Guaranteed Exam #1
*All of the following are features of catastrophic plans EXCEPT
High premiums
*If the policy summary for a life insurance policy is not given when the application is tacked when must the policy summary be given to the Policyowner?
when the policy's delivered
*If an individual willfully violates provisions of the Fair Credit Reporting Act, what is the maximum civil penalty?
$2,500
A retail shop owner is insured under a business overhead expense policy that pays a maximum monthly benefit of $2,500. His actual monthly expenses are $3,000. If the owner becomes disabled, the monthly benefit payable under his policy will be
$2,500
*Policy loan requests, except for loan requests for payment of due premiums, may be deferred for a period of up to
6 months
In the Social Security blackout period, the surviving spouse will not receive benefits until the age of
60
*What is it called when a doctor accepts the Medicare approved amount?
Assignment
A specified disease policy would cover which of the following?
Cancer
Hazards are conditions or situations that
Increase the likelihood of a loss occuring
* If a retirement plan or annuity is qualified, this means
It satisfies IRS requirements for favorable tax treatment
The annual open enrollment period for state insurance exchanges runs from November through
January
Which of the following used to be called Medicare + Choice Plans?
Medicare Advantage Plans
Underwriters use all of the methods to protect the insurer against adverse selection EXCEPT
Only accepting a small percentage of applicants
*When may HIV related test results be provided to the MIB
Only if the individual is not identified
*A core Medicare supplement policy (Plan A) will cover all of the following expenses EXCEPT
Part A deductible
HMOs are known as what type of plans?
Service
*Which of the following elements of a insurance contract requires paying premium and providing a statement of good health?
consideration
*What is the purpose of the gatekeeper in an HMO?
controlling costs
*Which of the following meets the insureds personal needs and is provided by nonmedical personnel?
custodial care
*The stop-loss feature on a major medical policy is intended to
establish a maximum amount of out of pocket expense that an insured will have to pay for medical expense in a calendar year
*An annuity owner receives the same guaranteed payment every month. What type of annuity is it?
fixed
*Whose responsibility is it to ensure that the application for health insurance is complete and accurate?
the agent's
To qualify for disability income benefits under Social Security, an individual's disability must be expected to result in death or last for at least
12 months
Core benefits are included in all Medicare supplemental policies. What percentage of Part B coinsurance is required?
20%
*At what point would an automatic premium loan be generated?
following the grace period
*Which of the following is NOT correct concerning taxation of disability income benefits?
if paid by the individual the premiums are tax deductible
*If a loan request is for payment of due premiums on the policy, how soon must the insurer issue a loan?
immediately
*When comparing a Joint Life policy to two individual life policies of the same amount on the same insured, which condition is true?
joint life has a lower premium than the total of the two individual policies
If an applicants health is poorer than an average applicant, the policy may be issued
Substandard
Which of the following indicates the person upon whose life the annuity income amount is determined?
Annuitant
*Which of the following describes the relationship between a capital sum and a principal sum?
Capital sums are percentages of principal sums
An insured bought an insurance policy that requires him to pay $150 in premiums on the 15th of each month. He then takes an extended vacation and forgets to pay the premium. Ten days later this policy is still in effect and has not lapsed. Which policy provision allowed for this?
Grace period
*Who would be the insured in business disability insurance?
Key employees
*An Equity Indexed Annuity will grow based upon
Performance of a recognized index
*If a basic medical insurance plan's benefits are exhausted, what type of plan will then begin covering those losses?
Supplementary major medical
*Which of the following is the best definition of Idemnification?
The act of one person who agrees to restore an injured person to the condition he/she enjoyed prior to the loss
Which of the following best depicts the law of large numbers?
The larger the pool of risks under study, the more accurate the predictions will be
Insurance provides a means to
Transfer a loss
Which of the following services will NOT be provided by an HMO?
