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