 days. his policy has paid benefits totaling:
$4500
What maximum amount of employer-provided group-term life insurance is tax-free (excluded from an employee's income)?
$50,000
violating the federal law that prohibits certain acts in the business of insurance is punishable by a fine up to:
$50,000
if an insurer inadvertently is found guilty of unfair trade practices while issuing, renewing and servicing a policy, the insurer could be prosecuted for how many violations?
1
Violating the federal law that prohibits certain acts in the business of insurance is punishable by imprisonment for up to:
10 or 15 years
the laws of most states require that a cash surrender benefit be provided in all of the following types of insurance policies EXCEPT:
10-year convertible term policy
in a qualified benefit plan with a 5 year vesting schedule, employer contributions are vested at what percentage at 5 years?
100%
which of the following provisions can protect an insurance company from a lawsuit before they hav time to investigate a claim?
incontestability
What information can a party to a contract of insurance be allowed NOT to communicate according to California law?
information which the other party already knows
creditors have rights to life insurance policy proceeds when the beneficiary is the
insured's estate
in a group life insurance policy, who are the parties to the master contract?
insurer and employer
The payor rider on a juvenile life policy provides that if the payor dies or becomes disabled before the insured juvenile reaches the age specified in the policy that the
insurer will make the payments until the insured juvenile reaches a specified age--usually twenty-one or twenty-five
Which of the following is NOT a type of authority associated with the authority of agents?
justified
the following classes of service are all under the jurisdiction of the DOI EXCEPT:
lasik
the California insurance code that provides an applicant the right to cancel an insurance policy by returning it only applies to policies with a face amount of:
less than $10,000
The usual amount of death benefit in an industrial life insurance policy is:
less than $2,000
the MINIMUM number of employees for group life insurance in California is:
2
how long is the life insurance policy grace period
2 months
the initial enrollment period for medicare part b ends how many months after the 65th birthday month?
3 months
to be fully insured for social security benefits, a worker must be credited with:
40 quarters
a 10-year certain annuity with an installment refund is purchased. the annuitant dies after receiving monthly payments for 5 years. how many remaining payments will the insurer make?
60 payments
In a 5-year vesting schedule what percentage is vested after 4 years?
80%
If a child is incapable of self-sustaining employment due to a physically or mentally disabling injury, illness, or condition, how long may coverage continue under an employer's group health insurance plan?
As long as the child is dependent upon the employee for support and maintenance
Which of the following statements about life insurance policy provisions is correct?
Certain provisions are prohibited by law from appearing in a life insurance contract
Which of the following is NOT covered by the CLHIGA?
Group stop loss plans
All of the following are under the jurisdiction of the Department of Insurance EXCEPT:
HMOs
Which organization designs standard insurance policy forms?
ISO - insurance services offices
Which government regulation prevents retirement plans from favoring highly compensated employees?
Nondiscrimination
What is the difference between a conditional premium receipt and a binding premium receipt?
Only a binding receipt always provides insurance that is effective from the date the receipt is given
under PPACA, what is a health benefit exchange
PPACA creates new entities called American Health Benefit Exchanges through which individuals, small businesses, and those who do not have access to affordable employer coverage, can purchase coverage
which plan is most likely to pay benefits of 90% for in-network providers and 70% for out-of network-providers?
PPO
RW and Associates is an agency which represents BLG Insurance Corporation in its advertisements by clearly stating the relationship between the two businesses in any of the following ways, EXCEPT:
RW and Associates underwriting for BLG Insurance Corporation
in disability insurance the benefit waiting period is also known as the:
elimination period
A parent who lives at home is being cared for by an adult daughter on a full time basis. Which of the following would provide care if the daughter needs a period of separation?
Respite care
When a corporation ceases to exist entirely, its insurance license:
Terminates unless the corporation files an application to continue to transact within 30 days
Which of the following contracts provides benefits that fluctuate automatically with investment results?
