Life and Heath with Ethics CA Test

Which is not considered one of the basic benefits required of all HMOs?

Long-term care

A public school teacher may contribute part of his or her income into a ____ plan and defer income taxes on not only the contribution but also the growth in the plan.

403(b)

With a split-dollar approach to premium payment, the employer will pay what portion of the premium due?

A premium as specified in the Split-Dollar Plan.

Which type of contract is drafted by an insurer and receives no input or alteration from the insured?

Adhesion

Which of the following types of coverage provides custodial care outside the home for individuals not requiring confinement?

Adult Day Care

Level, decreasing and increasing term primarily describe which policy feature?

Death benefit

Charging a different premium for two separate individuals who are in the same insuring classification, just because one of the individuals has a higher net worth, would be an example of:

Discrimination

Part B of Medicare would exclude which of the following medical expenses?

a. A regular dental checkup Correct b. Outpatient hospital treatment Incorrect c. Clinical laboratory services Incorrect d. Home health care Incorrect

The purpose of the Unfair Trade Practices Act is to

Regulate practices in the business of insurance by defining what practices are unfair and deceptive.

Which is not correct regarding a Waiver of Premium Rider?

The insured must repay the unpaid premiums.

Which type of retirement plan permits employees of a small printing company to take a reduction in their present wages and defer that amount into a retirement account?

SIMPLE

Which is not an unfair trade practice?

Selling better coverage that costs more.

Which type of life insurance plan insures an employee's life with premium payments shared by the employee and the employer via a contractual agreement?

Split-Dollar Plans

What are the three common rating classifications that impact an insured's premium or rate?

Standard, preferred and substandard

An insured selected the annuity benefit option that provides the highest amount of period benefit for life assuming the balance at annuitization and the age of the annuitant to be equal. Which option did they select?

Straight Life Option (Life Income)

Which of the following insurance policies may be written with Basic Medical Expense Coverage utilizing a Corridor Deductible after the basic plan benefits have been exhausted and before Major Medical benefits begin?

Supplementary Major Medical.

The most significant distinction between an ASO (Administrative Services Only) and a TPA (Third Party Administrator) arrangement is:

TPAs offer no insurance

Money accumulated in a permanent policy that the policyowner may borrow via a policy loan or receive if the policy is surrendered, refers to:

The Cash Value

In the event that an insured receives a periodic benefit as the result of exercising the Accelerated Death Benefit Rider, what information must the insurer provide to the insured?

The amount of the accelerated payment, the remaining death benefit and cash values

Because a Universal Life Policy does not have a maturity date stated in the contract, it would continue until:

The insured's death, or until cash values cannot pay the mortality charge.

A policyowner has decided upon the Fixed Amount Settlement Option. Which of the following best describes this option?

The owner specifies the amount of each periodic payment and the insurer pays that amount until the funds (i.e. death benefit) are exhausted.

An insured has paid $1000 in annual premiums for her permanent life insurance policy for 12 years. Now upon surrendering the policy she is due to receive $15,000 of cash value. How much of this cash value is taxable?

$3,000

Under a Key Employee Disability Income Policy, the employer is the:

All of the answers listed

Which of the following is not true of Medicare Part B?

All retirees are automatically covered.

Which of the following is true of annuity mortality tables when compared to life insurance mortality tables?

Annuity mortality tables reflect greater life expectancy than life insurance mortality tables

For which of the following reasons may an insured return the policy for a full refund within the Free Look Period?

Any reason

Which is not a requirement to obtain an insurance producer's license?

College degree

Right to Examine is the same as:

Free Look Period

If the insurer cancels an individual health plan, what happens to the unearned premium?

It is refunded on a pro rata basis.

Life insurance does not eliminate risk, it ______ the loss by transferring a portion of the risk from the insured to the insurer.

Reduces

Which of the following is true of Medicare Part B?

Benefits are funded by a combination of taxes and premium dollars and coverage is elective

Which is not a characteristic of a Fixed Annuity?

Money is held in a separate account

An insured has a $25,000 annual renewable term life policy, originally purchased on her April 1 birthday last year. She forgot to pay the $250 renewal premium, and dies in an accident on April 15. The beneficiary will receive:

$24,750

Harry, the owner of a non-qualified tax deferred annuity with $40,000 in balances chooses the Life Income with Refund Payment Option. After receiving $1000 monthly, Harry suddenly dies after having received his 32nd check. How much will his beneficiary, his wife Lucille, receive?

$8,000

Which of the following best describes a Conditional Contract?

A contract in which both parties must perform specified duties in order for the contract to remain enforceable.

Regarding Medicare Part B, which of the following is not true?

For citizens over the age of 65, there is no additional premium or cost.

Making the purchase of insurance from a particular source the condition to another business transaction is an example of which of the following unfair practices?

