Life and Health Test 1
All of the following are personal uses of insurance except: A) A buy-sell agreement B) To provide emergency funds so as not to need to liquidate assets C) Create an immediate estate D) Use to fund retirement plans
A) A buy-sell agreement
Which is a correct statement about life insurance? A) A term contract provides coverage for a period of time with minimal dollar outlay. B) A whole life policy paid up at 65 should cash values equaling the face amount at 65. C) All answers are correct D) No answers are correct
A) A term contract provides coverage for a period of time with minimal dollar outlay.
Non-forfeiture provision cannot be lost because of non-payment of current premiums, they then come into play automatically. A) True B) False
A) True
The department of insurance recognized a number of line insurance. Which is a correct statement? A)Disability and Worker's Compensation are two separate lines of insurance. B) Two lines are life and annuities C) Both are true D) Neither is true
A)Disability and Worker's Compensation are two separate lines of insurance.
One of the greatest advantage of convertible and renewable term policies is that: A) They are considerably less expensive than other term policies B) These features are automatically included in all term policies C) The insured is not required to show proof of insurability in order to renew or convert D) They accumulate cash value
C) The insured is not required to show proof of insurability in order to renew or convert
What best describes the form of reciprocal? A) They hire an accountant to manage the company B) They hire an executive to manage the company C) They hire an attorney-in-fact to manage the company D) They hire a lawyer to manage the company
C) They hire an attorney-in-fact to manage the company
What is true about annuities? A) They create an immediate estate B) They liquidate an estate over a period of time C) They liquidate an estate in a lump sum D) They may only be purchased by someone who is 59 1/2
C) They liquidate an estate in a lump sum
which of the following about an immediate annuity is true? A) It is used only when more than one life is covered B) Income to the annuitant is paid from the accumulated interest only C) This type of contract is funded by payment of a single premium D) Only workers in specified industries may purchase such a contract
C) This type of contract is funded by payment of a single premium
COBRA pertains to: A) ERISA allowing the extension of health benefit B) TEFRA allowing additional benefits for select employees C) NAIC limiting lobbying activities D) COBRA extending the minimum coverage period for qualified disabled beneficiaries
D) COBRA extending the minimum coverage period for qualified disabled beneficiaries
A provision starting that health insured's and their insurer will share covered losses in an agreed proportion is called: A) The stop-loss provision B) Comprehensive insurance C) Percentage insuring D) Co-insurance
D) Co-insurance
A bank was making a loan to an individual to buy a car. The bank included in the contract insurance that would make the payment if the borrower became disabled. This is called: A) Level term B) Credit life C) Convertible term D) Credit disability
D) Credit disability
On a major medical policy when two or three family members have satisfied the deductible for the entire family, this is referred to as: A) Per-cause deductible B) Calendar year year deductible C) Corridor deductible D) Family deductible
D) Family deductible
How long is income payable under a straight line annuity? A) For as long as the annuitant is alive B) Until the principal is exhausted C) For a guaranteed length of time D) For as long as the annuitant's beneficiary is alive
D) For as long as the annuitant's beneficiary is alive
A person picks the reduced paid up non-forfeiture option. Which statement is correct? A) The death protection would stay the same B) The company would send him a check for the cash values C) He would have death protection for limited number of years D) He would have a policy with a lower death benefit for life
D) He would have a policy with a lower death benefit for life
Which of the following is not used in determining health insurance rates? A) Expenses B) Interest C) Morbidity D) Mortality
D) Mortality
Which is a correct statement about reinsurance? A) Life insurer re-insurer B) A policy lapses and later it is re-instated. This referred to as reinsurance C) A company cedes all interest in a policy to another insurer D) No answers are correct
D) No answers are correct
Medicare Part A provides coverage for all of the following, except: A) Home health care B) Hospice C) Hospitalization D) Physicians services
D) Physicians services
Chuck fills a full-time employee position. He cannot enroll in the insurance program for 90 days during which time he must be working on a full-time basis. This period of time is called the: A) Elimination period B) Pending period C) Underwriting period D) Probationary period