Unlimited coverage for treatment for drug rehabilitation
*Where are premiums from fixed annuities invested?
a general account
*A comprehensive medical expense insurance policy combines which of the following coverages in a single contract?
basic hospital and surgical coverage with major medical
*What specific kind of insurance is often written in conjunction with hospital expense policies and includes surgeons and anesthesiologists fees?
basic surgical expense insurance
Answers to questions in an insurance application are called representations and, as such, they are
believed to be true to the best of the applicant's knowledge
*Which of the following is NOT a characteristic of variable insurance and annuities?
benefits are determined solely based on the policy premium
*Which of the following would describe the difference between a blanket life insurance policy and a franchise policy?
blanket policy does not name individual insureds
*Decreasing term insurance is often used to
cover a mortgage
*Regarding health insurance, all of the following are tax deductible EXCEPT
employee paid group disability income
*Agents may be found guilty of defamation if they make false statements that are intended to
maliciously criticize another insurance company
*Medicare Part A services do NOT include which of the following?
private duty nursing
In a group policy, all of the following can be the Policyowner EXCEPT
the insurance company
*All of the following are true regarding the waiver of cost of insurance rider EXCEPT
the rider expires when the insured reaches age 60
All of the following are reasons an organization will stop being an entity eligible to hold a license EXCEPT
the termination of a key employee
Which of the following riders pays a beneficiary a death benefit that is double or triple the face amount if the insureds death was caused by an accident as defined in the policy?
An Accidental Death Rider
*What type of insurer uses a formal sharing agreement?
Reciprocal insurers
Medicaid claims covered by the program known as Medi-Cal in California are paid for by
The state, mostly through federal reimbursements
If an applicant submits the initial premium with an application, which action constitutes acceptance?
The underwriters approve the application
*Medicare is a health insurance program for all of the following individuals EXCEPT
Those with low income and low assets
*An annuity has accumulated the cash value of $70,000 of which $30,000 is from premium payments. The annuitant dies during the accumulation phase. The beneficiary will receive
$70,000
*A Medicare supplement policy must have a free-look period of at least
30 days
*A subscriber has been treated for a medical condition by his primary care physician for 3 months with experimental remedies without a significant health improvement before being referred to a specialist. Which of the following types of plans does the subscriber have?
A gatekeeper HMO plan to control the costs
Conrad receives $50,000 from a $100,000 Accidental Death and Dismemberment policy as a result of the loss of his left arm in an accident. Conrad has received the
Capital amount
*Which of the following statements is INCORRECT?
Medicare and Medigap policies provide coverage for long term custodial or nursing home care
*A qualifying retiree has access to all parts of the social security Medicare program. Which of these parts requires a monthly payment from the insured?
Part B
Ed is covered under a health plan provided by his employer. He was told that his insurance would pay the majority of the covered expenses if he would choose to see a provider in his plan's list. If Ed chose to be treated by a provider who was not on the list, his portion of the bill would be greater. Ed is covered under a
Preferred Provider Plan
For which of the following reasons may group coverage NOT be discontinued?
The company's stock value lowers
Which of the following types of care could be provided at a community center?
adult day care
An employee dies having 6 quarters of coverage during the previous 13-quarter period. What status of coverage does the employee have under Social Security?
currently insured
*A new homebuyer wants to purchase a life insurance policy that would protect his family against losing the home, should he die before the mortgage was paid. The most inexpensive type of policy that would accomplish this need would be
decreasing term
*During policy solicitation, an insurer exaggerates the financial condition of one of its competitors, and makes it sounds worse than it is. This is an example of an unfair trade practice of
defamation
*All of the following health insurance disability benefits are income tax free EXCEPT
employer-paid group disability
Wagering on a sporting event is known as what type of risk?
speculative
The renewable provision allows the Policyowner to renew the coverage at the expiration date
without evidence of insurability
*The Policyowner chooses the annual mode for payment of the life insurance premium. For the year, the owner will pay
less as compared to the other payment modes
Under HIPAA portability, which of the following are NOT protected under required benefits?
