Life & Health Guarantee Exam CA

Which of the following types of care could be provided at a community center? a) Adult day care b) Respite care c) Intermediate care d) Skilled care

a) Adult day care

All of the following could qualify as a group for the purpose of purchasing group health insurance EXCEPT a) An association of 35 people b) Labor union c) Multiple employer trust d) Single employer with 14 employees

a) An association of 35 people

Which of the following elements of an insurance contract requires payment of premium? a) Consideration b) Legal Purpose c) Competent parties d) Offer and acceptance

a) Consideration

Which of the following meets the insured's personal needs, and is provided by nonmedical personnel? a) Custodial care b) Skilled care c) Assisted living d) Intermediate care

a) Custodial care

Which of the following would be considered a peril? a) Fire b) Smoking c) Driving too fast for conditions d) Playing golf in a thunderstorm

a) Fire

An insured was seriously injured in a skiing accident that required him to be hospitalized for 5 weeks. His medical expense policy covered all of the following EXCEPT a) Surgical expense. b) Hospital room and board. c) Loss of income while hospitalized. d) Necessary medicine and medical supplies.

c) Loss of income while hospitalized. The insured would need Disability Income to cover lost wages.

An insurer can decide to not renew an Optionally Renewable policy a) On the 15th of every month. b) On the 1st of every month. c) On premium due dates. d) At any point. There are no specific dates.

c) On premium due dates. Optional Renewability policies allow the insurer to cancel a policy for any reason whatsoever. Policies can only be cancelled on the policy anniversary or premium due date (renewal date). If the insurer elects to renew coverage, it can also increase the policy premium.

What is the minimum number of members required for group life insurance in this state? a) 10 b) 15 c) 25 d) 100

a) 10

Which rider, when added to a disability policy, pays income during the six-month waiting period before Social Security benefits can begin? a) Additional Monthly Benefit b) Cost of Living c) Waiver of Premium d) Coordination of Benefits

a) Additional Monthly Benefit

When is the company responsible for actions of its agents? a) Whenever the agent is acting within the conditions of the contract b) Whenever the agent is licensed c) Always: the agent's actions are presumed to be those of the company d) Never: agents represent clients, not companies

a) Whenever the agent is acting within the conditions of the contract

Considering the principles of liquidity, how would the policyowner use today's cash values in a life insurance policy? a) Fund a retirement b) Use it for emergency expenses c) Secure a car loan next year d) Make a down payment on a home in 5 years

b) Use it for emergency expenses Liquidity in life insurance refers to availability of cash to the insured. Some life insurance policies offer cash values that can be borrowed at any time and used for immediate needs.

An insurer incorporated under the laws of another state but doing business in this state is considered a) Multi-national b) Alien. c) Domestic d) Foreign

d) Foreign A foreign insurer is an insurance company that is incorporated in another state or territorial possession.

A core Medicare supplement policy (Plan A) will cover all of the following expenses EXCEPT a) The first 3 pints of blood. b) 20% of Part B coinsurance amounts for Medicare-approved services. c) Part A coinsurance. d) Part A deductible.

d) Part A deductible. Plan A is the core benefits only and does not include coverage for Part A deductibles.

Under HIPAA portability, which of the following are NOT protected under required benefits? a) Groups of one or more b) Self-employed c) Pregnant women d) Mentally ill

a) Groups of one or more

To purchase insurance, the policy owner must face the possibility of losing money or something of value in the event of loss. What is this concept called? a) Insurable interest b) Indemnity c) Exposure d) Pure loss

a) Insurable interest

Which of the following is the cause of loss? a) Peril b) Hazard c) Exposures d) Risk

a) Peril

All of the following are true regarding the federal Fair Credit Reporting Act EXCEPT a) Reports may be sent to anyone who request one b) Insurers are not required to give customers a copy of the report c) It applies to credit reports ordered in connection with insurance, banking and employment d) The customer must be notified if adverse action is taken as a result of a report

a) Reports may be sent to anyone who request one

If an insured purchases an insurance policy with a large deductible, what risk management technique is the insured exercising? a) Retention b) Transfer only c) Avoidance d) Sharing

a) Retention

Variable insurance and variable annuities are regulated by a) SEC, FINRA, and Department of Insurance. b) Departments of Insurance only. c) NAIC. d) SEC and FINRA only.

a) SEC, FINRA, and Department of Insurance.

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? a) To cover the employer's administration costs b) Penalty for termination c) Premium go up every year regardless of health conditions d) To cover employees who qualify to bypass premium payment

a) To cover the employer's administration costs

Which of the following is a permissible reason for an insurance company to contest payment of a claim based on statements in the application? a) The application contains a correction. b) The application contains material misstatements. c) The insured died too soon after applying for the policy. d) The insurer has already paid out the expected amount of benefits for the year.

b) The application contains material misstatements. An insurance company may contest payment of a claim on the basis of a material misstatement of facts or concealment of a material fact no later than 2 years after the policy became effective.

Which of the following would be TRUE of both the fixed-period and fixed-amount settlement options? a) The size of installments decreases after certain period of time. b) Both guarantee payments for the life of the beneficiary c) Both guarantee that the principal and interest will be fully paid out. d) The amount of payments is based on the recipient's life expectancy.

c) Both guarantee that the principal and interest will be fully paid out. Neither the fixed-period nor fixed-amount settlement options guarantee income for the life of the beneficiary, however, they both guarantee that the entire principal and interest will be distributed.

What is it called when a doctor accepts the Medicare approved amount? a) Consent b) Verification c) Acceptance d) Assignment

d) Assignment Assignment is when the doctor agrees to accept the Medicare approved amount.

Medicare Part A services do NOT include which of the following? a) Post hospital Skilled Nursing Facility Care b) Hospitalization c) Hospice Care d) Private Duty Nursing

d) Private Duty Nursing Private duty nursing is not covered under Medicare Part A.

An insured is anxious to get treatment for a health condition, and is convinced that a specialist is needed to cure the condition. If the insured has a PPO plan, which of the following is true? a) The insured can select any specialist, but non-network specialists will have higher out-of-pocket costs b) The insured must visit a primary care physician who will provide a referral to a specialist if the condition requires one c) The insured can visit a specialist in-network without consulting a primary care physician, but the out-of-pocket cost will be greater without the primary care physician's referral d) The insured will have to pay all costs for the specialist out-of-pocket if a primary care physician referral is not obtained

a) The insured can select any specialist, but non-network specialists will have higher out-of-pocket costs

An employee that becomes ineligible for group coverage because of termination of employment or change in status, must exercise extension of benefits under COBRA a) Within 10 days. b) Within 60 days. c) Within 30 days. d) Before termination is complete.

b) Within 60 days. The terminated employee must exercise extension of benefits under COBRA within 60 days of separation from employment.