D) Probationary period
Many major medical policies include a provision whereby when expenses reach a certain dollar amount the insured no longer shares in the cost of expenses; the insurer pay 100% of remaining covered charges. This is referred to as: A) Maximum benefit B) Benefit restoration C) Coinsurance percentage D) Stop loss limit
D) Stop loss limit
A representation in an insurance contract qualifies as which of the following: A) An express warranty B) An implied warranty C) An amendment D) A policy provision
B) An implied warranty
Group life insurance is usually written as a: A) One-year term policy B) 10-year term policy C) Whole life policy D) Split dollar life policy
A) One-year term policy
Carey is retiring and she wants a retirement income from her whole life policy that has been in force for a number of years. She wants to most guaranteed income for life that provides her an income that does not vary. Which choice suits her needs? A) Pure life income annuity B) Life annuity with period certain C) Life refund annuity D) A variable annuity
A) Pure life income annuity
What is the best description of coinsurance? A) Rate credit B) Partial deductible C) Claims credit D) Rate penalty
A) Rate credit
Mike dies before his annuity has paid out an amount at least equal to the purchase price of the annuity. If Paul's beneficiary continues to receive annuity payments until that amount has been reached what type of annuity is this? A) Refund life annuity B) Straight life annuity C) Joint and survivor D) Life annuity with no refund
A) Refund life annuity
Tort law is what kind of law? A) Natural law B) Contract law C) Corporate law D) Juvenile law
B) Contract law
Under the Consolidated Omnibus Budget Reconsolidation Act (COBRA), which of the following is a qualifying event? A) Promotion B) Divorce C) Marriage D) Relocation
B) Divorce
How do you refer to the 9 months for which the insurance company has covered Robert? A) Short rate B) Earned C) Unearned D) Pro-rata
B) Earned
A term-to-65 life policy is paid up at 65 A) True B) False
B) False
COBRA regulations allow an employer to cancel an employee's health coverage upon termination from work. A) True B) False
B) False
What type of policy builds cash value? A) Term insurance B) Permanent policy C) All policies D) No policies
B) Permanent policy
When a group plan is noncontributory, what percentage of eligible employees must be covered? A) 50% B) 75% C) 100% D) Percentage depends on the size of the group
C) 100%
An individual who wishes to provide a retirement income for himself that will also provide a retirement income for his wife in the event he dies should purchase which of the following: A) life annuity with period certain B) A refundable life annuity C) A joint and survivor life annuity D) An immediate annuity
C) A joint and survivor life annuity
Term insurance is designed to meet which of these needs at the lowest cost: A) Retirement income B) To accumulate savings for a child's college fund C) A temporary protection to cover loans that will be repaid in a defined time span. D) All answers are correct
C) A temporary protection to cover loans that will be repaid in a defined time span.
A _____ is a product used to accumulate funds and later liquidate that amount. A) Endowment B) Term contract C) Annuity D) Life paid up at 65
C) Annuity
Which of the following would be true about a renewable term policy? A) The premium would remain the same and at a later date it could be cash surrendered. B) The premium would go up after five years based on age and would end after 10 years. There would be no cash values. C) The premium would increase after 3 years and remain the same thereafter D) The policy owner could exercise non-forfeiture options.
B) The premium would go up after five years based on age and would end after 10 years. There would be no cash values.
Carrier misrepresented a policy to her clients and she can be jailed for 30 days: A) False B) True
B) True
The person receiving the benefit from an annuity is commonly called the: A) Recipient B) Policy owner C) Insured D) Annuitant
D) Annuitant
What impact has the Family and Medical Leave Act (FMLA) had on the insurance industry? A) Allow an employee to take up to 12 work weeks of paid or unpaid job-protected leave with employer paid health, dental and vision care benefits during their 12 week leave. B) Allow an employee to take up to 26 work weeks of paid or unpaid job- protected leave with employer paid health, dental and vision care benefits during their 26 week leave C) Allow an employee to take up to 6 work weeks of paid or unpaid job-protected leave with employer health. dental and vision care benefits during their 6 week leave D) Allows an employee to take as much time as need of paid or unpaid job-protected leave with employer paid health, dental and vision benefits during their leave
A) Allow an employee to take up to 12 work weeks of paid or unpaid job-protected leave with employer paid health, dental and vision care benefits during their 12 week leave.