Groups of one or more
A policy holder returns the policy to the insurer a week after it is delivered. How much of the premium will be returned to the applicant?
100%
How many tiers must be included in each treatment category of a Medicare prescription drug plan formulary?
2
Health insurance rates may be based upon all of the following EXCEPT
Religion
*Which statement about Life Insurance Code and Ethics is NOT true?
Acts of fair and unfair discrimination are prohibited
An individual is approaching retirement age and is concerned about having proper coverage should he have to be placed in a LTC facility. His agent told him that LTC policies would provide necessary coverage at all of the following levels EXCEPT
Acute
What is the maximum loan amount a Policyowner may withdrawal from a variable universal life insurance policy?
An amount not exceeding the cash value
All of the following could qualify as a group for the purpose of purchasing group heath insurance EXCEPT
An association of 35 people
HMO members pay a small fee when they see their primary care physician. This fee is called a
Copay
All of the following are ways to handle risk EXCEPT
Elimination
Which of the following would be considered a peril?
Fire
Which federal act defines rules pertaining to protected health information?
HIPAA
*To purchase insurance, the Policyowner must face the possibility of losing money or something of value in the event of loss. What is this concept called?
Insurable interest
Which of the following statements is NOT true regarding HICAP?
It exists to assist seniors who are not qualified to receive Social Security or Medicare
What does Basic Medical Expense cover?
Nonsurgical services a physician provides
If the annuitant dies before the annuity start date, which of the following is true?
The interest is taxable
A loss resulting from which of the following would qualify for the accidental death rider coverage?
an automobile accident
*Which of the following is NOT a standard exclusion in life insurance policies?
disability
All of the following are features of a health insurance plan purchased on the health insurance marketplace EXCEPT
dollar limits on essential benefits
*Restoring an insured financially after a claim is known as
indemnity
*An employee that becomes ineligible for group coverage because of termination of employment or change in status, must extension of benefits under COBRA
within 60 days
*A life insurance policy qualifies a Modified Endowment Contract (MEC) if the amount of premium paid exceeds the amount that would have provided paid-up insurance in how many years?
7 years
Under the Family Medical Leave Act, what happens to an employee's insurance benefits while he/she is on leave?
The benefits earned remain in effect for the duration of the employees leave
* In order for an alumni association to be eligible to purchase group health insurance for its members, all of these statements must be true EXCEPT when the association
has been active for 5 years minimum
*Which of the following is provided by skilled medical personnel to those who need occasional medical assistance or rehabilitative care?
intermediate care
*Medicare Part B covers all of the following EXCEPT
long term care services
*Key person insurance can provide protection for all of the following economic losses to a business EXCEPT
pay the death benefit to the estate of the insured
*If an insured purchases an insurance policy with a large deductible, what risk management technique is the insured exercising?
retention
*How are policy loans calculated?
the policy's cash value minus unpaid loans and accrued interest
*According to the Common Disaster Clause, if the insured and primary beneficiary are killed in the same accident and it cannot be determined who died first, which of the following will be assumed?
the primary beneficiary died before the insured
Which of the following Medicare parts provides prescription drugs benefit?
Part D
In order to reinstate a life insurance policy the insured must do all of the following EXCEPT
Pay next year's premium in advanced
In group insurance, the primary purpose of the Coordination of Benefits provision is to
Prevent overinsurance
The purpose of the Fair Credit Reporting Act is to
Protect consumers against the circulation of inaccurate or obsolete personal or financial information
*The family term rider incorporates
Spouse term and children's term
Any intentional and fraudulent omission on the part of one insured entitles the insurer to
Rescind the policy
When determining life insurance premium rates an insurer may NOT legally use which of the following information about the applicant?
Nationality
In insurance, what is the term used for the cause of a loss?
Peril
An individual is applying for health insurance. His health history is nearly perfect, he has a healthy weight and doesn't smoke. What risk classification would this applicant most likely receive?