All of the following are characteristics of group health insurance plans EXCEPT a) Employers may require the employees to contribute to the premium payments. b) The benefits under a group plan are more extensive than those under individual plans. c) The parties that hold a group health insurance contract are the employees and the employer d) The cost of insuring an individual is less than what would be charged for comparable benefits under an individual plan.

c) The parties that hold a group health insurance contract are the employees and the employer The contract for coverage is between the employer and the insurance company. Only one policy is issued (master policy) to the employer, covered employees receive a certificate of insurance.

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 a) Has a constitution, by-laws, and must hold at least annual meetings. b) is organized for reasons other than buying insurance. c) Has at least 100 members. d) Has been active for five years minimum.

d) Has been active for five years minimum. To be eligible to purchase group health insurance, an association must be organized for reasons other than buying insurance, must have at least 100 members, have a constitution, by-laws, and must hold at least annual meetings. As association group must have been active for at least two years.

Which of the following services will NOT be provided by an HMO? a) Unlimited coverage for treatment for drug rehabilitation b) Treatment of mental disorders c) Emergency care d) Inpatient hospital care outside the service area

a) Unlimited coverage for treatment for drug rehabilitation

When the owner of a participating whole life policy uses the dividend to provide more life insurance coverage, which of the following dividend options is being used? a) Paid-up additions b) Reduce the premium c) Fixed amount d) Reduced paid up

a) Paid-up additions

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) A gatekeeper HMO plan to control the costs b) A limited benefit plan c) A fully-paid indemnity plan that covers his condition only at a specified provider d) Major medical insurance with a low deductible and low coinsurance

a) A gatekeeper HMO plan to control the costs

Which of the following is NOT true regarding an optionally renewable policy? a) Insurer can only cancel the policy for reasons stipulated in the contract. b) Renewability is at the option of the insurer c) Nonrenewal can happen on the policy anniversary date d) Policy premiums can increase at renewal

a) Insurer can only cancel the policy for reasons stipulated in the contract.

Health insurance rates may be based upon all of the following EXCEPT a) Religion b) Gender c) Age d) Medical history

a) Religion

How are policy loans calculated? a) The face amount of the policy minus investment fees b) The policy's cash value minus unpaid loans and accrued interest c) The face amount of the policy minus unpaid loans d) Premium contributions over the previous year minus unpaid loans

b) The policy's cash value minus unpaid loans and accrued interest The loan amount available to a policyowner is determine by subtracting unpaid loans and accumulated interest from the policy's cash value.

Which of the following describes the relationship between the principal sum and a capital sum? a) A capital sum is a percentage of the principal sum b) The principal sum varies, while the capital sum does not c) The capital sum varies, while the principal sum does not d) The principal sum is a percentage of a capital sum

a) A capital sum is a percentage of the principal sum

Core benefits are included in all Medicare supplemental policies. What percentage of Part B coinsurance is required? a) 20% b) 35% c) 10% d) 15%

a) 20%

In the event a notice sent to an insured's email is not received, an insurer must either confirm the insured's email or send a notice by regular mail within a) 5 business days b) 7 business days c) 10 business days d) 30 business days

a) 5 business days

All of the following are ways to handle risk EXCEPT a) Elimination b) Avoidance c) Reduction d) Transfer

a) Elimination

Which of the following time periods is the general enrollment period for Medicare Part B? a) January 1 through March 31 each year b) March 1 through May 31 each year c) January 1 through January 31 each year d) March 1 through March 31 each year

a) January 1 through March 31 each year

Statistical probabilities of loss for a particular class of insureds is best predicted when the insured group is a) Larger b) Diverse c) Older d) Smaller

a) Larger

When assessing needs for life insurance, an individual may use retention, which means a) Maintaining assets at death b) Keeping a life insurance policy until death c) Raising capital d) Purchasing life insurance

a) Maintaining assets at death

Which of the following is NOT a component of an insurance policy premium? a) Number of beneficiaries b) Mortality cost c) Insurer expenses d) Investment return

a) Number of beneficiaries

Which of the following best describes a presumptive disability? a) One that is severe enough that the insured automatically qualifies for full disability benefits b) One that requires the insured to submit to physical exams periodically c) One that a doctor predicts may reoccur in the future d) One that the insured will fully recover from in the future

a) One that is severe enough that the insured automatically qualifies for full disability benefits

In a group life policy with a death benefit of more than $50,000 a) Premium cost above $50,000 is taxable as income to the employee b) Premium cost below $50,000 is taxable as income to the insured c) Premium cost is tax deferred d) Premium cost is taxable to the employer

a) Premium cost above $50,000 is taxable as income to the employee

Which of the following best describes the type of care provided by HMOs? a) Preventive b) Elective c) Major medical d) Fee-for-service

a) Preventive

In reinsurance, the company that transfer its loss exposure to another insurer is the a) Primary insurer b) Secondary insurer c) Reciprocal insurer d) Reinsurer

a) Primary insurer

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? a) Skilled care b) Intermediate care c) Custodial care d) Assisted living

a) Skilled care

For which of the following reasons may group coverage NOT be discontinued? a) The company's stock value lowers. b) Nonpayment of premium c) Movement outside the service area d) Fraud

a) The company's stock value lowers.

Elaine's Basic Hospital Expense policy has a $500 per day limit for room and board in a hospital for a maximum of 5 days. Elaine got sick and had to spend 3 days in the hospital at $650 a day. How much will Elaine have to pay to cover the rest of her room and board charges? a $350 b) $450 c) $0 d) $150

b) $450 Basic Hospital expense policies cover hospital room and board while the insured is confined in a hospital. There is no deductible and the limits on room and board are set at a specified dollar amount per day up to a maximum number of days. For example, if the hospital expense benefit was $500 per day, and the hospital actually charged $650 per day, the insured would be responsible for the additional $150 per day.

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 a) $30,000. b) $70,000 c) $100,000 (combination of the cash value and premiums paid). d) A survivor benefit determined by the insurance company.

b) $70,000 If the annuitant's death occurs during the accumulation period, the beneficiary will receive the amount of premiums paid into the plan or the cash value, whichever is greater. In this case, the beneficiary will receive $70,000.

