CA Life and Health Ins Exam

In a modified endowment contract, the penalty tax imposed on withdrawals is

10%

Mark, age 45, has a Modified Endowment Contract (MEC). What is the tax penalty for taking a loan against this policy prior to age 59 1/2?

10%

What percentage of eligible employees must participate in a noncontributory group health plan before it can be put in effect?

100%

Jerry is an insured who understated his age on his life insurance application, paying $12 per $1,000 of insurance instead of $15 per $1,000. If he dies, how will the adjusted death benefit be calculated?

12/15th of the policy's face amount

Medicare Part B has initial enrollment period. How many months after an individual's 65th birthday month does this enrollment period end?

3 months

At what age is a surviving spouse without dependents eligible for Social Security survivor benefits?

60

Individuals become eligible for Medicare Part A benefits at what age?

65

An insurance policy written after 1988 that fails to pass the seven-pay test is known as

A modified endowment contract

During the underwriting process for a group health policy, it was discovered that 15 out of 50 members of the group have major health issues. How would the insurer handle this?

Accept or reject the whole group

If an insured dies because of an accident, which type of life insurance rider will provide additional coverage?

Accidental death rider

Life insurance surplus must be distributed to policy owners at what frequency?

Annually

The systematic liquidation of a sum of money is provided by a(n)

Annuity

Which of the following is NOT a true description of non-medical life insurance?

Applicants are not required to answer medical questions on the application

What are collateral assignments normally associated with?

Bank loans

How does a conditional receipt differ from a binding receipt?

Binding receipts always provide insurance which starts from the date of receipt

Which of the following is an insurer established by a parent company for the purpose of insuring the parent company's loss exposure?

Captive insurer

What is a participating life insurance policy?

Contract that allows the policyowner to receive a share of surplus in the form of policy dividends.

Tim was recently terminated from his employment and opted to change his existing group term life insurance to individual permanent life insurance. What is this process called?

Conversion

Which of the following is NOT true regarding a family policy that covers children?

Conversion of child's coverage to permanent insurance requires evidence of insurability

The problem of overinsurance is addressed in which health insurance provision?

Coordination of benefits

When an insurance company request an attending physician's report, the request must be accompanied by a

Copy of the signed authorization

Which of the following types of life insurance is normally associated with mortgage loan?

Decreasing term

Which of the following is NOT a component of determining policy premiums?

Dividends

Which of the following does Medicare Part A NOT provide coverage for?

Doctor's services

Which statement is TRUE regarding Workers' Compensation coverage

Employer pays the entire premium fir Workers' Compensation coverage

Which of the following is NOT a characteristic of the conversion privilege?

Employer pays the premium for the converted policy

A life insurance policy that pay the face amount if the insured survives to a specified period of the time is called

Endowment insurance

Which of the following types of information is NOT required for a life insurance application?

Ethnicity

How is a Medicare claim submitted?

Expenses are submitted to Medicare by the health provider

Which of the following is NOT a common life insurance policy rider?

Extended term

Which of the following is NOT a life insurance settlement option?

Extended term option

What time period allows an insured's life insurance policy to remain in force even if the premium was not paid on the due date?

Grace period

Which policy provision protects the policyowner from unintentional lapse of the contract?

Grace period

Which of the following refers to a condition that may increase the chance of a loss resulting from a given cause of loss?

Hazard

Which principle is accurately described with the statement "Insured are entitled to recover an amount NOT greater than the amount of their loss"

Indemnity

Which of the following contracts is defined as "one the restores an injured party to the condition that was present before the loss"?

Indemnity contract

All of the following are considered characteristic of group life insurance EXCEPT

Individual policies

Which of the following is a contract that involves one party which indemnifies another when a loss arises from an unknown event?

Insurance contract

When does a life insurance policy's waiver of premium take effect?

Insured becomes totally disabled

Who is a financially liable for the payment of covered claims in a fully insured group health plan?

Insurer

When calculating life insurance premium rates, which component would an agent's commission fall under?

Insurer's expenses

Pam is the primary beneficiary of life insurance policy and wants to let the death benefit accumulate and receive only the monthly investment proceeds. Which settlement option should she choose?

Interest Option

Which of the following describes the statement " The more times an event is repeated, the more predictable the outcomes becomes"?

Law of large numbers

Buy-sell plans are typically funded by which two types of insurance?

Life insurance and disability insurance

Which of the following is NOT an element of an insurable risk?

Loss must be catastrophic

Which of the following is NOT a benefit of insurance?

Losses due to fraud are eliminated

What does the grace period allow a life insurance policyowner to do?

