Comprehensive Exam
Insurers must respond in writing to an insured's or claimant's notice of loss within how many days?
15 days: Insurers (and other licensees) must respond in writing to an insured's or claimant's notice of loss within 15 days of receiving that notice orally or in writing.
If a policy is not approved as applied for, the insurer may make: a) A 'counteroffer' to the applicant b) An acceptance to the applicant/insured c) An offer to the insured d) The producer redo the application to get the policy issued as originally applied for
a) A 'counteroffer' to the applicant If a policy is not approved as applied for, the insurer may make a 'counteroffer' to the applicant.
Which of the following annuities typically offers no guarantees? a) Variable b) Fixed c) Bonus Interest Rate Annuities d) Indexed
a) Variable Explanation: The variable annuity holder assumes all investment risk.
Group life insurance is usually written as: a) Whole-life b) Universal life c) Variable universal life d) Annual renewable term
d) Annual renewable term Group life insurance is usually written as annual renewable term.
Whenever an answer to a question on an application needs to be corrected, how is that best handled? a) Submit the application as is and see what the home office underwriters decide to do once they have had time to review it b) By using correction fluid or tape to cover up the incorrect information and writing in the correct information c) The producer indicates the correct information in the comments section of the application d) The applicant or producer makes the correction and the applicant initials the change, or the producer can complete a new application
d) The applicant or producer makes the correction and the applicant initials the change, or the producer can complete a new application Whenever an answer to a question on an application needs to be corrected, the applicant or producer makes the correction and the applicant initials the change, or the producer can complete a new application.
All of the following statements are true of a juvenile policy, except: a) The death benefit can increase at a specified age usually 21 or 25 without proof of insurability b) The premiums remain level c) The insured is the premium payor d) The death benefit increase is typically 5 times the original issue amount
d) The insured is the premium payor Explanation: The premium payor is an adult typically the parent of the minor insured.
P has a traditional participating whole life insurance policy with a death benefit of $100,000, $5,000 in dividend additions, and a $4,000 policy loan and loan interest. P reaches age 100. What is the amount the insurance company owes P?
$101,000 It is prohibited for an insurance company to offer any settlement at maturity of less value than the amount insured by the policy, plus dividend additions, less any outstanding policy loans and loan interest and less any unpaid premium. $100,000 + $5,000 - $4,000 = $101,000.
An evaluation of Simon's past earnings reveals his average earned monthly income to be about $4,000 monthly. The greatest amount of benefit that Simon will likely be able to purchase under a Disability Income Policy, in order to reduce malingering in the event of a claim, is $_____________ monthly.
$2,500 monthly Explanation: Benefits are usually determined as a percentage of the insured's current earnings, normally 60 to 70%. Simon would be unlikely to obtain 100% of his income as a disability benefit.
Social Security pays an eligible surviving spouse (or minor child) a one-time benefit upon the death of a covered worker. Which of the following is the amount of that benefit?
$255 Explanation: A one-time benefit of $255 is paid to a surviving spouse or child if he/she is eligible for Social Security benefits.
Furnishing false information to the Commissioner is subject to a civil penalty of $100,000 plus what amount per 30 days period of noncompliance?
$5,000 Explanation: Civil penalties for persons who furnish false information to the Commissioner may be issued up to $100,000 per violation, as well as a $5,000 penalty for every 30-day period during which the person fails to comply with a request.
Persons who transact insurance without being appropriately licensed may be issued a cease and desist order, carrying administrative penalties of up to how much per day?
$5,000 Persons who transact insurance without being appropriately licensed may be issued a cease and desist order, carrying administrative penalties of up to $5,000 per day for each day a violation occurred.
Q has a traditional whole life policy with a $10,000 face amount, a $5,000 cash value, and a $4,999 policy loan and loan interest outstanding. Q will forfeit the policy when the policy loan reaches ________ for failing to pay loan interest on a timely basis.
$5000 Explanation: It is prohibited for forfeiture of the policy for failure to repay any loan on the policy or to pay interest on the loan while the total indebtedness on the policy is less than the loan value of the policy.
A $100,000 policy with a waiver of premium rider and $30,000 of cash value is in force. The base policy costs $750 and the rider is $50. What is the total premium annually the policyowner must pay to keep the policy in force?
$800 Explanation: Riders such as the waiver of premium are a provided benefit for an additional cost, therefore the annual premium would be $800 ($750 + $50).
The Commissioner may suspend or revoke a license or certificate of authority, not to exceed ______ year(s), of anyone for willfully violating the prohibition on arranging for the sale of free insurance.
1 year Under the California Insurance Code the Commissioner may suspend or revoke a license or certificate of authority not to exceed 1 year of anyone for willfully violating the prohibition on arranging for the sale of free insurance.
The mortality rate is based on mortality tables which show life expectancy and the death rate per _______ people living in the U.S.
1,000 Explanation: Mortality tables show the death rate per 1,000, similar to how policy premiums are based on, a rate per $1,000 of coverage.
Under the PPACA, insurers are required to cover children under ______ with preexisting conditions and are prevented from dropping policyholders if they get sick.
19 Under the Patient Protection and Affordable Care Act, insurers are required to cover children under 19 with preexisting conditions and are prevented from dropping policyholders if they get sick.
A listing of prescription drugs that are covered under Medicare Part D are placed into different tiers, which are categorized based on cost and must include at least _____ drugs in each treatment category, but is not required to include all drugs.
2 A listing of prescription drugs that are covered under Medicare Part D are placed into different tiers, which are categorized based on cost and must include at least 2 drugs in each treatment category, but is not required to include all drugs.
How long, typically, is the reinstatement period from policy lapse?
3 years Explanation: Typically, the reinstatement period is 3 years, but it can be up to 5 years with some policies or some insurers.
Every Long-Term Care policy must provide a ______ -day free look period from the date the policy is delivered.
30 day Every Long-Term Care policy must provide a 30-day free look period from the date the policy is delivered.
Persons who are defined as a senior citizen on the date of purchase of a life insurance policy or an annuity must be given a free look period of how many days?
30 days: Explanation: Persons who are 60 years of age or older on the date of purchase of a life insurance policy or an annuity must be given a 30-day free look period.
A restricted license requires the agent to comply with all laws, complete all CE requirements and license renewals on time for up to _____ years.
4 years Under the California Insurance Code, a restricted license requires the agent to comply with all laws, and complete all CE requirements and license renewals on time for up to 4 years.
The waiting period from the start of a disability to be eligible to apply for social security disability is ____ months.
5 months The waiting period to apply for Social Security is 5 full months from the start of a qualified disability.
The California Insurance Code requires all producers who meet with prospective clients age 65 and older in their homes for the purpose of transacting life insurance, annuities, or disability insurance products to first provide a written notice of the first meeting which producers must retain a copy of in their files for a minimum of ______ years.
5 years The California Insurance Code requires all producers who meet with prospective clients age 65 and older in their homes for the purpose of transacting life insurance, annuities, or disability insurance products to first provide a written notice of the first meeting which producers must retain a copy of in their files for a minimum of 5 years.
The Medicare supplement open enrollment period lasts for ______ months beginning the month an individual turns age 65 and enrolls in Medicare Part B.
