Exam #5
An insured bought a $150,000 non-partipating whole life policy many year ago. He is 100 years old today. He has never borrowed from the policy's cash value and has faithfully made all payments when due. The policy's cash value is
$150,000
In California, the minimum participation requirement for a contributory large group health insurance
75% of eligible employees
Term insurance is typically characterized by
Low premiums and no cash value
During the disability elimination period
No benefits are payable
When are parties to a contract required to communicate information solely based on personal judgment for a matter in question
Only when relevant
People commonly purchase an annuity to protect agains the risk of
Outliving their financial resources
Which of these statements concerning Meidcare is not true?
Part A provides Hopistal, Part B provides Doctors, There is no Part C
Medicare Part A provides coverage for all of the following except
Physician services (it's covered by part B)
The Employee Retirement Income Security Act of 1974 (ERISA) mandates requiring plan sponsor to provide participants with
Plan descriptions and benefit statements
According to the CA Insurance Code, all insurers must maintain a department to investigate:
Possible fraud claims of insureds
A health maintenance organization (HMO) plan contains costs by promoting
Preventative care
A disability income policy social insurance supplement (SS) benefit rider:
Provides a payment only when the insured is totally disabled, but not receiving any social insurance benefit plans
Which of the following statements about the HICAP program is false/
Provides assistance for a fee based upon ability to pay
In the state of California
Providing free insurance coverage in connection with the sale of services as an inducement for completing the transaction is not legal
The guaranteed insurability option provides the ability to:
Purchase additional insurance regardless of insurability
RW and Associates is an agency which represents BLG Insurance Corporation. RW and Associates may leave the name BLG Insurance Corporation in is advertisements by clearly stating the relationship between the two business in any of the following ways, except
RW and Associates UNDERWRITING for BLG Insurance Corporation
Which type of insurance guarantees the right to renew the policy each year, regardless of health, but at an increased premium
Renewable term
An intentional concealment entitles the injured party to which course of action?
Rescission of the contract
What recourse does an insurer have if a violation of a material warranty on the party of the insured is discovered
Rescission of the policy
A disability policy, described as "guaranteed renewable" is one where he insurance company
Reserves the right to change the premiums, but ma not change any of its terms
A form of rest or relief offered to family members who are caring for a person who requires continual care is
Respite care
The basic feature of managed care indemnity plan is that he participants
Select a provider and submit claims to the insurance company (self-choice provider)
Which of the following describes an insurer who has enough financial resources to provide for all its liabilities and for all reinsurance of all outstanding risks?
Solvents
The adjustments that an insurer makes in a cash value account in a universal life policy each time a payment is made includes all of the following, except
Subtract the policy surrender charges
What does the Insurance Commissioner have the right to do if an agent lacks authority from an insurer named on the binder for coverage
Suspend or revoke the license of the agent
What is the purpose of "key person" insurance?
TO cover deceased business earnings due to the death of a key employee
An individual with a low income and high insurance needs should buy
Term insurance
Which definition of disability is the most difficult for an injured worker to satisfy?
The TOTAL disability definition used by the Social Security Administration
When a licensed agent submits a renewal application with applicable fee on or before the expiration date:
The agent will be able to operate for up to 60 DAYS after the specified expiration date
A health insurance deductible is:
The amount of covered expense that the insured pays before the insurer pay
A $50,000 whole life policy with a cash value of $10,000 has been in force for 11 years. The policy owner is unable to continue the premium payments. Which of the following describes the reduced paid-up non-forfeiture option
The cash value is used to purchase a $20,000 paid-up policy
All of the following statements about contingent beneficiaries are true, except
The contingent beneficiary shares death proceeds equally with the primary beneficiary
A hospital confinement indemnity insurance policy pays
The daily befit coverage amount stated in the policy for each day the insured is confined in the hospital
According to the CA Insurance Code, an insured's policy must specify all of the following, except:
The financial rating of the insurer
Why is having a large number of similar exposure units important to insurers?
The greater the number insured, the more accurately the insurer can predict losses and set appropriate premiums
Which of the following is a correct statement about life insurance policy types?