If an insured pays a health insurance premium each month, how long would the grace period be under the policy? a) 7 days b) 10 days c) 14 days d) 25 days

b) 10 days If the premium is paid on a monthly basis, a policy's grace period must be at least 10 days.

How many tiers must be included in each treatment category of a Medicare prescription drug plan formulary? a) 1 b) 2 c) 3 d) 4

b) 2 Prescription drug plans under Medicare Part D must include a formulary (list of approved drugs), with at least 2 tiers for each treatment category. These tiers must establish the varied costs of covered drugs.

An individual is approaching retirement age and is concerned about having proper coverage should he have to be placed in a Long-Term Care (LTC) facility. His agent told him that LTC policies would provide necessary coverage at all of the following levels EXCEPT a) Skilled. b) Acute. c) Custodial. d) Intermediate

b) Acute. Acute care is provided by Medical Insurance.

Which of the following riders pays a beneficiary a death benefit that is double or triple the face amount if the insured's death was caused by an accident as defined in the policy? a) A Covered Peril Rider b) An Accidental Death Rider c) A Double Indemnity Rider d) A Guaranteed Insurability Rider

b) An Accidental Death Rider The Accidental Death Rider pays some multiple of the face amount if death is the result of an accident as defined in the policy.

An underwriter is reviewing an applicant with an extensive medical history. Which of the following would give the underwriter a better understanding of how the applicant has been treated for various illnesses? a) Medical exam b) Attending Physician's Statement c) MIB Report d) Policy application

b) Attending Physician's Statement An Attending Physician's Statement (APS) is the best way for an underwriter to evaluate an insured's medical history. The report includes past diagnoses, treatments, length of recovery time, and prognoses.

A specified disease policy would cover which of the following? a) Infection due to liposuction b) Cancer c) Broken leg d) Illness caused by exposure to chemicals

b) Cancer Specified or dread disease policies protect only against the disease specified in the contract, such as cancer or heart disease.

A whole life policy is surrendered for a reduced-paid up policy. The cash value in the new policy will a) Reduce to the pre-surrender value. b) Continue to increase. c) Remain the same. d) Decrease over time.

b) Continue to increase. The new policy continues to build its own cash value and will remain in force until the insured's death or maturity.

What is the purpose of the gatekeeper in an HMO? a) Making sure that services are properly prepaid b) Controlling costs c) Making sure that patients do not go to physicians outside of the HMO's region d) Establishing strong preventive care

b) Controlling costs Initially the member chooses a primary care physician, or gatekeeper. If the member needs the attention of a specialist, the primary care physician must refer the member. This helps keep the member away from the higher priced specialists unless it is truly necessary.

An applicant for a license previously had a judgment against him after entering a plea of "nolo contendere." This applicant is considered to be a) Not guilty. b) Convicted. c) Innocent under the Code, but guilty by law. d) On probation for a period of 5 years.

b) Convicted. If an applicant is found guilty in a trial in which he or she entered a plea of "no contest," he or she is considered convicted.

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 a) Level term. b) Decreasing term. c) Increasing term. d) Flexible term.

b) Decreasing term. Decreasing term insurance may be written so that the face decreases at the same rate as the principal amount of the mortgage.

Who makes up the Medical Information Bureau? a) Hospitals b) Insurance companies c) Physicians and paramedics d) Former insureds

b) Insurance companies The Medical Information Bureau is made up of insurers so the companies can compare the information they have collected on a potential insured with information other insurers may have discovered.

Which of the following is provided by skilled medical personnel to those who need occasional medical assistance or rehabilitative care? a) Skilled care b) Intermediate care c) Custodial care d) Home health care

b) Intermediate care Intermediate care is occasional nursing and rehabilitative care that is ordered by a physician and provided by skilled medical personnel for such things as changing a bandage or administering medications.

Medicare Part B covers all of the following EXCEPT a) Outpatient hospital services. b) Long-term care services. c) Doctor's services. d) Home health visits.

b) Long-term care services. Medicare does not cover long-term care services.

For which of the following reasons could an insurer terminate a long-term care insurance policy? a) Deterioration in mental health of the insured b) Nonpayment of premium c) The advanced age of the insured d) Deterioration in physical health of the insured

b) Nonpayment of premium An insurer that issues a long-term care policy cannot cancel or decline to renew a policy based solely on the age or physical or mental deterioration of the insured.

What does Basic Medical Expense cover? a) Surgery b) Nonsurgical services a physician provides c) X-ray charges d) All office visits, under any circumstances

b) Nonsurgical services a physician provides Basic Medical Expense Coverage is often referred to as Basic Physicians Nonsurgical Expense Coverage because it provides coverage for nonsurgical services a physician provides. The benefits, however, are usually limited to visits to patients confined in the hospital. Some policies will also pay for office visits. There is no deductible with benefits, but coverage is usually limited to a number of visits per day, limits per visit, or limits per hospital stay.

Insurance contracts are unilateral in nature. What does that mean? a) A promise is made only at the time of policy application b) Only one party makes a promise c) The insured must make a promise to pay the premium. d) All parties to the contract exchange something of value.

b) Only one party makes a promise In a unilateral contract, only one of the parties to the contract is legally bound to do anything. The insured makes no legally binding promises. However, an insurer is legally bound to pay losses covered by a policy in force.

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? a) Part A b) Part B c) Medicaid d) Medi-Cal

b) Part B Medicaid (in California, Medi-Cal) is a program that provides health benefits for the uninsured or low-income people; therefore, no premiums are charged. Part A of Medicare is provided at no cost to the retirees; Part B requires a monthly payment from the insured.

Which of the following Medicare parts provides prescription drugs benefit? a) Part C b) Part D c) Part A d) Part B

b) Part D Medicare Part D is for prescription drug coverage.

J's retirement plan meets all federal requirements and entitles him to certain tax benefits as the owner of the plan. What term best describes J's retirement plan? a) Deferred b) Qualified c) Unqualified d) Variable

b) Qualified A qualified retirement plan entitles the owner to tax benefits. In order for a retirement plan to be qualified, certain federal requirements must be met.

Which of the following terms relates to disability income insurance? a) Insurable interest b) Residual benefit c) Coinsurance stop loss d) Deductibles

b) Residual benefit A residual benefit amount is based on the proportion of income actually lost due to a business interruption caused by the insured's disability.