6 months Explanation: The Medicare supplement plan, often referred to as Medigap, open enrollment period lasts for 6 months beginning the month an individual turns age 65 and enrolls in Medicare Part B.
If the insured is receiving regular disability income payments, the insurer can require notice of continuance of claim every ______ months.
6 months If the insured is receiving regular disability income payments, the insurer can require notice of continuance of claim every 6 months.
Group insurance plans must have a grace period of how many days?
60 days Group insurance plans must have a grace period of 60 days.
The Code requires insurers to notify the Fraud Division within how many days of uncovering an incident of actual or suspected fraud?
60 days: All admitted insurers are required to maintain a Special Investigations Unit (SIU) for the express purpose of detecting and investigating fraudulent claims. The Code also requires insurers to notify the Fraud Division within 60 days of uncovering an incident of actual or suspected fraud.
Originally, Medicare was for U.S. citizens age _______ and over.
65 Explanation: An amendment to the Social Security Act by Congress in 1965 created the Medicare program that was designed primarily for our citizens age 65 or over and was expanded to cover those persons of any age diagnosed with End Stage Renal Disease (ESRD) or Lou Gehrig's disease (ALS) who are currently insured under Social Security.
Which of the following would likely be considered a deceptive advertising? a) A magazine advertisement for a product not available for sale in California without a disclaimer concerning its availability b) Including a statement of the insurer's current financial strength rating c) A statement that the insurer handles claims quickly and efficiently d) Failure to include a statement that the insurer is a member of the California Insurance Guarantee Association
a) A magazine advertisement for a product not available for sale in California without a disclaimer concerning its availability Explanation: Advertising a product the insurer is unwilling or unable to sell in California is deceptive if the advertising fails to include a disclaimer that a product 'may not be available in all states.' Advertising an insurer's participation in one or both of the Guarantee Associations is a prohibited act.
In the insurance world, a potential for a loss is said to be: a) A risk b) An insurable interest c) A peril d) A hazard
a) A risk Explanation: Risk, simply defined, is uncertainty concerning a loss.
Typical exclusions or restrictions found in an accelerated death benefit include all of the following, except: a) Accidental injury while at work b) Engaging in illegal occupations or activities c) Suicide d) Intentional self-inflicted injury
a) Accidental injury while at work Explanation: The accelerated death benefit cannot contain exclusions or restrictions that are not also exclusions or restrictions in the policy, such as, suicide, intentional self-inflicted injury, war, or engaging in illegal occupations or activities.
Which of the following is not true of Medicare Part B? a) All retirees are automatically covered b) Provides coverage for outpatient services c) All recipients pay a monthly premium d) It is optional coverage for those eligible for Part A
a) All retires are automatically covered Explanation: Part B - Medical Insurance (Outpatient) is a voluntary program of government-subsidized insurance requiring participants to make premium payments.
All of the following are exclusions under an LTC policy, except: a) Chemical dependency on one's own prescription drugs b) Injury arising due to committing a felony c) Rest cures d) Nervous or mental disorders that have no demonstrable organic cause
a) Chemical dependency on one's own prescription drugs Explanation: Chemical dependency would not be excluded if it results from the administration of drugs under a physician's prescription and direction.
All of the following are methods of managing risk, except: a) Contracting the risk b) Avoiding the risk c) Retaining the risk d) Transferring the risk
a) Contracting the risk Risk may be avoided, transferred, or retained, in addition to being shared or reduced.
Group Accidental Death and Dismemberment premiums are _______ by the company paying the premiums as a business expense. a) Deductible b) Tax-Free c) Taxable d) Tax-Deferred
a) Deductible Explanation: Group Accidental Death and Dismemberment premiums are tax deductible by the business owner. Benefits are paid income tax-free because they are not considered income.
When replacing a Medicare Supplement policy, a copy of the notice of replacement, signed by the applicant and the agent, must be provided to the applicant and a signed copy must also be retained by the: a) Insurer b) Agency c) Commissioner of Insurance d) Agent
a) Insurer When replacing a Medicare Supplement policy, a copy of the notice of replacement, signed by the applicant and the agent, must be provided to the applicant and a signed copy must also be retained by the insurer.
The MIB obtains its information from which of the following? a) Insurers b) Producer's agencies c) Hospitals d) Physicians
a) Insurers Explanation: The primary purpose of the Medical Information Bureau (MIB) is to collect adverse medical information about an applicant's health that is known to insurers to which the applicant has previously applied for coverage.
Which of the following medical reports cannot be used as the sole basis for rating or denying coverage to an applicant? a) MIB b) Medical Exam c) Attending Physicians d) Paramedical Exam
a) MIB Explanation: The MIB report reveals past medical concerns and cannot be used as the only medical report for rating or denying an application.
All of the following are recognized classes of insurance in California, except: a) Medicare Supplement b) Burglary c) Disability d) Marine
a) Medicare Supplement Explanation: These classes are: Life, Fire, Marine, Title, Surety, Disability, Plate glass, Liability, Workers' Compensation, Common Carrier Liability, Equipment Breakdown, Burglary, Credit, Sprinkler, Team and Vehicle, Automobile, Aircraft, Mortgage Guaranty, Insolvency, Legal Insurance, and Miscellaneous. Medicare Supplement is a subsection of Disability.
To be eligible for a group insurance plan, the group must be: a) A natural group b) Formed for procuring insurance c) Formed for reducing the cost of insurance d) Approved by the Commissioner of Insurance
a) Natural group Explanation: To be eligible for a group insurance plan, the group must be a natural group, meaning it was formed for a purpose other than for procuring or reducing the cost of insurance.
A Whole Life policyowner elects to use his dividends to pay off the policy sooner than originally planned. Which option allows this to occur? a) Paid-Up Option b) Paid-Up Additions Option c) Cash Surrender Option d) Premiums Reduction Option
a) Paid-Up Option Explanation: The Paid-Up Option is designed so that at a future point the base policy is fully prepaid (i.e. no more premiums are due). In Paid-Up Additions, only the additions are paid up, not the base policy. Only a Whole Life can achieve paid-up status.
Under the Family and Medical Leave Act, an employer must maintain the employee's existing level of health coverage (including family or dependent coverage) under a group health plan during the period of, provided the employee: a) Pays his or her share of the premiums b) Is vested c) Has worked for the company for at least 5 years d) Promises to return to work
a) Pays his or her share of the premiums Under the Family and Medical Leave Act (FMLA), an employer always must maintain the employee's existing level of health coverage (including family or dependent coverage) under a group health plan during the period of FMLA leave, provided the employee pays his or her share of the premiums.
To help protect against ___________, group plans have a probationary period set by the group sponsor. a)Preexisting conditions and immediate claims b) Lazy and unmotivated employees c) Inventory shrinkage and bad hires d) High employee turnover
a) Preexisting conditions and immediate claims Explanation: To help protect against preexisting conditions and immediate claims, group plans have a probationary period set by the group sponsor.
