Insurance License Practice

To be eligible under HIPAA regulations, for how long should an individual converting to an individual health plan have been covered under the previous group plan? a)18 months b)5 years c)12 months d)63 days

18 months

What is the period of coverage for events such as death or divorce under COBRA? a)36 months b)60 days c)31 days d)12 months

36 months

The Commissioner may suspend an applicant's license without a hearing if the applicant has had another professional license suspended or revoked within what time period? a)6 months b)12 months c)5 years d)7 years

5 years

What is the penalty for IRA distributions that are below the required minimum for the year? a)10% b)25% c)50% d)60%

50%

At what age may an individual make withdrawals from an HSA for nonhealth purposes without being penalized? a)55 b)59 1/2 c)62 d)65

65

What is the maximum amount that can be contributed to an MSA of the high-deductible plan for individuals? a)35% b)50% c)65% d)75%

65%

An investor buys a life policy on an elderly person in order to sell it for a life settlement. This is an example of a)Third-party ownership. b)A STOLI policy. c)A prearranged funeral plan. d)A viatical settlement.

A STOLI policy.

Which of the following best describes the waiting period? a)A period of time that needs to lapse before coverage for specified conditions goes into effect. b)A period of time the insured has to wait before payments of benefits begin after a disability. c)A period of time the insurer has to wait for a claim to be submitted. d)A period of time during which a policy can be returned to the insurer for a complete refund of the premium.

A period of time the insured has to wait before payments of benefits begin after a disability.

The term "illustration" in a life insurance policy refers to a)A presentation of nonguaranteed elements of a policy. b)A depiction of policy benefits and guarantees. c)Pictures accompanying a policy. d)Charts and graphs.

A presentation of nonguaranteed elements of a policy.

Which of the following groups would probably be covered by blanket insurance? a)People who obtain temporary insurance b)A university's sports team c)A large family d)A publishing company

A university's sports team

Which of the following is NOT covered under a long-term care policy? a)Acute care in a hospital b)Adult day care c)Hospice care d)Home health care

Acute care in a hospital

Which of the following long-term care benefits would provide coverage for care for functionally impaired adults on a less than 24-hour basis? a)Residential care b)Assisted living c)Home health care d)Adult day care

Adult day care

A 63-year-old man is planning to be employed until age 68. When will he be eligible for Medicare? a)Age 70, if still employed b)Age 69 ½ if no longer employed c)Age 65, regardless of his employment status d)As soon as he retires at age 68

Age 65, regardless of his employment status

Assume that a policy allows the insurer to terminate coverage for a "class" of clients under stated circumstances. Which of the following classes would it be illegal for the insurer to terminate? a)All insureds living in ZIP code 90210 b)All insureds over age 65 c)All insureds with a sexual preference which increases the risk of HIV infection d)All truck drivers

All insureds with a sexual preference which increases the risk of HIV infection

Who can make a fully deductible contribution to a traditional IRA? a)Anybody: all IRA contributions are fully deductible regardless of income level b)Someone making contributions to an educational IRA c)A person whose contributions are funded by a return on investment d)An individual who has earned income

An individual who has earned income

When an annuity is written, whose life expectancy is taken into account? a)Annuitant b)Beneficiary c)Life expectancy is not a factor when writing an annuity. d)Owner

Annuitant

Occasional visits by which of the following medical professionals will NOT be covered under LTC's home health care? a)Community-based organization professionals b)Attending physician c)Registered nurses d)Licensed practical nurses

Attending physician

Any insurance agent who engages in the insurance business and violates the Code with respect to insurance replacement shall on the first violation a)Be administratively suspended from licensing for a period of 180 days. b)Be fined a sum of $5,000. c)Be fined a sum of $1,000.' d)Be fined a sum of $10,000.

Be fined a sum of $1,000.