An insured was diagnosed two years ago with kidney cancer. She was treated with surgeries and chemotherapy and is now in remission. She also has a 30-year smoking history. The insured is now healthy enough to work and has just started a full-time job. Which describes the health insurance that she will most likely receive? a) She would be accepted under an insurance policy, provided that a rider excluding cancer-related conditions is attached. b) She would be covered under her employer's group health insurance plan, without higher premiums. c) She would be covered under her employer's group health insurance plan, but she would pay higher premiums than the other employees. d) She would be denied coverage due to the risk posed by her prior medical history

b) She would be covered under her employer's group health insurance plan, without higher premiums. Because the insured was hired for a full-time job, she would be eligible for her employer's group health insurance plan. Group plans cover employees equally, regardless of their age, gender, and past medical history.

When an agent delivered an insurance policy to the insured, he collected the initial premium, as well as a document verifying that the insured had not had any injuries or illness since the application date. What is this document called? a) Insurability Clause b) Statement of Good Health c) Statement of Insurability d) Insuring Agreement

b) Statement of Good Health If the premium was not collected at the time of the application, the agent may also be required to get a statement from the applicant at the time of policy delivery that verifies that the insured has not suffered injury or illness since the application date (known as the Statement of Good Health).

Upon the surrender of a life insurance policy, any cash value accumulated in excess of the premium payments is a) Assessed a fine of 10% of the excess. b) Taxed as ordinary income. c) Not taxed. d) Taxed as income on 50% of the excess.

b) Taxed as ordinary income. Upon surrender or endowment, any cash value in excess of cost basis (premium payments) is taxable as ordinary income.

Which of the following is the best definition of "indemnification"? a) A contract whereby one undertakes to indemnify another against loss, damage, or liability arising from a contingent or unknown event b) The act of one person who agrees to restore an injured person to the condition he/she enjoyed prior to the loss c) A legal entity which acts on behalf of itself, accepting legal and civil responsibility for the actions it performs and making contracts in its own name d) A contract whereby the two parties involved agree to what things of value will be exchanged by the parties to the contract

b) The act of one person who agrees to restore an injured person to the condition he/she enjoyed prior to the loss After a loss of all or part of the value of an asset, the act of one person who agrees to bear the burden of the person which suffered the loss, or to assume the responsibility of the person who caused the loss, and to restore the injured person to the condition they enjoyed prior to the loss, is called indemnification.

What is the exclusion ratio used to determine? a) The benefit amounts to be paid to the annuitant. b) The annuity benefit to be excluded from taxes. c) The premium amounts to be included in taxes. d) The interest base and the payout base.

b) The annuity benefit to be excluded from taxes. The exclusion ratio is used to determine the annuity amounts to be excluded from taxes.

Medical claims covered by the program known as Medi-Cal in California are paid for by a) HMOs. b) The state, mostly through federal reimbursements. c) Assessments on insurers offering medical insurance based on market share. d) Workers compensation insurance.

b) The state, mostly through federal reimbursements. Medi-Cal is the state's version of Medicaid, a federal-state partnership for providing medical insurance to medically-indigent persons. Claims are paid for primarily with money from the federal government, although the states are responsible for the majority of their own administrative expenses.

Which of the following is true regarding taxation of accelerated benefits paid under a life insurance policy? a) They are tax deductible. b) They are received tax free. c) They are considered taxable income. d) They are taxable to the insured's estate.

b) They are received tax free. When accelerated benefits are paid under a life insurance policy to a terminally ill insured, the benefits are received tax free.

Medicare is a health insurance program for all the following individuals EXCEPT a) Those who have been on Social Security Disability for 2 years. b) Those with low income and low assets. c) Those 65 or over. d) Those with permanent kidney failure.

b) Those with low income and low assets. Medicare is a federal program for those over 65, those that have been on Social Security for 2 years, and those with permanent kidney failure. Assets and income have nothing to do with Medicare eligibility

A Medicare supplement policy must have a free-look period of at least a) 10 days. b) 15 days. c) 30 days. d) 45 days.

c) 30 days. The free-look period for Medicare supplement policies must be at least 30 days.

Policy loan requests, except for loan requests for payment of due premiums, may be deferred for a period of up to a) 30 days. b) 90 days c) 6 months. d) 9 months

c) 6 months. While the insurer may defer requests for other loans for a period of up to 6 months, loan requests for payment of due premiums must be honored immediately.

What are the continuing education requirements for agents who market long-term care insurance policies? a) 4 hours of long-term care education every 4 years b) 8 hours of long-term care specific education in addition to the regular CE requirements c) 8 hours of long-term care specific education included in the regular CE requirements d) 4 hours of long-term care education every year

c) 8 hours of long-term care specific education included in the regular CE requirements Eight hours of continuing education related to long-term care insurance must be included in the hours required for continuing education for each licensing period.

According to the metal level classification of health plans, what percentage of health care costs will be covered under a gold plan? a) 50% b) 60% c) 80% d) 100%

c) 80% According to the metal level classification of health plans, the gold plan is expected to cover 80% of the cost for an average population, and the participants would cover the remaining 20%.

Which of the following best defines the Probationary Period in group health policies? a) The stated amount of time when benefits may be reduced under certain conditions b) The number of days that must expire after the onset of an illness before benefits will be earned c) A specified period of time that a person joining a group has to wait before becoming eligible for coverage d) The number of days the insured has to determine if he/she will accept the policy as received

c) A specified period of time that a person joining a group has to wait before becoming eligible for coverage The Probationary Period is the waiting period that new employees would normally have to satisfy before becoming eligible for benefits.

According to the life insurance replacement regulations, which of the following would be an example of policy replacement? a) A lapsed policy is reinstated within a specific timeframe. b) A policy is reissued with a reduction in cash value. c) A term policy expires, and the insured buys another term life policy. d) Term insurance is changed to a Whole Life policy.

c) A term policy expires, and the insured buys another term life policy. Replacement refers to any transaction in which new life insurance or an annuity is purchased, resulting in reduced paid-up insurance, continuation of extended term insurance or otherwise reduced in value by the use of nonforfeiture benefits or other policy values.

If an insured dies, and it is discovered that the insured misstated his/her age or gender, the life insurance company will a) Deny all claims because of the misrepresentation. b) Adjust the back premiums for the proper age or gender. c) Adjust the death benefit to what the premium would have purchased at the actual age or gender d) Pay the face amount specified at the time of policy issue.

c) Adjust the death benefit to what the premium would have purchased at the actual age or gender If the applicant has misstated his or her age or gender on the application, the insurer, in the event of a claim, is allowed under this provision to adjust the benefits to an amount that the premium at the correct age or gender would have otherwise purchased.