Variable life insurance
all of the following apply to an insurance broker (not an insurance agent), EXCEPT:
a broker acts on behalf of an insurer
Which of the following statements defines partial disability?
a disabled employee while he is working part-time and receiving lost income under the company's long-term disability benefit
in california, an insurer organized under the state laws of Nevada is considered:
a foreign insurer
Which contract promises to pay the owner a guaranteed minimum income for as long as the individual lives?
a life annuity
any situation that presents the possibility of a loss is known as:
a loss exposure
select the choice which best describes an insurance agent
a person who, for compensation, on behalf of another person, transacts insurance on behalf of the insured
under a disability insurance policy, an insured is eligible for a waiver of premium benefit:
after total disability
who must submit a signed statement saying that an illustration is used
agent and applicant
when an insurance agent advertises on the internet for insurance transacted in the state of California, all of the following information must be provided EXCEPT:
agent's business phone number
the following expenses are important characteristics in a major medical policy EXCEPT:
capitation fee
An insurer owned by a parent company that provides insurance to cover the parent company's loss exposures is a:
captive insurer
when one person applies for an insurance policy on the life of another the application must be signed by both the applicant and the person whose life is to be insured. the proposed insured's signature on the application indicates that he or she:
consents to the issuance of insurance on his or her life that will be owned and controlled by someone else
as defined by the California insurance code, "insurance" is a:
contract
sales materials promoting term life insurance to individual 55 or older must provide the consumer all of the following information EXCEPT:
conversion options
which policy is a savings instrument designed to first accumulate funds and then systematically to liquidate the funds?
deferred annuity
according to the California code of regulations governing the settlement of claims, which of the following actions is fair and equitable in settling a claim?
delaying a decision in order to investigate
in order to qualify for social security retirement benefits the worker must be:
fully insured
insurers offering individual life insurance policies or annuities to senior citizens that use non-guaranteed elements in illustrations must provide a statement to that effect. Which of the following is correct regarding this statement?
guaranteed elements must be in bold print and non-guaranteed elements must be in plain type
preprinted illustrations used to sell non guaranteed individual annuity and life policies must show:
guaranteed values in bold print and non guaranteed values in standard print
which provision best protects an insurer from adverse selection
illness waiver
in health insurance, the result of rising morbidity rates is
increased premiums
all of the following might opt for a self-insured medical and disability policy, EXCEPT:
individuals
a beneficiary wants to let the death benefit accumulate and receive only the monthly investment proceeds. which settlement option should be chosen?
interest option
all of the following are true of insurance EXCEPT:
it eliminates risk
how is medical loss ratio used:
it lets consumers know. how much money an insurer is paying out in claims and how much it uses to cover its administrative costs and profits
the federal tax treatment of employee insurance is characterized by the fact:
key employee insurance premium payments generally qualify as a reasonable business need for purposes of the accumulated earnings tax
what is the cost of service from the health insurance counseling advocacy program (HICAP)
no charge
what does the term non-medical life insurance mean?
no physical examinations is required
the insurance term used for an insurer who has not compiled with the requirements to obtain a certificate of authority from the California insurance commissioner is:
non admitted
according to California insurance code, how must an agent publicize the right to return information to a senior citizen purchasing an annuity policy?
on the cover page of a policy jacket
what refund is owed when a senior citizen elects the right to return and cancels an individual variable annuity policy invested in a money market fund?
paid premiums and policy fees
in life insurance, the only measure of liability is the amount:
payable as provided in the policy
direct response marketing uses all of the following EXCEPT:
phone calls from agents
all of the following may be named as exclusions in a group disability income policy EXCEPT:
pregnancy
which of the following allows employees to share in the financial success of the company
profit sharing plan
if an insurer knowingly allows one of its agents to mislead a member of the public in order to induce the person to change their existing insurance, the commissioner may:
suspend the insurer's certificate of authority for the class of business involved
an individual with a low income and high insurance needs should buy
term insurance
disability income insurance payments are based on:
the amount needed to continue the insured's standard of living
when an agent takes an application or receives premium moneys for an application, including a health policy, the insurance code specifically requires the agent to disclose to the insured or applicant:
the effective date of coverage, if known, or the circumstances under which coverage will be effective
what rule is used to determine the importance of a representation?
the materiality of concealment
which of the following is NOT a characteristic of a contributory group insurance plan?
the policy owner pays all of the cost
when must insurance records for insurance agents and insurance brokers be made available to the insurance commissioner?
at all times
When is the automatic loan provision activated?
at the end of the grace period
assuming all of the following would have an equivalent face amount, which would have the lowest premium in the first year if the insured were 22 years old?
five-year term insurance
In financial planning, what is the Human Life Value concept based on?
income
in a 6-year vesting schedule, what percentage of employer contributions must be vested after 6 years?