Boycott, Coercion or Intimidation

Precertification, Mandatory Second Surgical Opinion, and Concurrent Review are provisions in health insurance policies known as

Case Management Provisions

An insured with a Whole Life Policy, passes away of natural causes at the age of 89. Which of the following would the insurer not pay to the beneficiary?

Cash value

Before an insurer can operate in this state, it must have which of the following?

Certificate of Authority issued by the State Department or Division of Insurance

The fact that only one deductible applies when several family members are injured in the same accident refers to the:

Common Accident Provision.

When an individual is covered by more than one health plan and is injured, how is it resolved as to which plan pays and how much?

Coordination of Benefits

If the insurer issues a policy after receiving an application for health insurance for which preexisting conditions were inadvertently left blank, what would be the consequence to the insured's coverage if a preexisting condition caused a claim shortly after being issued?

Coverage would be as stipulated in the policy because the company issued the policy even though the question was left blank.

All states have adopted the Uniform Individual Accident and Sickness Policy Provision Law. If an insurer changes any of these provisions, they must make sure it does not:

Create a less favorable meaning than the original wording.

If a policy requires the payment of an additional premium for the continuation of coverage for a newborn, the insurer must be notified within 31 days of the ______.

Date of birth

Group Accidental Death and Dismemberment premiums are _______ by the company paying the premiums as a business expense.

Deductible

What is the status of a policy that has been mailed to an insured by an insurer?

Delivered

Which of the following is consistent with group health underwriting?

Each member of the group is covered regardless of his or her health history.

Which of the following accurately describes the principle duties of the Commissioner or Director of Insurance?

Enforcement of insurance laws and administration of the Department of Division of Insurance.

A producer gathers information about the applicant, for the insurer, in order to avoid adverse selection.

Field underwriting

Which of the following is true of Medicare Part A, in terms of coverage?

Helps pay for hospital care and skilled nursing facility care as an inpatient plus home or hospice care

When Jim traveled from Hereville to There City, his plane crashed and he was slightly injured. Who paid for his medical expenses? He flew Slow Air.

His accident and health personal policy

Which rider would eliminate coverage for a preexisting condition?

Impairment Rider

Which principle states that an insured may claim only up to the amount of the actual loss?

Indemnity

Information about an applicant's work behavior or character gathered from neighbors or co-workers would be included on an?

Inspection Report

An agent develops a marketing brochure that lists the benefits of doing business with his firm. Under what context may he not include a reference of the State Guaranty Association?

Insurers and agents are prohibited from using the existence of the State Guaranty Association to induce a prospect to purchase.

Which of the following states the obligation of the insurer and the risk that is considered in a life insurance policy?

Insuring Clause

Regarding COBRA, which of the following is not true?

It covers participants who have resigned for 36 months following the date of their resignation.

Of the following choices, which is false concerning Long-Term Care Insurance?

It is a qualified retirement plan.

In the event there is a policy issued and there are questions on the insurance application that went unanswered:

It will be assumed that the insurer waived their right to have answers to those questions.

Which provision is a Mandatory Uniform Provision?

Legal Actions

A married couple is interested in a life insurance policy settlement option that will guarantee them both an income for as long as they live, first for the full amount and then at 2/3 of that amount when the first dies. What should they select?

Life Income Joint and Survivor

Which of the following products are offered by insurers to protect families from the financial setback of a family member's premature death?

Life Insurance

Which of the following is an optional coverage as it pertains to individual or group health policies?

Maternity benefits

The Unpaid Premiums Optional Uniform Provision allows an insurer to:

Reduce the amount of a claim payment by the premium due.

A self-insured health care plan in which the sponsor pays claims directly, but limits liability both on a per claim and aggregate plan basis, is called a:

Minimum Premium Plan

Making, issuing, or circulating any written or oral statement that misrepresents the benefits, conditions, or terms of any insurance policy, or transaction is an example of:

Misrepresentation

An aunt and uncle purchase a life insurance policy for their niece, for whom they are the legal guardians. Both (aunt and uncle) perish in an accident some time later. Who collects the death benefit?

No one, the insured (niece) is still living

An insured with an individual LTC policy is deducting the premiums he is paying for the plan on his income taxes. Once he begins to receive an income from this plan, what will be the tax consequences on this income?

Not taxable

Under an annuity with a Joint Life Payment Option, what will the survivor receive upon the death of the first annuitant?

Nothing

In Disability Income underwriting, the single most important rating factor from an underwriting standpoint is the applicant's:

Occupation

Coordination of Benefits is a provision designed to reduce __________ when an insured is covered under multiple group plans.

Overinsurance

A Whole Life policyowner elects to use his dividends to pay off the policy sooner than originally planned. Which option allows this to occur?

Paid-Up Option

Which requirement is needed to act as an insurance producer or agent?