Which of the following statements is INCORRECT concerning Modified Endowment Contracts (MECs)? a) A primary purpose of the regulations governing MECs was to reduce incentives for the use of life insurance as a short-term investment vehicle. b) A distribution from an MEC may be subject to a 10% penalty if withdrawn prior to 59 1/2. c) An MEC must always pass the 7-pay test. d) A life insurance policy failing the 7-pay test is classified as an MEC

c) An MEC must always pass the 7-pay test. Life insurance contracts must pass the 7-pay test, otherwise, they become classified as Modified Endowment Contracts (MECs), and policy loans or withdrawals will be subject to taxation as provided by the regulation. If investment funds are withdrawn or borrowed prior to age 59 1/2, they will also be subject to a 10% penalty.

If a person qualifies for Social Security disability benefits after the 5 month elimination period, when will benefits begin? a) Benefits will begin after the 6th month and are retroactive to the beginning of the disability. b) A lump-sum of benefits will be paid at begin at the beginning of the 6th month which are retroactive to the beginning of the disability. c) Benefits begin at the beginning of the 6th month and are not retroactive to the beginning of the disability. d) Benefits begin at the beginning of the 6th month and are retroactive to the beginning of the disability.

c) Benefits begin at the beginning of the 6th month and are not retroactive to the beginning of the disability. The elimination period for Social Security disability benefits is 5 months. Benefits begin at the beginning of the 6th month and are not retroactive to the beginning of the disability

Which of the following is NOT a typical type of Long-Term Care coverage? a) Residential care b) Home health care c) Child day care d) Skilled nursing care

c) Child day care Long-term care services are designed for senior citizens and provide coverage for individuals who are no longer able to live an independent lifestyle and require living assistance at home or in a nursing home facility.

What type of an interest rate is guaranteed in universal life policies? a) Adjustable interest rate b) Current interest rate c) Contract interest rate d) Nominal interest rate

c) Contract interest rate The insurer guarantees a contract interest rate. A current interest rate is not guaranteed in the contract and may be higher because of current market conditions.

Which of the following is an example of a physical hazard? a) Lying b) Bankruptcy c) Diabetes d) Carelessness

c) Diabetes Physical hazards are individual characteristics that increase the chances of the cause of loss and exist because of a physical condition, past medical history, or a condition at birth, such as blindness.

All of the following are features of a health insurance plan purchased on the health insurance marketplace EXCEPT a) Coverage for emergency services. b) Coverage for pre-existing conditions. c) Dollar limits on essential benefits. d) Guaranteed renewability.

c) Dollar limits on essential benefits. Health plans are restricted from applying a dollar limit on essential benefits, nor can they establish a dollar limit on the amount of benefits paid during the course of an insured's lifetime.

All of the following health insurance disability benefits are income tax free EXCEPT a) Key-person disability benefits. b) Personally-owned individual disability insurance. c) Employer-paid group disability. d) Employee-paid group disability.

c) Employer-paid group disability. Employer-paid group disability benefits are income taxable.

Under the Affordable Care Act, maternity, pregnancy, and preventive care services are considered a) Limited. b) Optional. c) Essential d) Elective.

c) Essential All of those listed are essential benefits in health insurance plans.

The notice about policy cancellation delivered to senior consumers must include all of the following information EXCEPT a) To whom to return the policy. b) Possible surrender charge. c) Explanation of where the premiums have been invested. d) Time limit for cancellation.

c) Explanation of where the premiums have been invested. The notice of right to cancel the policy must include information about the time limit, to whom to return the policy, and possible penalties and surrender charges.

Which of the following is NOT a type of a hazard? a) Moral b) Morale c) Exposure d) Physical

c) Exposure Physical hazards are those arising from the material, structural, or operational features of the risk, apart from the persons owning or managing it. Moral hazards refer to those applicants that may lie on an application for insurance, or in the past, have submitted fraudulent claims against an insurer Morale hazard refers to an increase in the hazard presented by a risk, arising from the insured's indifference to loss because of the existence of insurance.

The owner of a deferred annuity pays $100 in premium one month, and $130 the next month. Which of the following terms best describes this premium payment arrangement? a) Single premium b) Level premium c) Flexible premium d) Lump-sum premium

c) Flexible premium Periodic payment annuities can be either level (the annuitant/owner pays a fixed installment), or flexible (the amount and frequency of each installment varies).

Hazards are conditions or situations that a) Determine the likelihood of a loss occurring. b) Guarantee that a loss will occur. c) Increase the likelihood of a loss occurring. d) Decrease the likelihood of a loss occurring.

c) Increase the likelihood of a loss occurring. Hazards are conditions or situations that increase the likelihood and severity of a loss occurring due to a peril. Hazards are classified as physical hazards, moral hazards, or morale hazards.

The provision that sets forth the basic agreement between the insurer and the insured and states the insurer's promise to pay the death benefit upon the insured's death is called the a) Declarations. b) Consideration c) Insuring clause. d) Payment of claims.

c) Insuring clause. The insuring clause states the insurer's promise to pay the death benefit upon the insured's death and sets forth the basic agreement between the insurer and the insured.

Which source of underwriting information includes information on an applicant's character, general reputation, personal habits, and mode of living? a) Physician's statement b) Agent's report c) Investigative consumer report d) MIB report

c) Investigative consumer report An investigative consumer report includes information on an applicant's character, general reputation, personal habits, and mode of living that is obtained through investigation.

All of the following statements are true regarding an Ordinary (Straight) Life policy EXCEPT a) It builds cash value. b) If the insured lives to age 100, the policy matures, and the face amount is paid to the insured. c) It does not have a guaranteed death benefit d) It is funded by a level premium.

c) It does not have a guaranteed death benefit Straight Life (also called Ordinary Life or Continuous Premium Whole Life) charges a level annual premium for the lifetime of the insured and provides a level, guaranteed death benefit. If the insured lives to age 100, the policy endows (matures) and the face amount is paid to the insured at that time. During the insured's lifetime the straight life policy builds cash value. The insurer guarantees the cash value and death benefit under a straight life policy.

Which of the following statements is NOT true regarding HICAP? a) It provides consumer counseling. b) It works in conjunction with local area agencies on aging. c) It exists to assist seniors who are not qualified to receive Social Security or Medicare. d) It is overseen by The State Department of Aging.

c) It exists to assist seniors who are not qualified to receive Social Security or Medicare. HICAP assists seniors who are already receiving or are about to receive Social Security or Medicare.