100%
a life insurance policy written after 1988 that fails to meet the seven-pay test is known as
a modified endowment contract
the rules regarding life insurance policy illustrations are intended to ensure all of the following, EXCEPT:
ensure that the illustration specifies that both guaranteed and non-guaranteed elements will continue unchanged for all years shown
In financial planning, what is the Needs Approach concept based on?
family's needs
Which of the following replaces the universal life's pure fixed fund cash value with a facility for the policy owner to select the investment media in which the cash value is placed?
flexible premium variable life
vision insurance usually limits coverage in all of the following ways EXCEPT for:
a specific dollar amount for examinations
All of the following are required to be included in life insurance illustrations, EXCEPT:
a statement that the benefits in the illustration are guaranteed
a married couple has a handicapped child that depends on them for care taking. if one of the parents dies it will not put a significant financial strain on the family. if both parents die, there will be a significant financial problem. of the following, which is the best insurance product to deal with this situation:
a survivor policy (second-to-die)
transferring ownership rights from the current owner to another person is known as:
assignment
all of the following are qualified retirement plans EXCEPT:
deferred compensation plans
In which of the following qualified pension plans are benefits linked to the employee's years of service and/or amount of compensation?
defined benefit plan
the employee retirement income security act of 1974 (ERISA) regulates group health insurance in the area of
disclosure and reporting
non-participating life insurance policies provide all of the following, EXCEPT:
dividends
Under the ADA, which of the following is an activity of daily living
eating
who pays the premiums for voluntary group life insurance benefits made available through an employer?
employee
Persistency in group health insurance is important for all of the following reasons EXCEPT:
employees tend to utilize insurance benefits at a greater rate each year the contract is in force
All of the following are covered by the CLHIGA, EXCEPT:
employer self-funded plans
after receiving care by a physician, how is a patient notified of medicare's decision to cover it?
medicare summary notice (msn)
an example of a moral hazard in relation to a life insurance application would be:
misstating your health history to an insurance company
what refund is owed when a senior citizen elects the right to return and cancels an individual variable annuity policy invested in a mutual fund?
premiums paid minus policy fees
What is Medicare Part D
prescription drug coverage
if an insurer must have its rates accepted by the department of insurance prior to using them, then the insurer would be under which jurisdiction?
prior approval
All of the following are included in mortality tables, EXCEPT:
probability of living at end of year
Which retirement plan is often used to distribute a portion of an employer's favorable financial experience to employees?
profit sharing plans
negotiating an insurance policy means which of the following
promising a commission rebate to an existing insured if she renews
when premium payments on a whole life insurance policy are being waived because the person whose life is insured is totally disabled, the actual effect on the policy's cash value will be to:
provide for the continued increase in the cash value during the period of disability
In the state of California:
providing free insurance coverage in connection with an inducement to completing the transaction is prohibited
all of the following conditions must be met to qualify for residual disability benefits under a disability income policy EXCEPT:
qualifies for social security disability benefits
the women's health & cancer rights act requires that when a group health plan provides coverage for mastectomy it must also provide coverage for which of the following?
reconstructive breast surgery
Which nonforfeiture option uses an existing policy's cash value to purchase a paid-up policy with a lower face value than the original policy?
reduced paid-up insurance option
What is the performance of an equity index annuity based on?
s&p 500
Who will ultimately be held responsible for the information on an agent's website?
the agent
who must sign a statement acknowledging that a life insurance policy is to be replaced by an applicant
the applicant and the agent
a life insurance application is important for all of the following reasons EXCEPT:
the beneficiary must sign the application before the insurer will issue the policy
How does the cost recovery rule apply when a life insurance policy is surrendered for its cash value?
the cost basis of the policy is exempt from taxation
what are the tax consequences when an employer provides an employee with more than $50,000 of coverage under the employer's group life insurance plan?
the cost of coverage in excess of the first $50,000 will be included as income and appear on the employee's W-2
an elimination period in a disability income policy serves the same function as:
the deductible in a medical expense policy
Non-preprinted illustrations selling non-guaranteed individual life and annuity policies must include a statement providing the following information:
the illustration is an illustration only and not a prediction of actual performance
The mathematical rule that says that as the number of individual but similar exposure units increases the easier it is to predict losses is which of the following?
the law of large numbers
if an insurance company knowingly allows one if its life agents or brokers to guarantee interest income to an insured on one of its policies, the Department of Insurance can do all of the following EXCEPT:
use the Insurance Guarantee Association to pay the salaries of employees
The insured is totally and permanently disabled. The insured's policy continues in force without payment of further premiums because the policy contains a
waiver of premium provision
when does the license of a life agent become inactive?
when the agent is not currently appointed by an insurer, but renewal fees are paid and continuing education requirements have been met