The following acts and practices are prohibited, except: a) Providing a prospective applicant, at the time of solicitation, written notice that the Health Insurance Counseling and Advocacy Program (HICAP) provides health insurance counseling to senior California residents free of charge b) Using any method of marketing that fails to conspicuously disclose that a purpose of the advertising is the solicitation of insurance and that contact will be made by an insurance agent or insurance company c) Intentionally making any false or materially inaccurate representation or comparison of two or more policies which induces any person to lapse, forfeit, surrender, or not take, a policy of insurance d) Using any marketing method that induces or even tends to induce the purchase of insurance through force, fright, threat or undue pressure
a) Providing a prospective applicant, at the time of solicitation, written notice that the Health Insurance Counseling and Advocacy Program (HICAP) provides health insurance counseling to senior California residents free of charge Explanation: Providing a prospective applicant, at the time of solicitation, written notice that the Health Insurance Counseling and Advocacy Program (HICAP) provides health insurance counseling to senior California residents free of charge is not a prohibitive act or practice.
All of the following are ways in which an annuity can be classified based on its premium funding method, except: a) Reinvestment b) Periodic c) Single d) Flexible
a) Reinvestment Explanation: Single, Flexible, and Periodic are the ways in which an annuity is classified based on premium payment.
All of the following are a prohibited form of advertising, except: a) Stating that 'We have been in business for over 50 years, for more information contact a local agent.' b) When an insurer excludes coverage for preexisting conditions, an advertisement of the policy that implies that the applicant's medical condition or history will not affect eligibility or payment c) An advertisement that claims settlements are generous or liberal d) An advertisement that uses the words 'only', 'just', 'merely', 'minimum', or similar words to imply a minimal imposition of restrictions and reductions
a) Stating that 'We have been in business for over 50 years, for more information contact a local agent.' Explanation: The other responses reflect prohibited forms of advertising.
The type of disability that impairs an insured's ability to work but a full recovery is expected is considered: a) Temporary b) Total c) Partial d) Permanent
a) Temporary Explanation: With a temporary disability an insured's ability to work is impaired, but a full recovery is expected.
Which of the following statements is accurate concerning the changing of an irrevocable beneficiary? a) The beneficiary may be changed only with the written consent of the present beneficiary b) The beneficiary may be changed only on the anniversary date of the policy c) The beneficiary can never be changed d) The owner may change the irrevocable beneficiary at any time
a) The beneficiary may be changed only with the written consent of the present beneficiary Explanation: Once an irrevocable beneficiary has been declared by the owner of the policy, the beneficiary designation can then be changed only with the irrevocable beneficiary's prior written consent. An irrevocable beneficiary has a vested interest in the policy benefits.
What is the result of an insured not receiving a claim form within the time period allotted after submitting a notice of claim? a) The insured can submit written proof of the loss b) The claim is automatically denied c) The insurer must add a 10% penalty to any amount eventually paid d) The claim is automatically accepted
a) The insured can submit written proof of the loss Explanation: The claim form must be received by the insured from the company within 15 days after notice of claim. If forms are not furnished, the insured may submit written proof of occurrence, character, and extent of loss.
Causing a person to give up an existing contract through surrender, lapse, or other forfeiture is known as: a) Twisting b) Coercion c) Rebating d) Boycott
a) Twisting Causing a person to give up an existing contract through surrender, lapse, or other forfeiture (such as exchanging a whole life policy for a reduced paid-up or extended term policy), is also known as 'twisting.'
Which of the following is a physical hazard? a) Uneven pavement in a sidewalk b) An insured's attitude that good housekeeping is not important c) The storage of flammables in a fireproof container d) Dishonesty on the part of an insured
a) Uneven pavement in a sidewalk Explanation: A physical hazard is a physical condition that increases the probability of loss to the property.
Which of the following concerning Noncontributory Group Life insurance is FALSE? a) An employer pays 75% of the premium b) The employee pays none of the premium c) No evidence of insurability is required on the part of the participant d) 100% participation is required
a)An employer pays 75% of the premium Explanation: To minimize the effects of adverse selection, a noncontributory group life policy must cover 100% of the eligible employees. The employer pays 100% of the premium.
A(n) ___________ designed to produce leads must prominently disclose that 'an insurance agent will contact you', if that is the case.
an advertisement An advertisement designed to produce leads must prominently disclose that 'an insurance agent will contact you', if that is the case.
Which of the following term life insurance policies would have the highest 1st-year annual premium, all other factors being equal? a) 10-year b) 15-year c) 1-year d) 5-year
b) 15-year Explanation: The 15-year term life insurance policy would have the highest first-year premium of the choices provided. In essence, there is a slight overcharge in the early years, to be able to level out the premium for the balance of the years.
Every individual annuity contract delivered or issued for delivery to a senior citizen in California may be returned by the owner to the insurance company or agent who sold the policy within the free look period after receipt of the policy for: a) The amount of cash value in excess of the surrender charge b) A full refund c) The policy's cash values, if any d) The amount of premium deposit in excess of any costs of issuance
b) A full refund Every individual annuity contract delivered or issued for delivery to a senior citizen in California may be returned by the owner to the insurance company or agent who sold the policy within 30 days after receipt of the policy for a full refund.
Which of the following allows reimbursement benefits to be paid directly to medical providers? a) Change of insured b) Assignment of benefits c) Precertification d) Schedule of benefits
b) Assignment of benefits When a policy pays on a reimbursement basis, benefits are paid directly to the insured. The exception to this is if the insured assigned benefits to the provider(s), in which case they would then be paid directly to the provider.
In a long-term care policy transaction, when must the outline of coverage be provided to the applicant? a) At the time of premium collection b) At the time of initial solicitation and prior to the application c) At the time of delivery d) At the time of issuance
b) At the time of the initial solicitation and prior to the application In a long-term care policy transaction an Outline of Coverage must be delivered to an applicant on the initial solicitation and prior to the presentation of the application form.
Credit life insurance typically covers all of the following types of debts, except: a) Mortgages loans b) Business loans c) Personal & educational loans d) Loans covering the purchase of appliances, motor vehicles, mobile homes, and farm equipment
b) Business loans Explanation: Credit life insurance typically covers the following debts, personal and educational loans, mortgage loans, loans covering the purchase of appliances, motor vehicles, mobile homes, and farm equipment, and bank credit and revolving check loans.
Which of the following defines risk? a) Financial interest in property b) Chance of loss c) Cause of loss d) Amount of loss
b) Chance of loss is the definition of risk.
The type of impairment that involves the loss of memory and deductive or abstract reasoning due to an organic mental illness, including Alzheimer's disease and senile dementia, is referred to as: a) Intensive b) Cognitive c) Chronic d) Acute
b) Cognitive Explanation: Cognitive impairment involves the loss of memory and deductive or abstract reasoning due to an organic mental illness, including Alzheimer's disease and senile dementia. It also includes impairment due to traumatic brain injury, such as a stroke or blunt-force trauma.
Under the California Senior Market and Policy Illustrations rules, all preprinted illustrations containing non-guaranteed values must show the: a) Agent's license number and other relevant contact information b) Columns of any guaranteed values in bold print c) Guaranteed portion of any dividends projected d) Historical interest rates credited by the insurer to such polices
b) Columns of any guaranteed values in bold print Under the California Senior Market and Policy Illustrations rules, all preprinted illustrations containing non-guaranteed values must show the columns of any guaranteed values in bold print.