The First Street Church plans to sponsor a summer camp for the youth of their congregation. They would like to purchase insurance that would pay benefits should one of the youth get injured while participating in the camp activities. The type of policy they would likely need is a/an a)Limited Sickness. b)Accidental Death and Dismemberment. c)Limited Accident. d)Blanket.

Blanket

Which of the following must an insurer obtain in order to transact insurance within a given state? a)Certificate of authority b)Producer's certificate c)Business entity license d)Insurer's license

Certificate of authority

Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as a)Contracts of adhesion. b)Unilateral contracts. c)Aleatory contracts. d)Binding contracts.

Contracts of adhesion.

All of the following are features and requirements of the Living Needs Rider EXCEPT a)Diagnosis must indicate that death is expected within 3 years. b)It is usually available at no additional charge. c)The remainder of the policy proceeds is payable to the beneficiary at the insured's death. d)It provides funds for medical and nursing home expenses to a terminally ill insured.

Diagnosis must indicate that death is expected within 3 years.

Which of the following is true regarding taxation of dividends in participating policies? a)Dividends are taxable in some life insurance policies and nontaxable in others. b)Dividends are considered income for tax purposes. c)Dividends are not taxable. d)Dividends are taxable only after a certain amount is accumulated annually.

Dividends are not taxable.

If an annuitant dies before annuitization occurs, what will the beneficiary receive? a)Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount b)Either the amount paid into the plan or the cash value of the plan, whichever is the lesser amount c)Amount paid into the plan d)Cash value of the plan

Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount

Mortality - Interest + Expense = a)Benefits budget b)Operating expenses c)Net premium d)Gross premium

Gross premium

A Medicare supplement plan must have at least which of the following renewal provisions? a)Nonrenewable b)Noncancellable c)Guaranteed renewable d)Conditionally renewable

Guaranteed renewable

According to the nonforfeiture law, if the owner decides to surrender a deferred annuity prior to annuitization, the owner is entitled to which of the following? a)No payments b)Annuity dividends c)Full premium refund without any charges d)Guaranteed surrender value

Guaranteed surrender value

First Dollar Coverage refers to a type of insurance which a)Requires that the insured pay the first billing from the medical provider, after which the insurer begins making payments. b)Has no deductible. c)Is always primary, regardless of other coverages for the same loss. d)Has a delayed deductible.

Has no deductible.

Which of the following types of LTC is NOT provided in an institutional setting? a)Custodial care b)Skilled nursing care c)Intermediate care d)Home health care

Home health care

Upon the submission of a death claim under a life insurance policy, when should the insurer pay the policy benefit? a)Within 2 years of the date of loss b)Immediately after receiving written proof of loss c)On the next anniversary of the policy d)After the estate of the insured has been settled

Immediately after receiving written proof of loss

The insurer may suspect that a moral hazard exists if the policyholder a)Always drives over the speed limit. b)Is not honest about his health on an application for insurance. c)Is prone to depression. d)Is indifferent to activities that may be dangerous.

Is not honest about his health on an application for insurance.

What is the benefit of choosing extended term as a nonforfeiture option? a)It allows for coverage to continue beyond maturity date. b)It can be converted to a fixed annuity. c)It has the highest amount of insurance protection. d)It matures at age 100.

It has the highest amount of insurance protection.

Which of the following does NOT describe hospice care? a)It provides continuous care. b)It provides care in a home-like setting. c)It provides care to terminally-ill people. d)It provides care to people with life expectancies of 1 to 2 years.

It provides care to people with life expectancies of 1 to 2 years.

An insured buys a 5-year level premium term policy with a face amount of $10,000. The policy also contains renewability and convertibility options. When the insured renews the policy in 5 years, what will happen to the premium? a)It will increase each year during the next 5 years as the face amount increases each year. b)It will increase because the insured will be 5 years older than when the policy was originally purchased. c)It will remain the same for the new 5-year term. d)It will decrease for the new 5-year term since the insured is now a lesser risk to the company.

It will increase because the insured will be 5 years older than when the policy was originally purchased.