If a retirement plan or annuity is qualified, this means a) Dividends will be paid until payments are distributed. b) It is not permitted by the IRS. c) It satisfies IRS requirements for favorable tax treatment. d) It has unlimited uses.

c) It satisfies IRS requirements for favorable tax treatment. A qualified annuity permits the employer or individual the opportunity to use contributions to the plan as a tax deduction. In addition, while in the plan, the income earned by the contribution accumulates income tax-free. The money is not taxed until withdrawn from the plan, and then it is taxed at the current taxing rate.

The annual open enrollment period for state insurance exchanges runs from November through a) March b) December c) January d) February

c) January Annual open enrollment period is currently scheduled from November 1 through January 31.

When comparing a Joint Life Policy to two individual life policies of the same amount on the same insureds, which condition is true? a) The Joint Life premium can only be paid monthly. b) Joint Life has a higher premium than the total of the two individual policies. c) Joint Life has a lower premium than the total of the two individual policies d) Joint Life has a premium that is identical to the sum of the two individual policies.

c) Joint Life has a lower premium than the total of the two individual policies Since Joint Life only pays one death benefit (at the first death) its premium is less than the total of two individual policies.

What does an annuity protect the annuitant against? a) Estate taxes b) The financial impact caused by premature death c) Living longer than expected d) Leaving beneficiaries without income

c) Living longer than expected Annuities are contracts designed to liquidate an estate and to protect a person against outliving his or her money.

Which of the following indicates how much of the health coverage premium must go toward actual medical care? a) Modified Adjusted Gross Income (MAGI) b) Metal tiers c) Medical Loss Ratio (MLR) d) Minimum Value (MV) calculator

c) Medical Loss Ratio (MLR) The Medical Loss Ratio (MLR) indicates how much of the health coverage premium must go toward actual medical care, as opposed to administrative costs and profits.

Dividends received on participating life insurance policies are a) Not taxable because they are a return on your investment. b) Taxable because they are a return of unused premiums. c) Not taxable because they are a return of unused premiums. d) Taxable because they are a return on your investment.

c) Not taxable because they are a return of unused premiums. Dividends on participating life insurance policies are not income taxable because they are a return of unused premiums.

The needs approach to calculating the amount of life insurance needed is based on a) Whether or not the insured has dependents. b) The estimate of what would be lost to the family in the event of the premature death of the insured. c) Predicted needs of a family after the premature death of the insured. d) Whether or not the family is in the blackout period.

c) Predicted needs of a family after the premature death of the insured. The needs approach is based on the predicted needs of a family after the premature death of the insured.

On an Accidental Death and Dismemberment (AD&D) policy, the death benefit payable is known as the a) Capital sum. b) Policy limit c) Principal sum. d) Face amount.

c) Principal sum. In Accidental Death and Dismemberment coverage, the principal sum is paid for accidental death.

An annuity would normally be purchased by an individual who wants to a) Earn a higher rate of interest. b) Create an estate. c) Provide income for retirement. d) Provide a death benefit to the surviving family.

c) Provide income for retirement. The main purpose of an annuity is to liquidate an estate and provide income for retirement. Life insurance creates an estate and provides a death benefit to the beneficiaries.

An individual was denied coverage under Social Security because his disability did not meet the strict definition of total disability used by Social Security. Which of the following would provide disability income coverage? a) Major Medical Supplement b) Workers Compensation c) SIS rider d) Medicare Supplement Insurance

c) SIS rider Social Insurance Supplement (SIS) riders are used to supplement or replace benefits that might be payable under Social Security Disability. If the insured has been denied coverage under Social Security, a Social Insurance Supplement or social security rider would be applicable.

Which of the following will NOT be included in the buyer's guide? a) Explanation on how to choose the amount and type of insurance b) Basic information about life insurance policies c) Specific information about the policy d) Comparison of policy costs

c) Specific information about the policy A buyer's guide provides generic information about life insurance policies and explains how a buyer should go about choosing the amount and type of insurance to buy and saving money by comparing the cost of similar policies. The policy summary provides specific information about the chosen policy, as well as the agent's name and address.

If an applicant's health is poorer than that of an average applicant, the policy may be issued a) Ordinary b) Preferred c) Substandard. d) Standard

c) Substandard. If an insurance company issues a policy on an applicant whose health is below average, it may be issued on a substandard basis.

Whose responsibility is it to ensure that the application for health insurance is complete and accurate? a) The underwriter's b) The applicant's c) The agent's d) The policyowner's

c) The agent's As a field underwriter, the agent must ensure that the applications are complete and accurate,

The Insurance Commissioner may deny an applicant an insurance license for any of the following reasons EXCEPT a) The applicant does not have a good business reputation. b) The applicant lacks integrity. c) The applicant does not have a California business address. d) The applicant lied about an insurance policy.

c) The applicant does not have a California business address. The lack of a California business address is not a valid reason to deny an applicant an insurance license.

In life insurance, which of the following is NOT required to have an insurable interest in the insured? a) The insured b) The applicant c) The beneficiary d) The policyowner

c) The beneficiary The beneficiary does not have an insurable interest in the life of the insured.

Once the initial benefit limit in Medicare Part D is reached, how is the beneficiary affected? a) The beneficiary is no longer responsible for prescription drug costs. b) Medicare Part A will cover all costs. c) The beneficiary is then responsible for a portion of prescription drug costs. d) The beneficiary is then responsible for 75% of prescription drug costs.

c) The beneficiary is then responsible for a portion of prescription drug costs. Once the initial benefit limit is reached the beneficiary is responsible for paying 25% of prescription drug costs.

Considering the California Insurance Code's definition of an insurable event, which of the following statements is true? a) The more unpredictable a loss, the higher level of protection is needed. b) The more predictable a loss, the less insurable it is. c) The more predictable a loss, the more insurable it is d) The more unpredictable a loss, the more insurable it is.

c) The more predictable a loss, the more insurable it is According to the CIC 250, any unknown event, past or future, which may damnify a person having an insurable interest, or create a liability against him, may be insured against. The more predictable a loss becomes, the more insurable it is. The more unpredictable a loss, the less insurable it becomes.

If an applicant submits the initial premium with an application, which action constitutes acceptance? a) The producer delivers the policy. b) The insurance company receives the application and initial premium. c) The underwriters approve the application. d) The applicant submits a statement of good health.

c) The underwriters approve the application. Acceptance takes place when an insurer's underwriter approves the application and issues a policy.