Pass a state insurance examination.

If an insured enjoys a premium that is lower than others that are in the same class, this insured is considered to be rated as?

Preferred

Which of the following best describes the consideration given by the insured?

Premium payment and health representations at the time of application.

Which of the following is not a true characteristic of permanent protection Whole Life?

Premiums are flexible.

Which of the following is correct pertaining to underwriting a group health policy?

Premiums are generally re-evaluated annually and may be based upon prior claims.

Which of the following are powers of the Commissioner or Director of Insurance?

Receive documentary evidence, subpoena and cross-examine witnesses

Concerning the Paid-Up Additions Dividend Option, all of the following are true, except?

These single premium additions do not impact the face value of the original policy.

Which of the following pertaining to most LTC policies is true?

They are issued guaranteed renewable.

Which is correct concerning Blue Cross and Blue Shield Plans?

They are service plans with benefits paid directly to the hospital or physician.

Which provision states that the insurance company must pay claims immediately?

Time of Payment of Claims

Another name for assignment is:

Transfer Rights of Ownership

Encouraging a client to lapse a policy to his/her detriment and replace it with another is which unfair practice:

Twisting

Permitting individuals of the same class and hazard to be charged different rates for the same insurance coverage (unless the rate differential is based upon sound actuarial principles or is related to actual experience) is an example of

Unfair discrimination

Which of the following is not a Mandatory Uniform Provision of an Accident and Health policy?

Waiver of Premium

Which of the following best depicts statements made to an insurer by an insured that affect the validity of the contract?

Warranties

Based upon Optional Uniform Provisions, an insurer would have the right to deny claim payment in all of the following circumstances, except:

a. A claim involving an injury sustained in a bank robbery. Incorrect b. A claim is covered by another insurer. Incorrect c. A broken leg injury suffered as the result of ingesting an illegal drug. Incorrect d. Misstatement of age on the application. Correct

The cash value of a Modified Endowment Contract is treated in a similar manner for federal income tax purposes as the following vehicles, except:

a. Balances in a 403(b) Annuity Incorrect b. A nonqualified tax deferred annuity Incorrect c. Permanent policies passing the 7-Pay Test Correct d. Balances in a 401(k) Plan Incorrect

All of the following are unique features of a Roth IRA not available in a traditional IRA, except:

a. Contributions are never tax deductible. Incorrect b. Qualified distributions are completely tax free. Incorrect c. Life insurance is an approved funding vehicle. Correct d. There are no post 70 1/2 mandatory distributions. Incorrect

The Director, Commissioner, or Superintendent may suspend or revoke a license if the licensee has:

a. Had license suspended in another state. Incorrect b. Been convicted of an armed criminal action. Incorrect c. All of the answers listed. Correct d. Been found to be twisting, rebating, and/or illegal inducing.Incorrect

All of the following are Optional Uniform Provisions, except:

a. Misstatement of Age Incorrect b. Change of Occupation Incorrect c. Legal Actions Correct d. Illegal Occupation Incorrect

Of the following statements, which is true of the One-Year Term Dividend Option?

a. Pays a death benefit of the face amount plus total dividends paid. Incorrect b. The dividend is used to purchase a one-year term policy equal to the cash value. Correct c. Doubles the death benefit for one year. Incorrect d. Pays a death benefit of the face amount plus total premiums paid. Incorrect

Which of the following Medicare Supplement policies have Core Benefits?

a. Plan A only Incorrect b. Plans A through J Correct c. Plan A through C only Incorrect d. Plans C through J only Incorrect

All of the following are correct regarding Key Employee Life Insurance, except:

a. Premiums are deducted from the employee's salary. Correct b. The beneficiary (the employer) typically receives the death benefit free of federal income tax. Incorrect c. The employer is the owner/applicant of the policy. Incorrect d. The employer has an insurable interest in the key employee. Incorrect

Which of the following are included in Part II of a Life Insurance Application?

a. Present health and medical background of applicant and family. Correct b. Address Incorrect c. Marital status Incorrect d. Occupation Incorrect

The Department or Division of Insurance may refuse to renew the license of a licensee if:

a. Proper renewal procedures are not followed. Incorrect b. The continuing education requirements are never met. Incorrect c. Renewal fees are not paid. Incorrect d. All of the answers listed.

Which of the following are true of the State Guaranty Association?

a. Protect policyowners, insureds, and beneficiaries when an insurer is unable to perform contractual obligations. Incorrect b. All of the answers listed. Correct c. Establish procedures for accounting for the assets of insolvent member insurers. Incorrect d. Establish benefit levels.

All are correct pertaining to Decreasing Term, except:

a. The premium declines throughout the term of the policy. Correct b. Its most common use is in credit life insurance. Incorrect c. The death benefit decreases. Incorrect d. The premium stays level. Incorrect