Jill has a handicapped grown-up child who is chiefly dependent upon her for support and maintenance. How will that affect Jill's insurability in the group plan? a)Jill's dependent's condition will not affect her rating or eligibility. b)Jill will not qualify for group benefits because of her dependent's physical condition. c)Jill may qualify for partial benefits along with government subsistence. d)Jill will receive full benefits, but her dependent will not be covered.

Jill's dependent's condition will not affect her rating or eligibility.

A couple near retirement is planning for their golden years. They want to make sure that their retirement annuity provides monthly benefits for the rest of their lives. Should one of them die, the other would still like to continue receiving benefits. Which settlement option should they choose? a)Joint life b)Life with period certain c)Straight life d)Joint and Survivor

Joint and Survivor

A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this? a)Level term b)Term to specified age c)Ordinary life policy d)Limited pay whole life

Level term

Which type of Medicare policy requires insureds to use specific healthcare providers and hospitals (network providers), EXCEPT in emergency situations? a)Preferred b)Medicare SELECT c)Medicare Advantage d)Medicare Part A

Medicare SELECT

Which of the following statements is correct? a)Care needed because of aging is covered by Medicare. b)Medicare does not pay for nursing home care in any case. c)Medicare will cover nursing home care if it is part of the treatment for a covered illness. d)Care needed because of aging is covered by Medicare but not by Medicare supplements.

Medicare will cover nursing home care if it is part of the treatment for a covered illness.

In health underwriting, it would be inappropriate to decline a risk using any of the following factors EXCEPT a)Blindness. b)Mental illness. c)Genetic characteristics. d)Marital status.

Mental illness.

According to the California Insurance Code, any agent violating the regulations relating to misrepresentation will be charged with a a)Felony, a fine not to exceed $5,000, and a possible 2 year imprisonment. b)Misdemeanor, a fine not to exceed $25,000, and/or a possible 1-year imprisonment. c)Misdemeanor, a fine not to exceed $500, and a possible 1-year imprisonment. d)Felony, a fine not to exceed $2,000, and a possible 2-5 year imprisonment.

Misdemeanor, a fine not to exceed $25,000, and/or a possible 1-year imprisonment.

If a life insurance policy develops cash value faster than a seven-pay whole life contract, it becomes a/an a)Nonqualified annuity. b)Modified endowment contract. c)Accelerated benefit policy. d)Endowment.

Modified endowment contract.

Which of the following terms most precisely fits the definition of "the incidence or probability of sicknesses or accidents within a given group of people?" a)Risk b)Morbidity c)Mortality d)Loss

Morbidity

Which of the following is NOT true regarding the needs approach method of determining the value of an individual's life? a)It must be assumed that the death of the insured will occur immediately. b)Need is predicted using the number of years until the insured's retirement. c)Coverage is based on the predicted needs of that family. d)The death of an insured must be premature.

Need is predicted using the number of years until the insured's retirement.

What other term is used to refer to unintentional torts? a)Hazard b)Peril c)Breach of contract d)Negligence

Negligence

Charges for services provided through a HICAP agency are a)Paid for 80% by the insurer and 20% by the insured. b)Based on the client's ability to pay. c)Never made to the client. d)Billed to the client's insurance company.

Never made to the client.

In long-term care insurance, what type of care is provided with intermediate care? a)Daily care, but not nursing care b)Intensive care c)Occasional nursing or rehabilitative care d)Nonmedical daily care

Occasional nursing or rehabilitative care

#1. Who is involved in completing the agent's report? a)Attending physician and the agent b)Only the agent c)The agent and the applicant d)Only the underwriter, if no agent

Only the agent

During the grace period, the policyowner can a)Return the policy to the insurer for a full refund. b)Add riders to the existing policy. c)Renew the policy without proof of insurability. d)Pay a late premium without penalty.

Pay a late premium without penalty.