What rider is designed to help the insured offset the effects of future inflation on the policy's face amount? a) Living Needs b) Cost of Living c) Decreasing Term d) Accelerating Benefits
b) Cost of Living Explanation: The Cost of Living Rider allows for the policy's death benefit to keep up with inflation without having to prove insurability but with an increase in premium to reflect the added risk to the insurer.
The California Health Benefit Exchange is also referred to as: a) Medi-Cal b) Covered California c) Cal-Cobra d) 24 Hour Care Coverage
b) Covered California The California Health Benefit Exchange is referred to as Covered California.
The net amount at risk in an Ordinary Whole Life Insurance Policy _________ over the life of the policy. a) Varies b) Decreases c) Remains the same d) Increases
b) Decreases Explanation: As the cash values build, the net amount at risk for the insurer declines since the face amount is the benefit paid out upon the death of the insured. It is a way to keep the premiums affordable as the insured ages and the risk of death increases.
When admission to a hospital's facilities is __________, the insurer may require pre-authorization approval under a managed care plan before claims will be paid. a) An emergency b) Elective c) Critical d) Non-elective
b) Elective Explanation: With a managed health care plan when admission to a hospital's facilities is 'elective', the insurer may require pre-authorization approval before claims will be paid.
Which of the following is considered the responsibility of the California Commissioner of Insurance? a) Sets insurance rates b) Established policies and procedures for dealing with insurer insolvency c) Alters or amends insurance legislation as passed by the state legislature or governing body d) Issues a Certificate of Authority to any insurer that requests one
b) Established policies and procedures for dealing with insurer insolvency Explanation: The Commissioner has no authority to establish laws or alter or amend /insurance laws, that is the responsibility of the legislature. The Commissioner establishes policies and procedures for carrying out the laws. He or she does not set rates. Certificates of Authority go only to authorized insurers.
Offering any kind of insurance as an inducement to the purchase of property or services without a separate fee charged to the insured for the insurance is a violation and is considered: a) Discrimination b) Free Insurance c) Replacement d) Defamation
b) Free Insurance Explanation: No insurer or agent may offer any kind of insurance or annuities in this state as an inducement to the purchase or rental by the public of any property, or services, without any separate charge to the insured for such insurance. Offering free insurance is a violation that may result in suspension or revocation of a license.
An Administrator who collects any charges or premium from or adjusts claims on California residents in connection with life, health, or annuity insurance meet all of the following requirements, except: a) Have a written agreement with an insurer b) Hold a Certificate of Authority issued by the Commissioner c) Hold a Certificate of Registration issued by the Commissioner d) Keep a copy of a written agreement for 5 years after the agreement has ended
b) Hold a Certificate of Authority issued by the Commissioner Explanation: An administrator is any person who collects any charges or premium from, or who adjusts or settles claims on, residents of this state in connection with life, health or annuity insurance coverage and must hold a Certificate of Registration as an administrator issued by the Commissioner. An administrator must have a written agreement with an insurer. A copy of the agreement must be kept for 5 years after the agreement has ended.
What is an impairment rider? a) It pays out an additional benefit in cases where the cause of loss is a result of an accident b) It excludes specific conditions that normally would cause the entire policy to be declined c) It pays out an additional benefit if the insured cannot perform 2 of the 5 specified functional activities d) It guarantees the insured's future insurability
b) It excludes specific conditions that normally would cause the entire policy to be declined Explanation: An impairment rider is a rider added to a policy that will exclude specific conditions that would normally cause a policy to be declined. The use of this rider allows an insured to qualify for a policy with the exclusion attached, where they would otherwise be declined altogether.
All of the following are Optional Uniform Provisions, except: a) Misstatement of Age b) Legal Actions c) Illegal Occupation d) Change of Occupation
b) Legal Actions Explanation: Legal Actions is a Mandatory Uniform Provision. All other responses are Optional Uniform Provisions.
The annuity product which features fixed interest rate guarantees, combined with an interest rate adjustment factor that can cause the surrender value to fluctuate in response to market conditions, is known as: a) Indexed b) Market Value Adjustment c) Fixed d) Variable
b) Market Value Adjustment Explanation: Market-Value Adjustment (Adjusted) Annuity is an annuity product that features fixed interest rate guarantees combined with an interest rate adjustment factor that can cause the surrender value to fluctuate in response to market conditions.
A program designed to provide increased assistance to those who are unable to pay for their medical needs is known as: a) Supplemental Security Income b) Medicaid (In California, Medi-Cal) c) Medicare Part A d) State Supplemental Payment Program
b) Medicaid Explanation: Medicaid (in California, Medi-Cal) is the federal and state administered program that provides increased assistance to those who are unable to pay for their own medical needs.
Which of the following is a limited form of medical expense coverage added to a disability income policy? a) Social insurance supplement rider b) Non-disabling injury rider c) Hospital confinement rider d) Additional monthly benefit rider
b) Non-disabling injury rider Explanation: A Non-Disabling Injury Rider does not pay disability income, but pays medical expenses related to an injury that does not result in total disability (emergency room, x-rays, durable medical equipment, etc.). It is a limited form of medical expense coverage added to a disability income policy.
In California, which of the following is true concerning the right of cancellation period for an individual life insurance policy or individual annuity contract purchased by a senior citizen (60 years of age or older): a) Not less than 60 days b) Not less than 30 days c) Not less than 30 days, nor more than 60 days d) Not less than 10 days, nor more than 30 days
b) Not less than 30 days Explanation: The right of cancellation period for an individual life insurance policy or individual annuity contract purchased by a senior citizen is not less than 30 days.
HMOs are established as either ________, which means the doctor can work with anyone, including HMO members, or ________, which means the doctor can only work with HMO members. a) Staff model, group model b) Open panel, closed panel c) Open group, specified group d) Variable group, fixed group
b) Open panel, closed panel Explanation: As the terms imply, the open panel is open to all patients, and the closed panel is closed to all but the HMO's subscribers.
Which of the following is a policy not issued with a rating? a) Flat Rate b) Preferred Rate c) Tabular Rate d) Lien Plan
b) Preferred Rate Explanation: Individuals who meet certain requirements and qualify for lower premiums, such as ideal health, height, and weight, are issued at preferred rates. Substandard Risks (Higher Risk Exposure) Individuals who are not acceptable at standard or preferred rates because of health, habits, or occupation, and are issued 'rated policies.'
All of the following were eliminated under the PPACA for preventive care and medical screenings, except: a) Coinsurance b) Premiums c) Deductibles d) Copayments
b) Premiums Explanation: Under the Patient Protection and Affordable Care Act, copayments, coinsurance, or deductibles for preventive care and medical screenings were eliminated.
Medicare Part D plans are offered by: a) Pharmaceutical companies b) Private insurers c) State governments d) National drug store chains
b) Private insurers
The nonforfeiture option that provides the least amount of coverage is: a) Automatic Premium Loan b) Reduced Paid-Up c) Extended Term d) Convertible Term
b) Reduced Paid-Up Explanation: Extended term provides the most amount of coverage for the least amount of time, whereas reduced paid-up provides the least amount of coverage for the longest period of time.