Make a premium payment after the due date without any loss of coverage

The importance of representation is demonstrated in what rule?

Materiality of concealment

Most U.S. life insurance companies belong to the

Medical Information Bureau

How does underwriting differ between group life and individual life insurance?

Medical question must be answered on individual life insurance

Which of these is NOT a valid policy dividend option?

Monthly income payments

Which of the following describe the increase int he probability of a loss due to an insured's dishonest tendencies?

Moral hazard

When calculating life insurance premium rates, which component is affected by an insured's age and gender?

Mortality

Which of the following describes the number of deaths in a year compared to the number of people in a select group?

Mortality rate

The probability of death, listed by year, are demonstrated in

Mortality tables

A participating company is also referred to as which type of insurer?

Mutual insurer

Disabled workers are covered under Workers' Compensation medical expense benefits for how long?

NO limit

Which of the following is life insurance policy that does NOT require a physical exam?

Non-medical

Which of the following is NOT a feature of equity-indexed annuities?

Offers a maximum interest rate that increases annually

Which of the following statements correctly describes a contact of indemnity?

One party is restored to the same financial positions the party was in before the loss occurred

A unilateral contact is one in which

Only one party (the insurer) makes any kind of legally enforceable

Which of the following describe a contributory group insurance plan?

Part of the premium is paid by the employee

Who is issued a certification of insurance with a group insurance policy?

Participant

John has an insurance policy that gives him the right to share in the insurer's surplus. What kind of policy is this?

Participating

In a life insurance policy, the entire contract consist of the

Policy and attached application

How are acts of war considered under a group life insurance policy?

Policy exclusion

When an accidental death benefit is added to a whole life policy, how does this affect the policy's cash value?

Policy's cash value is not affected

Coverage for care received from a network provider pays more than care received from a non-network provider in what type of health plan?

Preferred Provide Organization (PPO)

Minimum participation standards exist for group health insurance plans in order to

Prevent adverse selection

Restoring an insured to the same condition as before a loss is known as

Principle of indemnity

Which of the following is NOT required in the content of a policy?

Probability of loss

All of the following circumstances must be met for loss retention to be an effective risk management technique EXCEPT

Probability of loss is unknown

Which of the following is NOT considered ti be a definition of the rem "loss"?

Probability that an event will occur

Which of the following is NOT a requirement for a terminated employee that has exercised the conversion privilege?

Provide proof of insurability

A situation in which there is ONLY a chance of loss or no loss is a

Pure risk

Which of these statements correctly describes risk?

Pure risk is the only insurable risk

After a policy has lasted, which provision allows the insured to continue coverage?

Reinstatement provision

Which of the following is type of insurance where an insurer transfers loss exposures from policies written for its insureds?

Reinsurance

In a Renewable Term Life insurance, the contract will usually

Require a higher premium payable to each renewal

Which course of action is the insurer entitled to when deliberate concealment is committed by the insured?

Rescinding the contract

Which of the following is NOT typically covered under vision care insurance?

Retina surgery

Which of the following would NOT be accomplished with the purchase f an insurance policy?

Risk is eliminated

John and Mary have a handicapped child that is financially dependent upon them. The death of one of the parents would not be financially disastrous, however the death of both likely would be. Which policy would be best suited for them?

Second-to-die policy

Medicare Part A covers what type of care?

Skilled nursing facility care

Which type of risk is gambling?

Speculative risk

Which of the following life insurance classifications charges the highest premium?

Substandard

An insurer can be protected from adverse selection with which policy provision?

Suicided clause

A terminated employee that has exercised the conversion privilege is able to convert

Term group life coverage into permanent insurance

Which of the following is NOT considered a definition of risk?

The cause of a loss

a creditor would be allowed rights to life insurance policy proceeds if which of the following beneficiaries is chosen?

The insured's estate

When an applicant applies for insurance, the process by which the insurer determines whether to issue a policy is called

Underwritting

Which of the following types of life insurance combines a saving element along with a flexible premium option?

Universal Life

An annuity which is backed by a life insurer's separate account is called a(n)

Variable annuity

A life insurance policy where the insured can choose where the cash value can be invested is called

Variable life

An employee for XYZ Corp is injured on the job. Where does coverage for the employee's injuries come from?

Workers' Compensation

Which statement is true regarding policy dividends?

a dividend option is selected by the insured at the time of policy purchase

Business Overhead Expense Insurance pays for

business expenses when a business owner becomes disabled

Moral hazard is described as the

increased chance of a loss because of an insured's dishonest tendencies

Premiums are best describe as

money paid by the insured to acquire a policy's benefits

A life insurance policy's limit of liability would be

the policy's face amount