Simulate exam #5

What is Medi-Cal?

California's Medicaid health care program

Which of the following components must a life insurance policy have to allow policy loans?

Cash value

The insured provides a proof of claim to the

Insurer.

A married couple's retirement annuity pays them $250 per month. The husband dies and his wife continues to receive $125.50 per month for as long as she lives. When the wife dies, payments stop. What settlement option did they select?

Joint and survivor

The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called

Joint and survivor.

After a cease and desist order is final, if the Commissioner finds that the person has continued to willfully violate the insurance code, what penalty may be applicable in addition to initial penalties?

Maximum $55.000

In health underwriting, it would be inappropriate to decline a risk using any of the following factors EXCEPT

Mental illness.

Qualified medical expenses paid for participants in a Medical Savings Account (MSA) are

NOT taxable

The classification Small Employer means any person actively engaged in a business that on at least 50% of its working days during the preceding year employed

No more than 100 employees.

Medical savings accounts are only available to groups of how many employees?

No more than 50

Which renewal provision(s) must be included in a long-term care policy issued to an individual?

Noncancellable and guaranteed renewable

The dividend option in which the policy owner uses dividends to purchase a term policy for one year is referred to as the

One-year term option.

Which renewability provision allows an insurer to terminate a policy for any reason, and to increase the premiums for any class of insureds?

Optionally renewable

Which renewal option does NOT guarantee renewal and allows the insurance company to refuse renewal of a policy at any premium due date?

Optionally renewable

Medicare Part A services do NOT include which of the following?

Outpatient Hospital Treatment

Outpatient Hospital Treatment is cover

Part B

Which of the following riders would NOT cause the Death Benefit to increase?

Payor Benefit Rider

A guaranteed renewable health insurance policy allows the

Policyholder to renew the policy to a stated age, with the company having the right to increase premiums on the entire class.

Which of the following individuals must have insurable interest in the insured?

Policyowner

To achieve the profitable distribution of exposures,

Preferred risks and poor risks are balanced, with average risks in the middle.

Which of the following is NOT among the goals of a Medicare supplement application?

Presuming the applicant is eligible for Medicaid, based on the nature of the policy

A Medicare SELECT policy does all of the following EXCEPT

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

All of the following are actual deductibles found in medical insurance policies EXCEPT

Replacement

Your client is planning to retire. She has accumulated $100,000 in a retirement annuity, and now wants to select the benefit option that will pay the largest monthly amount for as long as she lives. As her agent, you should recommend

Straight life.

The Health Insurance Counseling and Advocacy Program (HICAP) is administered by

The California Department of Aging.

Signing and dating a delivery receipt for a life insurance policy helps to establish all of the following timeframes EXCEPT

The Grace Period.

All of the following entities regulate variable life policies EXCEPT

The Guaranty Association.

Your client has a Social Insurance Supplement (SIS) rider on his disability policy. After he becomes disabled, he receives payments from the company. Shortly thereafter, he also begins receiving Social Security benefit payments. Which of the following will happen?

The SIS payment will be reduced dollar-for-dollar by the Social Security benefit payment.

All of the following statements are TRUE concerning Debtor Groups EXCEPT

The amount of insurance on the life of any debtor may exceed the greater of the scheduled or actual amount of unpaid indebtedness to the creditor.

The period of time immediately following a disability during which benefits are not payable is

The elimination period.

A life agent may use the name of corporation or association on any stationery or advertisement to identify the relationship in all of the following ways EXCEPT

"Contracted by...

What is a penalty tax for nonqualified distributions from a health savings account?

20%

In addition to penalties, fines, and possible imprisonment for violating the provision relating to misrepresentation, the Commissioner may suspend the license of such a person for a period up to

3 years

How are HMO territories typically divided?

Geographic areas

All of the following statements are true regarding installments for a fixed amount EXCEPT

The payments will stop when the annuitant dies.

Which of the following is true regarding taxation of accelerated benefits under a life insurance policy?

They are tax free to terminally ill insured.

HICAP counselors are primarily

Trained and registered volunteers.

Which of the following CANNOT be included along with illustrations used to sell life insurance?

Vanishing premium information

Dividends

are the return of premiums in mutual policies.

Accidental Death Rider,

if the insured dies from an accident, Death Benefit is a multiple of the Face Amount.

Cost of Living Rider

increases Death Benefit to keep pace with inflation;

Payor Benefit Rider does

not increase the Death Benefit; it only pays the premium if the payor is disabled or dies.

A small hardware store owner is involved in a car accident that renders him totally disabled for half a year. Which type of insurance would help him pay for expenses of the company during the time of his disability?

Business overhead expense policy

Which of the following best describes the waiting period?

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

Guaranteed Insurability Rider

Allows insured to purchas additional amounts of disability income insurance at future dates - future dates are policy anniversary dates -added coverage can be attained but must prove income increase - AKA Additional Purchase or Future Increase Option

Under HIPAA, which of the following is INCORRECT regarding eligibility requirements for conversion to an individual policy?

An individual who was previously covered by group health insurance for 6 months is eligible.

Which of the following would qualify as an implied warranty in an insurance contract?

An oral representation by the applicant

Which of the following is NOT true of Section 1035 Policy Exchanges?

Any exchange made under Section 1035 of the Internal Revenue Code must be completed within 30 days.

An individual was involved in a head-on collision while driving home one day. His injuries were not serious, and he recovered. However, he decided that in order to never be involved in another accident, he would not drive or ride in a car ever again. Which method of risk management does this describe?

Avoidance

Any insurer who engages in the insurance business and violates the Code with respect to insurance replacement shall on the first violation

Be fined a sum of $10.000.

If the information is used only for identification and not for underwriting purposes, which of the following information about the applicant may be listed on a life insurance application?

Birthplace

An individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation?

Decreasing term

Of the following, which is NOT considered a general duty or power of State Insurance Commissioners?

Develop and implement laws to regulate the business of insurance.

Each of the following factors are used in determining insurance rates EXCEPT

Dividends

The insurance policy, together with the policy application and any added riders form what is known as a(n)

Entire contract.

In disability income insurance, the own occupation definition of disability applies

For the first 2 years of a disability.

What required provision protects against unintentional lapse of the policy?

Grace period

Which of the following annuity riders ensures that the owner will receive from an annuity at least the amount paid for the annuity?

Guaranteed Lifetime Withdrawal

If a life policy allows the policy owner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a

Guaranteed insurability rider.

What type of insurance would be used for a Return of Premium rider?

Increasing Term

Under which of the following annuity options does the annuitant select the time period for the benefits, and the insurer determines how much each payment will be?

Installments for a fixed period

Business overhead expense (BOE) policy

insurance is sold to small business owners for the purpose of reimbursing the policyholder for various business overhead expenses during a period of total disability. Expenses such as rent, utilities, and employee salaries are covered.

The Guaranteed Lifetime Withdrawal Benefit

protects annuity owners from losing their investments if the annuity value drops.

Guaranteed Insurability Rider,

the policyowner can increase Death Benefit at specified ages or events, i.e. marriage or birth of a child;