If an individual is age 65 or over and continues to work, Medicare is usually the _________ insurer to any employer group health plan the individual participates in. a) Tertiary b) Secondary c) Supplemental d) Primary
b) Secondary If an individual is age 65 or over and continues to work, Medicare is usually the secondary insurer to any employer group health plan the individual participates in.
Which of the following would have the lowest first-year annual premium for a 30-year-old, all other factors being equal? a) Term to age 60 b) Term to age 40 c) Term to age 50 d) Term to age 70
b) Term to age 40 Explanation: 10 years of coverage is less costly than longer terms of coverage.
The predictability of loss improves when the number of similar units increase because of which principle? a) The Law of Averages b) The Law of Large Numbers c) Accumulated Experience d) The Golden Rule of Underwriting
b) The Law of Large Numbers Explanation: The Law of Large Numbers is an underlying principle of insurance, stating that the greater the number of units of exposure, the greater the accuracy in predicting a loss.
Which of the following is true about a Stock Insurance Company? a) Any insurance company whose home office is in this state and is incorporated in this state b) The company is directed by officers and directors and has a stated amount of capital stock owned by stockholders c) Policyholders own the insurance company d) An insurance company whose home office is in some other state, but does business in this state
b) The company is directed by officers and directors and has a stated amount of capital stock owned by stockholders Explanation: A Stock Insurance Company is owned by its stockholders
The intent of the Contract of Indemnity is best described by which of the following? a) The insured indemnifies the insurer for any expenses in adjusting the loss b) The insured's financial condition is the same as it was prior to the loss, with no intent of loss or gain c) The insured sustains a loss as a result of an accident d) The insured's financial condition is as good as, or better than, it was before the loss
b) The insured's financial condition is the same as it was prior to the loss, with no intent of loss or gain Explanation: Indemnity is a fundamental concept governing insurance. It is compensation for the precise loss or injury sustained.
All of the following are requisites of an ideally insurable risk, except: a) The loss must cause economic hardship b) The loss must be unpredictable c) The loss must be definite in terms of cause, time, place, and amount d) Catastrophic perils are typically excluded
b) The loss must be unpredictable Explanation: Losses are to be reasonably predictable when insuring a large number of homogeneous (like) units.
The human life value approach in determining the amount of life insurance someone needs takes into consideration all of the following, except: a) Planned retirement age b) The number of cars the insured and family members own c) Personal and financial information d) Occupation
b) The number of cars the insured and family members own Explanation: The human life value approach takes into consideration the individual's age and gender, the individual's occupation, the individual's annual wage and employment benefits, and the individual's planned retirement age.
The HIV Consent Form specifies which types of individuals may receive __________. a) The underwriter's decision b) The test results c) The name of the medical lab used and lab work d) The amount and type of policy applied for
b) The test results The HIV Consent Form specifically addresses who may receive test results, most often it is the insured's doctor.
If an annuity policyowner stops putting money into their periodic or flexible premium annuity what happens to the policy values? a) They are refunded to the policyowner in a lump sum b) They are protected by the nonforfeiture provision c) They are forfeited to the insurer for breach of contract d) They automatically purchase an immediate payout option
b) They are protected by the nonforfeiture provision Explanation: Just like with life insurance any policy values contained in the contract are nonforfeitable for nonpayment of premium. They can be used for surrender or buying a paid up annuity.
All of the following statements are true regarding Long-Term Care policies, except: a) They may exclude coverage for illegal drug abuse b) They must require prior confinement in a hospital as a condition for payment c) They must have a renewal provision shown on the first page of the policy d) They must provide a free look period of at least 30 days
b) They must require prior confinement in a hospital as a condition for payment Explanation: Prior confinement in a hospital cannot be a condition for coverage or payment.
Which of the following is not a natural person? a) Tom Thumb, a self-employed tailor doing business as Tom Thumb Tailors b) Tom Thumb Tailors, a business operated by Tom Thumb, a sole proprietor c) Tom Thumb, a tailor who is employed by a dry cleaner d) Tom Thumb, a retired tailor who still owns Tom Thumb Tailors
b) Tom Thumb Tailors, a business operated by Tom Thumb, a sole proprietor Explanation: A natural person is a living (or formerly living) human being. A business entity is not a natural person, even when operated as a sole proprietorship.
Which of the following annuities requires the producer to hold a securities registration (license) in order to sell it? a) Fixed b) Variable c) Indexed d) Market Value Adjustment
b) Variable With Variable Annuities, a securities registration (license) is required to be held by the producer in order to sell it.
When are Errors and Omissions claims filed? a) Within 6 months of premium payment b) When clients file a report or a complaint c) When policies are issued other than at the standard rate d) When producers fail to provide their business card at the time of solicitation or sale
b) When clients file a report or a complaint Explanation: Claims are filed due to client reports (complaints) and for a number of reasons, including negligence or inadequacy.
Harry was hospitalized and in a coma for 6 months. When does proof of loss for this claim have to be submitted? a) An executor would be appointed by the courts to handle the necessary paperwork b) Within 1 year, unless he suffers legal incapacity c) Anytime, since he was in a coma and obviously could not submit a claim d) Within 2 years, covered under the contestable period
b) Within 1 year, unless he suffers legal incapacity Explanation: The Proof of Loss Provision (a Mandatory Uniform Provision) stipulates that the insured must provide proof of the loss within 90 days of the loss, or within in the shortest time possible, but not to exceed 1 year unless the insured suffers legal incapacity. Since Harry was in a coma for 6 months, it would not have been possible for him to file a claim within the 90-day time period.
Accident and Health policies provide coverages for all, except: a) Loss of income b) Workers' Compensation claims c) Accidental death and dismemberment d) Medical expenses
b) Workers' Comp claims Explanation: Workers' Compensation is a form of casualty insurance contract, and can only be written with a Property/Casualty license. It is not a disability policy written by Accident and Health insurers.
The Insurance Commissioner is required to: a) Write laws relating to insurance b) Interpret laws relating to insurance c) Approve insurance premium rates d) Approve insurance laws
b) interpret laws relating to insurance The Insurance Commissioner has the duty to interpret laws relating to insurance.
Regarding alternatives to traditional healthcare facilities, the cost of care provided at: a) An urgent care center will be more expensive than a visit to a hospital emergency room b) A surgicenter will be more expensive than an overnight stay in a hospital c) A surgicenter will be less expensive than an overnight stay in a hospital d) An urgent care center will be the same as a visit to a hospital emergency room
c) A surgicenter will be less expensive than an overnight stay in a hospital The cost of care provided at a surgicenter will be less expensive than an overnight stay in a hospital.
A viatical settlement contract must provide the viator with an unconditional right to rescind the contract for at least: a) 15 days after the receipt of the viatical settlement proceeds or execution of the contract b) 30 days after the receipt of the viatical settlement proceeds or 15 days after the contract is executed c) 15 days after the receipt of the viatical settlement proceeds or 30 days after the contract is executed d) 10 days after the receipt of the viatical settlement proceeds or 30 days after the contract is executed
c) A viatical settlement contract must provide the viator with an unconditional right to rescind the contract for at least 15 days after the receipt of the viatical settlement proceeds, or 30 days after the contract is executed.