What is the purpose of key-person insurance? a) To provide retirement benefits to key employees b) To give senior managers the ability to purchase shares in the business c) To cover decreased business revenues as a result of the death of a key employee d) To provide key employees with life insurance coverage

c) To cover decreased business revenues as a result of the death of a key employee The business is indemnified for the loss of business earnings that the key employee would have brought in until the business can hire and train a replacement.

An aleatory contract is based on what kind of exchange? a) Balanced benefits b) Exchange of equal obligations c) Unequal exchange of values d) Equal amounts for pay in and pay out

c) Unequal exchange of values An aleatory contract is a contract in which the parties exchange unequal amounts or values. The premium the insured pays is small in relation to the amount the insurer will pay in the event of loss.

What is the maximum penalty for releasing personal nonpublic information of multiple consumers without their consent? a) $2,500 b) $4,800 c) $160,000 d) $500,000

d) $500,000 Financial institutions that violate the California Financial Information Privacy Act by releasing one consumer's financial information without consent may be fined up to $2,500 per violation, or $500,000 for multiple consumers.

Joe, age 63, was disabled and can no longer work. He meets the Social Security definition of total disability. How many work credits must Joe have accumulated to have the status of fully insured? a) 10 b) 6 c) 20 d) 40

d) 40 After age 31, the number of work credits required to receive benefits varies, but at least 20 of those credits must have been earned in the 10 years immediately prior to becoming disabled. Those age 62 or older must have accumulated at least 40 work credits.

There is a 10% penalty on the taxable portion of a deferred annuity when it is surrendered prior to what age? a) 55 1/2 b) 40 c) 65 d) 59 1/2

d) 59 1/2 When a deferred annuity is surrendered prior to 59 1/2, there is a 10% penalty on the taxable portion. Penalty free withdrawals are permitted if distribution is from a qualified plan; immediate annuity or structured settlement; employer purchased annuity, periodic payments if taken in series of equal payments for life, disability, or death.

To be acceptable to insurance companies, what percentage of eligible employees must be enrolled under a contributory group health insurance plan? a) 100% b) 50% c) 65% d) 75%

d) 75% State laws establish the minimum number of individuals that constitute a group. Insurers may have a larger number required for certain plans.

In health insurance, what is coinsurance? a) A portion of the deductible the insured must pay for treatment b) The amount an insured pays for treatment c) The amount the insurance company pays for the insured's treatment d) A percentage of the cost of service that the insured and the insurer share

d) A percentage of the cost of service that the insured and the insurer share After an insured meets the deductible required by the policy, the insured and the insurer split the cost of additional expenses, up to a certain limit. This amount, the coinsurance, is presented as a percentage.

Which of the following terms is used to define the period of time during which an annuitant makes payments into an annuity? a) Premium building period b) Annuity period c) Loading period d) Accumulation period

d) Accumulation period The term which denotes the period of time during which the owner makes premium payments, which then earn tax-deferred interest, is called the accumulation period.

Which of the following premium modes would result in the lowest overall premium? a) Quarterly b) Semi-annual c) Monthly d) Annual

d) Annual Paying the premium one time a year would be least expensive because of fewer billing and loading charges.

A comprehensive medical expense insurance policy combines which of the following coverages in a single contract? a) Disability income and accidental death b) Disability income with basic hospital and surgical coverage c) Major medical and accidental death and dismemberment d) Basic hospital and surgical coverage with major medical

d) Basic hospital and surgical coverage with major medical A comprehensive medical expense policy provides the first dollar coverage provided by basic coverage, followed by a corridor deductible, then the high limits of coverage under major medical.

What specific kind of insurance is often written in conjunction with hospital expense policies and includes surgeons' and anesthesiologists' fees? a) Basic medical insurance b) Personnel insurance c) Practitioner's insurance d) Basic surgical expense insurance

d) Basic surgical expense insurance Basic surgical expense coverage is commonly written in conjunction with hospital expense policies. These policies pay for the costs of surgeons services, whether the surgery is performed in or out of the hospital. Coverage includes surgeons fees, anesthesiologist, and the operating room when it is not covered as a miscellaneous medical item.

Which of the following is NOT a characteristic of variable insurance and annuities? a) Cash value accumulates based on the performance of stocks. b) Benefits are not guaranteed. c) Cash value is adjusted for inflation. d) Benefits are determined solely based on the policy premium.

d) Benefits are determined solely based on the policy premium. While fixed life and annuities policy benefits are determined exclusively by the premium amount paid, benefits in variable insurance and annuities are determined by the performance of a stock portfolio. As a result, variable policy benefits cannot be guaranteed.

A dentist is off work for 4 months due to a disability. His dental assistant's salary would be covered by a) Disability Income. b) Key Employee Disability. c) Partnership Disability. d) Business Overhead Insurance.

d) Business Overhead Insurance. Business overhead insurance is designed to pay the ongoing business expenses of a small business owner while they are disabled and unable to work. It will provide the funds needed to pay the salary of employees other than the owners and their other ongoing business expenses, such as rent.

When filling out 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? a) Either white out the answer or cross it out and write the new answer beside it. b) Nothing. A fresh application must be obtained. c) White out the incorrect answer and write the new one over it. d) Cross the incorrect answer out, write the correct one beside it, and initial the answer

d) Cross the incorrect answer out, write the correct one beside it, and initial the answer The agent might make a mistake when filling out the app or the applicant might answer a question incorrectly and want to change it. There are two ways to correct an application. The first and best is to simply start over with a fresh application. If that is not practical, draw a line through the incorrect answer and insert the correct one. The applicant must initial the correct answer.

Which of the following losses would likely be covered under the Accidental Death rider? a) Suicide. b) Mountain-climbing accident. c) Death resulting from a long-term disability d) Death caused by a head-on collision.

d) Death caused by a head-on collision. Accidental Death rider pays some multiple of the face amount if death is the result of an accident as defined in the policy, it would not, however, include death that results from any health problem or disability, self-inflicted injuries, war, or dangerous hobbies or avocations.