Preferred
Because of an injury, an insured has been unable to work for 7 months. He wasn't able to pay his life insurance policy premium, yet the policy remained in force. The policy includes
Waiver of premium rider
* If an insured pays a health insurance premium each month, how long would the grace period be under the policy?
10 days
Who makes up the Medical Information Bureau?
Insurance companies
* An employee has a Flexible Spending Account (FSA) with a $5,000 annual benefit. This year the employee used $3,000. What would be the amount of the benefit available to the employee next year?
$5,000
J's retirement plan meets all federal requirements and entitles him to a certain tax benefits as the owner of the plan. What term best describes J's retirement plan?
Qualified
When filing out on an application for insurance, the applicant makes a mistake. If a fresh application were not available, what could the applicant do to properly correct the mistake?
Cross the incorrect answer out, write the correct one beside it and initial the answer
There is a 10% penalty on the taxable portion of a deferred annuity when it is surrendered prior to what age?
59 1/2
Which of the following is NOT a typical type of LTC coverage?
Child day care
Which of the following riders provides for the payment of part of the policy death benefit if the insured is diagnosed with a terminal illness that will result in death within 2 years?
Living Needs Rider
*Which of the following will NOT be included in the buyer's guide?
Specific information about the policy
What is the purpose of a disability buy sell agreement?
To allow the business buyout in case of the owner's disability
What is the purpose of a benefit schedule?
To state what and how much is covered in the plan
*Concerning the Family Protection Policy, all of the following statements are true EXCEPT
children, upon reaching the age of majority, are permitted to convert to an individual policy with proof of insurability
Which of the following is a daily nursing and rehabilitative care that can only be provided by medical personnel, under the direction of a physician?
skilled care
*According to the life insurance replacement regulations, which of the following would be an example of policy replacement?
A policy is reissued with a reduction in cash value
*Which of the following terms refers to the nontaxable portion of each annuity benefit payment?
cost base
*Which of the following statements is TRUE regarding an Agent's Report during the policy application process?
It provides the agent's personal observations concerning the proposed Insured
*Which of the following is true regarding pure life annuity settlement option?
It provides the highest monthly benefit
*An insurer who transacts insurance in this state but whose articles of incorporation are registered in Canada is considered what type of insurer?
alien
*An insured's hospital policy states that it will pay him a flat fee of $75 per day for each day he is hospitalized. The policy benefits on what basis?
indemnity
*Which of the following statements describes one of the reasons individuals purchase life insurance?
it creates an immediate estate
*Your client wants to provides a retirement income for his elderly parents in case something happens to him. He wants to make sure that both beneficiaries are guaranteed an income for life. Which settlement option should this Policyowner select?
joint and survivor
*In health insurance, the length of the grace period varies according to the
mode of premium payment
*Under the Affordable Care Act, when would pregnancy be considered a pre-existing condition?
never
*only the agent is involved in completing the agents report. The agent's statement is
not included in the "entire contract"
Which of the following best describes the type of care provided by HMO'S?
preventive
Once the initial benefit limit in Medicare Part D is reached, how is the beneficiary affected?
the beneficiary is then responsible for prescription drug costs
*An employee is covered under COBRA. His previous premium payment was $100 per month. HIs employer now collects $102 each month. Why does the employer collect an extra $2?
to cover the employer's administration costs
Statistical probabilities of loss for a particular class of insureds is best predicted when the insured group is
Larger
The Affordable Care Act mandates that insurers provide coverage for adult children of the insured to the age of
26
Which of the following is an example of a physical hazard?
Diabetes
In the event an annuitant dies during the accumulation period, and there is a beneficiary named in the annuity, annuity benefits would be paid to the
named beneficiary
*Insurance contracts are unilateral in nature. What does that mean?
only one party makes a promise
An insured decided to surrender his Whole Life insurance policy. The cash value at surrender is higher than the premiums paid into the policy, due to interest. What part of the surrender value would be income taxable?
The difference between the premiums paid and the cash value