What type of agent is authorized to transact coverage for sickness and bodily injury, disability income, long-term care, supplemental benefits, and 24-hour care coverage? a) Life b) Annuity c) Accident and Health d) Property and Casualty
c) Accident and Health Explanation: An accident and health agent is authorized to transact coverage for sickness and bodily injury, disability income, long-term care, supplemental benefits, and 24-hour care coverage.
If a group Medicare Supplement policy is terminated by the group policyholder, the insurer must offer a certificate holder: a) A full refund of any premiums paid b) An individual policy with enhanced benefits at a lower premium c) An individual policy providing the same benefits as the group policy or an individual policy that provides only benefits required to meet the minimum standards d) A full refund of any premiums paid less any benefits paid out
c) An individual policy providing the same benefits as the group policy or an individual policy that provides only benefits required to meet the minimum standards If a group Medicare Supplement policy is terminated by the group policyholder, the insurer must offer a certificate holder an individual policy providing the same benefits as the group policy or an individual policy that provides only benefits required to meet the minimum standards.
A life or accident and health agent must provide at the time of ___________ the effective date of coverage, if known, or the circumstances under which coverage will be effective if there exists conditions precedent to coverage. a) Solicitation, illustration, or proposal presentation b) Policy delivery c) Application or receipt of premium d) Any required paramedical exam
c) Application or receipt of premium Explanation: Under the California Insurance Code, a life or accident and health agent must provide at the time of application or receipt of premium the effective date of coverage, if known, or the circumstances under which coverage will be effective if there exists conditions precedent to coverage.
Before a licensed agent may transact insurance, the agent must first be _________ by an admitted insurer or a licensed agency which has a marketing agreement with one or more insurers. a) Certified b) Licensed c) Appointed d) Authorized
c) Appointed Under the California Insurance Code, before a licensed agent may transact insurance, the agent must first be appointed by an admitted insurer or a licensed agency which has a marketing agreement with one or more insurers.
Reimbursement benefits may be paid directly to the medical providers under which condition? a) Loss of income benefits b) Scheduled benefits c) Assignment of benefits d) njury benefits
c) Assignment of benefits Explanation: When a policy pays on a reimbursement basis, benefits are paid directly to the insured. Benefits may be assigned directly to the service provider, who then becomes responsible for filing the claim.
When must required disclosures be provided to a life settlement contract applicant? a) Within 3 business days after the application has been submitted b) At the time the life settlement proceeds are delivered c) At the time of the application d) At the first solicitation
c) At the time of the application Explanation: Required disclosures must be provided to a life settlement contract applicant at the time of application.
With Long-Term Care Insurance coverage, the longer the _________ is, the higher the premium is. a) Elimination Period b) Waiting Period c) Benefit Period d) Preexisting Period
c) Benefit Period A long benefit period is more costly to the insurer. Therefore, the premium is higher.
Under the California Insurance Code, the records required to be maintained for each insurance transaction must include all of the following, except: a) Names b) Amounts and policy numbers of each transaction c) Commission disclosures d) Dates
c) Commission disclosures Under the California Insurance Code, the records required to be maintained must include names, dates, amounts, and policy numbers of each transaction.
Coverage that is substantially the same as or better than the minimum requirements of Medicare Part D is called ________ coverage. a) Superior b) Approved c) Creditable d) Standalone
c) Creditable Creditable coverage is that which is substantially the same as or better than the minimum requirements of Medicare Part D.
A Disability Income Policy has a period of deductibility immediately following a disability during which time benefits are not payable. This period is called a(n): a) Loss of Income b) Probationary Period c) Elimination Period d) Loss of Time
c) Elimination Period A policy may state 6 months elimination period for sickness and immediate coverage or as little as 7 days in case of an accident. Although waiting period means the same thing, elimination period is the most correct term.
Part A of Medicare pays for: a) Dental expenses b) None of the answers listed c) Hospital expenses d) Outpatient expenses
c) Hospital expenses Medicare Part A covers inpatient hospital expenses.
Under the California insurance code an insurer is entitled by law to rescind a policy in all of the following cases, except: a) An intentional and fraudulent omission of matters proving the falsity of a warranty b) Violation of a warranty c) Immaterial misrepresentation d) Intentional or unintentional concealment of information material to the risk being insured
c) Immaterial misrepresentation Under the California insurance code an insurer is entitled by law to rescind a policy in the case of material misrepresentation.
An agent that enters into agreements with more than one insurer is which of the following? a) Direct b) Captive c) Independent d) Exclusive
c) Independent Explanation: The independent agent may represent many insurers at the same time.
Optional Uniform Provisions are included in the contract at the _______ option. a) Commissioner's b) Beneficiary's c) Insurer's d) Insured's
c) Insurer's Explanation: The Optional Uniform Provisions are included at the insurer's option. However, if used, they must conform to that state's insurance code.
What is the term for the increase in predictability of the loss when the number of similar units of risk increase? a) Law of Averages b) Similarity of Units c) Law of Large Numbers d) Accumulated Experience
c) Law of Large Numbers Explanation: The Law of Large Numbers is an underlying principle of insurance; the larger the number of participants in a given arrangement, the more accurate the rate is to the exposure.
______________ give the owner the rights to the accumulation in the contract. a) Annuitization options b) Annuity rules c) Nonforfeiture provisions d) Settlement options
c) Nonforfeiture provisions Explanation: Nonforfeiture provisions give the owner the rights to the accumulation in the contract.
Any employee-paid group life insurance premiums are __________. a) Tax-deductible b) Tax-exempt c) Not tax-deductible d) Tax-deferred
c) Not tax-deductible Any employee-paid group life insurance premiums are not tax-deductible.
Under the Patient Protection and Affordable Care Act, _____________ begins on November 15 before the Benefit Year and ends on February 15 of the Benefit Year. a) Delayed enrollment b) Post enrollment c) Open enrollment d) Pre-enrollment
c) Open enrollment Under the Patient Protection and Affordable Care Act, open enrollment begins on November 15 before the Benefit Year and ends on February 15 of the Benefit Year.
An insurer has the right to request a physical exam or an autopsy to determine its liability to pay benefits. This request may be made under which provision? a) Proofs of Loss b) Intoxicants and Narcotics c) Physical Exam & Autopsy d) Proof of Disability or Death
c) Physical Exam & Autopsy Explanation: According to the Physical Exam and Autopsy Provision (a Mandatory Uniform Provision), the insurer, at its own expense, has the right to request a physical exam or autopsy where not prohibited by law.
If renewal fees are paid and continuing education requirements are satisfied, but an agent has no active Notice of Appointment on file with the Commissioner, the license will be: a) Revoked b) Cancelled c) Placed on inactive status d) Terminated
c) Placed on inactive status Explanation: Under the California Insurance Code, if renewal fees are paid and continuing education requirements are satisfied, but the agent has no active Notice of Appointment on file with the Commissioner, the license will be placed on inactive status.