The "stop-loss" feature on a major medical policy is intended to a) Establish a maximum amount of out-of-pocket expense that an insured will have to pay for medical expense for the life of the policy. b) Discourage insured from making unnecessary appointments at the doctor's office. c) Establish the number of claims that may be filed on a policy in a calendar year. d) Establish a maximum amount of out-of-pocket expense that an insured will have to pay for medical expense in a calendar year.

d) Establish a maximum amount of out-of-pocket expense that an insured will have to pay for medical expense in a calendar year. A stop-loss feature is a provision that gives the insured financial security by limiting the maximum amount that would have to be paid in deductibles and co-payments during a calendar year.

All of the following are features of catastrophic plans EXCEPT a) Out-of-pocket costs. b) High deductibles c) Essential benefits. d) High premiums.

d) High premiums. Catastrophic plans usually have lower monthly premiums and high deductibles

During the accumulation phase of a fixed annuity, the annuitant's interest rate is based on a minimum rate as specified in the contract, or the current interest rate, whichever is a) Lower. b) Specified in the annuity contract. c) More beneficial to the insurer. d) Higher

d) Higher During the accumulation phase, the insurer will invest the principal, or accumulation, and give the annuitant a guaranteed interest rate based on a minimum rate as specified in the annuity, or the current interest rate, whichever is higher.

Restoring an insured financially after a claim is known as a) Adhesion b) Restoration c) Reasonable expectations. d) Indemnity.

d) Indemnity. Under indemnity, an insured or a beneficiary is permitted to collect only to the extent of the financial loss.

The policyowner chooses the annual mode for the payment of the life insurance premium. For the year, the owner will pay a) More in the first policy year, and then less in consequent years. b) More as compared to the other payment modes. c) The same as compared to the other payment modes. d) Less as compared to the other payment modes.

d) Less as compared to the other payment modes. Premium is calculated on an annualized basis. The more payments (semi-annual, quarterly, monthly) the premium is broken into the higher it will be for the year. One annual payment allows the insurer to work with all of the money up front and cuts down on their expenses.

What is the primary difference between Medigap and Medicare SELECT policies? a) Medigap policy premiums are lower. b) Medicare SELECT policies cover the first 3 pints of blood. c) Medigap policies provide coverage for core benefits. d) Medicare SELECT policies contain restricted network provisions.

d) Medicare SELECT policies contain restricted network provisions. Unlike Medigap policies, Medicare SELECT policies contain restrictive network provisions. In exchange for using network providers, insureds are able to pay lower premiums.

Which of the following statements is INCORRECT? a) Medicare and Medicare supplements does not cover skilled nursing care. b) Medicaid does not pay for nursing home care in any case. c) Medicare and Medigap policies do not provide coverage for long-term custodial or nursing home care. d) Medicare and Medigap policies provide coverage for long-term custodial or nursing home care

d) Medicare and Medigap policies provide coverage for long-term custodial or nursing home care Medicare and Medigap policies do not provide coverage for long-term custodial or nursing home care. Medicare will cover nursing home care if it is part of the treatment for a covered injury or illness. Medicare and Medicare supplements pay for skilled nursing care, but the coverage is limited. Medicaid does pay for nursing home care, but it provides coverage only for those that qualify with low income and low assets.

Cash Value guarantees in a whole life policy are called a) Living Benefits. b) Cash Loans c) Dividends. d) Nonforfeiture values

d) Nonforfeiture values Because permanent life insurance policies have cash values, there are certain guarantees that are built into the policy that cannot be forfeited by the policyowner. These guarantees (known as nonforfeiture values) are required by state law to be included in the policy. A table showing the nonforfeiture values must be included in the policy for a minimum period of 20 years. The policyowner has options as to how to exercise nonforfeiture values.

Which of the following is consideration on the part of an insurer? a) Decreasing premium amounts b) Paying the premium c) Underwriting d) Paying a claim

d) Paying a claim The binding force in any contract is consideration. Consideration on the part of the insured is the payment of premiums and the health representations made in the application. Consideration on the part of the insurer is the promise to pay in the event of loss.

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/an a) Coordinated Plan. b) HMO group plan. c) Limited health plan. d) Preferred Provider Plan.

d) Preferred Provider Plan. Under a preferred provider plan, the insurer has contracted with certain providers to provide services at a certain rate. If an insured chooses to be treated by another provider who does not have a contract with them, the coinsurance rate could be reduced, with the insured paying a higher percentage of the charges.

In group insurance, the primary purpose of the Coordination of Benefits provision is to a) Prevent lawsuits between insurance companies involved in the claim. b) Ensure the payment of claims by all policies that are in effect at the time of the claim. c) Encourage hospitals to keep their charges reasonable. d) Prevent overinsurance.

d) Prevent overinsurance. Coordination of Benefits provision is used to prevent or minimize over-insurance. Usually, under Coordination of Benefits provisions, one insurance policy is primary and the other is secondary. The primary policy pays first. Expenses not covered by the primary, but covered under the secondary may be collected, but only after the primary has paid its limit.

The insured dies 6 months after the policy issue date. Upon death of the insured, it is determined that the insured made a material misstatement on the application. What is the most likely course of action for the insurer? a) An administrative hearing by the Department of Insurance b) A hearing by a court of law to determine the appropriate actions c) No course of action allowed since the policy has already been issued d) Rescind the policy

d) Rescind the policy The contestability period is still in force so the policy can be rescinded by the company for material misrepresentation on the application.

The family term rider incorporates a) Whole life and other-insured term. b) Key person whole life and dependents term. c) Cost of living rider and family protection rider. d) Spouse term and children's term.

d) Spouse term and children's term. A single rider that provides coverage on every family member is called a "family rider." It incorporates the spouse term rider and the children's term rider.

Under the Family Medical Leave Act, what happens to an employee's insurance benefits while he/she is on leave? a) The benefits are cut in half during the employee's leave. b) The benefits are suspended until the employee returns to work. c) The benefits are cancelled. d) The benefits earned remain in effect for the duration of the employee's leave

d) The benefits earned remain in effect for the duration of the employee's leave Insurance benefits must remain in effect during leave under FMLA.

Insurance provides a means to a) Retain a loss. b) Avoid a loss. c) Eliminate a loss. d) Transfer a loss

d) Transfer a loss Insurance allows individuals to transfer a risk from themselves to a large group.

Because of an injury, an insured has been unable to work for 7 months. When his life insurance premium came due, he was unable to pay, yet the policy remained in force. The policy includes a) Guaranteed insurability benefits. b) Facility of payment clause. c) Nonforfeiture options. d) Waiver of premium rider.

d) Waiver of premium rider. The Waiver of Premium rider causes the insurer to waive future premiums if the premium payor is disabled for a period beyond 6 months or more.