The initial premium for term insurance is lower than the initial premium for whole life insurance
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 on the policy
The insurer will make the payments until the insured juvenile reaches the specified age
All of the following statements about survivorship life insurance are true, except
The policy face amount is paid out only upon the death of the first insured to die (last)
While an insurer is paying the premium for life insurance policy under the waiver of premium rider
The policy remains in full force in every respect
What makes up the entire contract in a life insurance policy?
The policy, and when attached, the application
loss retention is an effective risk management technique when all of the following conditions exist, except
The probability of loss is unknown
Which of the following is a true statement regarding the social security (OASDHI) program?
The program provides only a minimum floor of income. Individuals are expected to supplement this with their own personal programs
Which of th following statements about LTC is correct:
The very poor and the very rich probably do not need LTC coverage
Which of the following is a type of deductible that charges the insured after basic medical benefits have been and before other medical coverage begins?
Corridor Deduction
In the event of an accidental death, the principal sum in a disability policy will be paid
In one lump sum
If an insurer is not able to meet financial obligations when due, the insurer would be considered
Insolvent
Which statement is true regarding Medicare Supplement Insurance plans?
Insurers may offer POLICIES THAT CONTAIN ONLY THE CORE BENEFITS
Renewable term insurance can be best described as
A LEVEL DEATH benefit with an INCREASE in premium
Which of the following is a hazard?
A condition that might increase the likelihood of a loss occuring
An example of a third party administrator is
AN OUTSIDE ORGANIZATION that processes claims for an employer's self-funded plans
Which provision will pay a portion of the death benefit prior to the insured's death due to a serious illness
Accelerated death benefit
Which of the following are commonly covered by medical expense policies?
Accidental injuries
A measure for rating an individual's need for LTC benefits is called
Activites of daily living
The insurer, aged 65, owns a $100,000 non-participating whole life policy. The policy is paid-up as of today. When would the cash value reach $100,000?
Age 100
How do rights of an irrevocable beneficiary differ from those of a revocable beneficiary?
An irrevocable beneficiary has a VESTED RIGHT that neither policy owner nor his creditors can impair without the beneficiary's consent
Under social security, the definition of disability is the inability to engage in
Any substantial gainful activity
All of the following statements about social security disability benefits are true, expect
Benefits are designed to replace the entire amount of a worker's earnings
Each of the following terms is an important characteristic of a major medical policy, except
Capitation
Under an individual health guaranteed renewal contract, the insurer has the right to
Change premiums for the same class insured
A provision stating that health insured's and their insurers will share covered losses in an agree proportion is called
Co-insurance
A provision stating that the insured and the insurer will share covered losses in an agreed proportion is called
Co-insurance
The insured's policy has a deductible that is applied between the exhaustion of basic plan limits and the commencement of excess coverage. This is a called
Corridor Deductible
Concerning Part B of Medicare, which of the following is incorrect?
It is paid entirely by FICA (SS) payroll taxes
What would be the Insurance Commissioner's most likely course of action if an applicant for an insurance license had a previous application for a professional license denied for cause by any licensing authority within five years of the date of the filing?
Deny the application without a hearing
Under COBRA, a qualifying event ensures that an employee who loses coverage can
Elect to continue coverage
The passage of worker's compensation legislation meant
Employers WOULD BE HELD RESPONSIBLE for the cost of their employee's work injuries regardless of fault
Common life insurance policy riders include all of the following except
Extended term
Which of the following requires a reporting company to respond to a consumer's complaint that his file contains inaccurate information about them
Fair Credit Reporting Act
What would we call a representation which fails to correspond with its stipulations or asserts?
False (if it's non-intentional)
Which of the following expenses is never covered by a LTC insurance policy?
Hospital Acute Care Unit
The insured is totally and permanently disabled. The insured's policy continues i force without the payment of a premium because the policy contains a
Waiver of premium provision
All of the following statements about the election of a life insurance policy's settlement options are rue, except
When no settlement option is chosen, the proceeds are automatically paid to the policy owner's estate
The probationary period in a group health policy is intended for people
Who joined the group after the policy effective date
In order to receive the principal sum benefit for death from a disability policy, the death must occur
Within a specified number of days after injury