The replacement rules apply to which one of the following? a) Group life insurance or annuities b) Credit life insurance c) Proposed life insurance that is to replace life insurance issued by a different insurer d) Conversion of an existing policy
c) Proposed life insurance that is to replace life insurance issued by a different insurer Explanation: Replacement rules does not apply to credit life insurance, group life insurance or annuities, conversion of an existing policy, or proposed life insurance that is to replace life insurance issued by the same insurer.
Under the Patient Protection and Affordable Care Act, a(n) _______ enrollment period is the length of time during which a person may enroll in a Qualified Health Plan outside of open enrollment if a qualifying life event, such as marriage, divorce, or the birth of a child, takes place. a) Post b) Qualifying c) Special d) Open
c) Special Under the Patient Protection and Affordable Care Act, a special enrollment period is the length of time during which a person may enroll in a Qualified Health Plan outside of open enrollment if a qualifying life event, such as marriage, divorce, or the birth of a child, takes place.
Insurance contracts are required to include all of the following, except: a) The period during which the insurance is to continue b) The premium rate or basis for determining the final rate c) The financial rating of the insurance company d) The parties between whom the contract is made
c) The financial rating of the insurance company Explanation: The property or life being covered must also be included, however the financial rating of the insurer is not required.
Which of the following is true regarding the California Insurance Guarantee Association? a) Membership in the Association is voluntary on the part of producers, agents, and brokers b) It gives producers, agents, and brokers an excellent tool to induce prospects to purchase insurance c) The primary purpose is to protect insureds from insurers that become insolvent d) Membership in the Association is voluntary on the part of insurers
c) The primary purpose is to protect insureds from insurers that become insolvent Explanation: The purpose of the California Insurance Guarantee Association is to protect policyholders and beneficiaries from the insolvency of insurance companies.
Why are dividends not taxable as income when paid out to a participating policyholder? a) Because they are often the sole source of a policyholders' income b) To create parity with nonparticipating policies under the tax code c) They represent a return of a portion of the premium paid d) They are paid from a non-profit organization
c) They represent a portion of the premium paid Explanation: A participating insurance company's dividend consists of the amount of premium that is returned to the policyowner if the insurance company achieves lower mortality and expense costs than expected.
The medical loss ratio is the ratio of an insurer's claims costs and certain taxes and fees versus its: a) Gross revenues b) General account assets and earnings c) Total premiums received d) Dividend surplus
c) Total premiums received Explanation: Under the Patient Protection and Affordable Care Act, the medical loss ratio is the ratio of an insurer's claims costs and certain taxes and fees versus its total premiums received.
Which of the following policies requires a producer to have both a life and securities license to sell? a) Universal b) Indeterminate Premium c) Variable Universal d) Equity-Indexed
c) Variable Universal Explanation: Both Variable Life and Variable Universal Life require a securities and life license to sell. A securities license is not required for Adjustable Life, Universal Life, or Equity-Indexed Life.
What is the name of the clause which is the insurer's promise to pay the policy's death benefit to the named beneficiary, after receiving due proof of death of the insured, as long as the insured died while the policy was in force? a) The entire contract clause b) The consideration clause c) The insuring clause d) The waiver and estoppel clause
c) the insuring clause The insuring clause is the insurance company's promise to pay the policy's death benefit to the named beneficiary, after receiving due proof of death of the insured, as long as the insured died while the policy was in force.
Which of the following traditional whole life policies has the highest first-year annual premium, all other factors being equal? a) 40-pay life b) 20-pay life c) 30-pay life d) 10-pay life
d) 10-pay life: Explanation: The shorter the premium paying period, the higher the premium. A Limited Pay Life policy of 10 years would have a higher premium than a 20-pay, 30-pay, or 40-pay life policy.
Which of the following is the correct number of days in the grace period for each premium mode? a) 7 days for weekly, 10 days for monthly, 28 for all others b) 10 days for weekly, 15 days for monthly, 31 for all others c) 10 days for weekly, 15 for all others d) 7 days for weekly, 10 days for monthly, 31 for all others
d) 7 days for weekly, 10 days for monthly, 31 for all others Explanation: According to the Grace Period Provision (a Mandatory Uniform Provision), this is the correct response.
Failure of an admitted insurer to accept an application or cancel insurance under conditions less favorable to the insured, except for reasons that apply to all persons of the same marital status, gender, race, color, religion, national origin or sexual orientation is considered: a) A felony b) A method of protecting against adverse selection c) Common practice d) A discriminatory practice
d) A discriminatory practice Under the California insurance code no admitted insurer can fail to accept an application or cancel insurance under conditions less favorable to the insured, except for reasons that apply to all persons of the same marital status, gender, race, color, religion, national origin or sexual orientation. This is a discriminatory practice.
The contracting agency or organizer of a PPO might be any one of the following, except: a) A large employer or trade union b) A commercial insurance company c) A local group of hospitals and physicians d) A neighborhood association
d) A neighborhood association Explanation: The contracting agency or organizer of a PPO might be a commercial insurance company, Blue Cross/Blue Shield, local group of hospitals and physicians, an HMO, large employers, or trade unions.
Which of the following is not a function of insurance? a) It protects against uncertainty and reduces anxiety b) It transfers risk from the insured to the insurer c) It is the substitution of a small certain expense for a large uncertain loss d) It is designed to be used to protect the insured from dishonest acts
d) It is designed to be used to protect the insured from dishonest acts Explanation: The function of insurance is to protect the insured's assets against loss by insurable perils.
A Child Rider that is added to an insured's permanent policy includes which of the following features? a) Coverage is for the same amount as the primary insured b) If the child rider death benefit is paid, it reduces the face amount of coverage c) The covered child becomes the premium payor d) All children (beyond 14 or 15 days of age) are covered, and the rider may be converted to permanent coverage at a specified age without evidence of insurability
d) All children (beyond 14 or 15 days of age) are covered, and the rider may be converted to permanent coverage at a specified age without evidence of insurability Explanation: The benefit of a Child Rider is twofold. It provides basic coverage, and is convertible to a permanent policy without proof of insurability, when the child reaches the maximum age.
What must a producer give an insured who purchased an accident and health policy no later than policy delivery? a) The company's rate book b) Claim forms c) Any and all sales literature d) An outline of coverage (also called a policy summary)
d) An outline of coverage (also called a policy summary) Explanation: An outline of coverage (also called a policy summary) must be provided to a prospective buyer of health insurance at the time of application or policy delivery. The outline of coverage includes benefits, premiums, and other relevant information regarding the sale of the policy.
If an insurer cancels a contract, written notice must be provided to the insured within a certain period of time. This is a requirement under which of the following provisions? a) Legal Actions b) Conformity with State Statutes c) Entire Contract d) Cancellation
d) Cancellation Explanation: Cancellation (an Optional Uniform Provision) establishes that the insurer may cancel a policy with written notice to the insured of between 5 and 31 days, depending on the policy.
Which one of the following is not a source of underwriting information? a) Medical Information Bureau (MIB) b) An inspection report c) Medical exams d) College transcripts
d) College transcripts Explanation: The sources of underwriting information include the application, medical exams, an Attending Physician's Statement, the Medical Information Bureau (MIB), an inspection report, and the agent's report.