The causes of loss insured against in an insurance policy are known as a)Risks b)Hazards c)Perils d)Losses

Perils

Which of the following is the most common time for errors and omissions to occur on the part of an insurer? a)Policy renewal b)Underwriting c)Application process d)Policy delivery

Policy delivery

A Medicare SELECT policy does all of the following EXCEPT a)Provide payment for full coverage under the policy for covered services not available through network providers. b)Provide for continuation of coverage in the event that Medicare SELECT policies are discontinued due to the failure of the Medicare SELECT program. c)Prohibit payment for regularly covered services if provided by non-network providers. d)Make full and fair disclosure in writing of the provisions, restrictions, and limitations of the Medicare SELECT policy to each applicant.

Prohibit payment for regularly covered services if provided by non-network providers.

To sell variable life insurance policies, an agent must receive all of the following EXCEPT a)A life insurance license. b)SEC registration. c)FINRA registration. d)A securities license.

SEC registration.

If an agent wishes to sell variable life policies, what license must the agent obtain? a)Securities b)Adjuster c)Surplus Lines d)Personal Lines

Securities

Blue Cross and Blue Shield organizations are a)Liability organizations. b)Preferred Provider Organizations (PPOs). c)Service organizations. d)Health Maintenance Organizations (HMOs).

Service organizations.

Which of the following policies would be classified as a traditional level premium contract? a)Adjustable Life b)Universal Life c)Variable Universal Life d)Straight Life

Straight Life

The interest earned on policy dividends is a)40% taxable, similar to a capital gain. b)Taxable. c)Nontaxable. d)Tax deductible.

Taxable

The annual contribution limit of a Dependent Care Flexible Spending Account is set by a)The insurer. b)The insured. c)The IRS. d)The employer.

The IRS.

An insured who has an Accidental Death and Dismemberment policy loses her left arm in an accident. What type of benefit will she most likely receive from this policy? a)The capital amount in monthly installments b)The principal amount in monthly installments c)The capital amount in a lump sum d)The principal amount in a lump sum

The capital amount in a lump sum

Which statement accurately describes group disability income insurance? a)There are no participation requirements for employees. b)Short-term plans provide benefits for up to 1 year. c)The extent of benefits is determined by the insured's income. d)In long-term plans, monthly benefits are limited to 75% of the insured's income.

The extent of benefits is determined by the insured's income.

What is the advantage of reinstating a policy instead of applying for a new one? a)Proof of insurability is not required. b)The face amount can be increased. c)The cash values have gained interest while the policy was lapsed. d)The original age is used for premium determination.

The original age is used for premium determination.

In an Adjustable Life policy all of the following can be changed by the policy owner EXCEPT a)The premium. b)The amount of insurance. c)The type of investment. d)The length of coverage.

The type of investment.

Medi-Cal may be available to persons over age 65 if a)They have no pension or retirement plan. b)They do not own a Medicare supplement insurance policy. c)They are not married. d)They have medical or long-term care claims not paid by Medicare.

They have medical or long-term care claims not paid by Medicare.

The Health Insurance Counseling and Advocacy Program is administered by a)The California Department of Insurance. b)Medi-Cal. c)The top 10 companies selling disability policies for seniors. d)The California Department of Aging.

They must be part of the contract.

What is a wrongful act or the violation of someone's rights that leads to legal liability called? a)Hazard b)Peril c)Loss d)Tort

Tort

The Waiver of Cost of Insurance rider is found in what type of insurance? a)Whole Life b)Joint and Survivor c)Juvenile Life d)Universal Life

Universal Life

During the free-look period, the premium for a variable annuity may be invested in all of the following EXCEPT a)Value funds. b)Fixed-income investments. c)Money-market funds. d)Mutual funds (only upon the investor's request).

Value funds.

Can an individual who belongs to a POS plan use an out-of-network physician? a)Yes, and they may use any preferred physician, even if not part of the HMO b)No c)Yes, but they must use the POS physician first d)Yes, but they must use the HMO physician first

Yes, and they may use any preferred physician, even if not part of the HMO