Which statement would be considered inaccurate regarding the underwriting of a group plan? a) The insurer can require a minimum percentage of the group to be enrolled to guard against adverse selection b) The cost of a group policy is determined by the type, size, and average age of the group and claims experience with previous insurers c) The insurer may use experience or community rating to determine premiums d) Contributory plans require 100% employee participation
d) Contributory plans require 100% employee participation Explanation: Contributory plans require both the employee and the employer to contribute to the premium, and 75% participation is required.
Which provision of group health plans is used to determine primary and secondary coverage when an insured is covered by more than one insurance plan? a) Primary Care Coverage b) Extension of Benefits c) Schedule of Benefits d) Coordination of Benefits
d) Coordination of Benefits Explanation: The Coordination of Benefits provision describes how primary and secondary coverage will be determined when an insured is covered by more than one group policy.
When an individual is covered by more than one health plan and is injured, what provision determines which plan is that person's primary coverage? a) Continuation of Coverage b) Conversion Privilege c) Extension of Benefits d) Coordination of Benefits
d) Coordination of Benefits Explanation: The Coordination of Benefits provision determines that a person's own employer-sponsored health plan is his/her primary coverage. However, if any plan fails to include a coordination of benefits provision, that plan would automatically be primary.
A(n) __________ annuity has its interest credit linked to the positive performance of a stock market index. a) Variable b) Market Value Adjustment c) Fixed d) Equity-Indexed
d) Equity-Indexed Explanation: An Indexed (or Equity-Indexed) Annuity is an annuity product with interest rates that are linked to the positive performance of a stock market (equity) index, such as the Standard & Poor's 500 Index.
All of the following are correct regarding renewable term insurance, except: a) The policy is renewable until the expiration date b) The premium increases at renewal based on attained age c) The policy renews as long as the premium continues to be paid d) Evidence of insurability is required to renew the policy
d) Evidence of insurability is required to renew the policy Explanation: Evidence of insurability is not required upon renewal. As long as the premium continues to be paid, the policy will renew until the expiration date and the premiums will increase based on attained age.
Which of the following statements about a Modified Endowment Contract (MEC) is FALSE? a) Taxable distributions include cash value surrenders and policy loans b) The 7-Pay Test compares the premiums paid for the policy during its first 7 years with the annual net level premiums of a 7-Pay Policy c) Funds distributed before age 59 1/2 are subject to a 10% penalty on any gains d) If a contract is deemed a MEC, any funds distributed are subject to a first-in/first-out (FIFO) tax treatment
d) If a contract is deemed a MEC, any funds distributed are subject to a first-in/first-out (FIFO) tax treatment Explanation: Any funds distributed are subject to a last-in, first-out (LIFO) tax treatment, meaning gains will be taxed before principal.
An agreement that pays on behalf of another party under specified conditions describes which of the following contract terms? a) Personal b) Aleatory c) Adhesion d) Indemnity
d) Indemnity The insurance company pays for a claim covered by the indemnity contract on behalf of the insured. An Indemnity Contract is an agreement to pay on behalf of another party under specified circumstances, such as when a loss occurs.
Which of the following is not true about insurance? a) Risk is transferred to the insurer b) Declining to own a business is an example of risk avoidance c) The insured may retain part of the risk through deductibles d) Insurance covers intentional as well as unintentional losses
d) Insurance covers intentional as well as unintentional losses Explanation: Insurance is not designed to cover intentional losses.
Which clause in a contract would state that Jim is covered by XYZ insurer for a monthly benefit of $2,000 in the event of disability? a) Entire Contract b) Consideration Clause c) Free Look Provision d) Insuring Clause
d) Insuring Clause Explanation: The Insuring Clause states who is covered, by whom, for how much, for what period, and against what peril.
What is the easiest and best way to assure that the life insurance policy's death proceeds don't end up in probate court process? a) Make sure the client has a will that is current and in an easily accessible location b) Name the estate as beneficiary c) Ascertain that the client has a trust that is filed with the County court d) List a primary and contingent beneficiary by their full name and relationship to the insured
d) List a primary and contingent beneficiary by their full name and relationship to the insured Explanation: So long as the named beneficiaries are alive at the time of death of the insured, the proceeds bypass the probate process.
The Individual Exchange and Small Business Health Options Exchange (SHOP) will screen for and enroll individuals in _______ if they are eligible for those programs based on income compared to the Federal Poverty Level. a) Cal-Cobra b) Medicare c) Medigap d) Medi-Cal
d) Medi-Cal Explanation: The Individual Exchange and Small Business Health Options Exchange (SHOP) will screen for and enroll individuals in Medi-Cal if they are eligible for those programs, the federal law requires state exchanges to perform this function.
An agent would be guilty of 'pretexting' or conducting a 'pretext interview' in which of the following situations? a) Pretending to be an employee of a local utility company when attempting to obtain information in the investigation of an insurance claim b) Sends unsolicited text messages to persons who are not existing client c) Advises a client to lapse, forfeit, or surrender any insurance contract on the basis of misrepresentation or fraud d) Pretends to be someone or something other than an insurance producer in order to obtain personal non-public information about someone in connection with an insurance transaction
d) Pretends to be someone or something other than an insurance producer in order to obtain personal non-public information about someone in connection with an insurance transaction Explanation: Pretending to be someone other than an agent or broker when transacting insurance is prohibited, and may be a state or federal crime under specific circumstances. Pretending to be someone else during the investigation of an insurance claim is not prohibited and is a common practice by insurance company and law enforcement investigators working undercover.
Under the California Insurance Code, an Insurance Solicitor is employed to aid a property and casualty broker-agent acting as an insurance agent or insurance broker in transacting ____________ insurance. a) Life b) Health c) Disability d) Property and casualty
d) Property and casualty Explanation: Under the California Insurance Code, an Insurance Solicitor is employed to aid a property and casualty broker-agent acting as an insurance agent or insurance broker in transacting insurance other than life, disability, or health.
The Guaranteed Renewable Provision states that the policy is: a) Renewable only at the option of the insurer b) Renewable with adjustable premiums determined by frequency of claims c) Renewable with no increase in premium d) Renewable with premiums that may be increased for entire classes of insureds
d) Renewable with premiums that may be increased for entire classes of insureds Explanation: The Guaranteed Renewable Provision allows the insurer to adjust premiums upon renewal, but by classification only, not for particular individuals.
PPOs differ from HMOs in that PPOs do not have: a) Premiums or any out of pocket costs to pay b) Specialists within their networks c) As many doctors or hospitals subscribers have access to d) Separate physical facilities
d) Separate physical facilities PPOs differ from HMOs in that PPOs do not have separate physical facilities.
Which of the following receipts states that coverage will begin immediately for a specific length of time, regardless of whether the applicant is ultimately approved for coverage by the insurer? a) Trial receipt b) Acceptance approval receipt c) Conditional receipt d) Temporary insurance agreement
d) Temporary insurance agreement Explanation: If premium is paid, coverage will begin immediately for a specific length of time regardless of whether the applicant is ultimately approved by the insurer. This may also be referred to as a temporary insurance agreement or a binding receipt.