A period of time in which a deferred annuity builds it proceeds tax deferred is referred to as: A) An accumulation period B) An annuity period C) An elimination period D) A waiting period
A) An accumulation period
What is excluded in a Tort Law? A) Breach of contract/crime B) Administrator C) Civil rights D) Negligence
A) Breach of contract/crime
Which of these will a convertible life insurance policy allow the insured to do: A) Change to permanent plan of insurance without evidence of insurability at standard rates B) Renew his policy at the end of the policy period without evidence of insurability C) Change to renewable term insurance without evidence of insurability D) Change to renewable term insurance with evidence of insurability
A) Change to permanent plan of insurance without evidence of insurability at standard rates
Credit life insurance is usually written as: A) Decreasing term B) Increasing term C) One-year renewable term D) Permanent protection
A) Decreasing term
An insurer organized under the laws of the State of California is a: A) Domestic insurer B) Foreign insurer C) Non-alien insurer D) Non-admitted insurer
A) Domestic insurer
Common life insurance policy riders include all of the following except: A) Extended term B) Guaranteed insurability C) Accidental death D) Waiver of premium
A) Extended term
Unless the applicant indicates otherwise during the right-tor-return period in an individual annuity the premium for a variable annuity would be invested only in: A) Fixed income investments and money market funds B) The mutual funds underlying the variable annuity contract C) The insurer's general fund D) The insurer's separate account
A) Fixed income investments and money market funds
Jack applied for a $50,000 life policy and was turned down as uninsurable. Shortly afterwards he was employed by a firm where he was covered for $10,000 worth of group life insurance. The reason he could be covered under a group policy include all of the following except: A) Insurers are careless in underwriting group policies die to the number of people covered B) Group policies normally do not ask medical information C) People in the work force are normally healthy and it is assumed the losses will not be high D) The large number of insured's protects the company from adverse selection
A) Insurers are careless in underwriting group policies die to the number of people covered
A Multiple Employer Trust (MET): A) Is a legal entity of small business owners formed to purchase group insurance B) Cannot be formed by a third party administrator C) Is never composed of employers in the same industry D) None of the above
A) Is a legal entity of small business owners formed to purchase group insurance
Each of the following is a principal factor in determining group premium rates except: A) Location of business (locate of entity) B) Waiting period involved C) Average of the group D) Number of female lives involved
A) Location of business (locate of entity)
An employer is changing insurance carriers from company " A" to company " B". What protects the employee from having their pre-existing conditions excluded? A) No lose, no gain B) Extension of benefit clause C) Guaranteed replacement provision D) California guarantee association
A) No lose, no gain
Medicare supplement policies as they are regulated by the Department of Insurance can: A) Offer only core benefits B) offer policies that only have more coverages than core benefits C) Both of the above D) None of the above
A) Offer only core benefits
Medicare supplement policies may offer contracts that cover: A) Only policies containing more than core benefits B) Broader coverages with no core benefits C) Both of the above D) None of the above
A) Only policies containing more than core benefits
What is Loss Exposure? A) Potential for incurring a loss B) Cause of loss C) Lost Revenue D) No answers are correct
A) Potential for incurring a loss
Jessica is 60 years old and has an annuity contract worth $100,000. If she were guaranteed to live to 95 years old which option would give her the most income? A) Pure/Straight life B) Life with 10 year certain C) Life with 20 year certain D) A, B and C would pay an equal amount
A) Pure/Straight life
In an annuity which settlement option will pay the annuitant the greater amount over a period of time? A) Straight life B) Period certain annuity C) Cash refund annuity D) Joint and last survivor annuity
A) Straight life
An organization will cease to exist as an entity eligible to hold a license for all of the following reasons, except: A) Termination of a key employee B) Dissolution of a co-partnership C) Dissolution of a corporation D) Termination of association
A) Termination of a key employee
An individual purchase a life policy with a death benefit of $50,000. A month later he was covered for $50,000 of group life insurance through his employer. What is a correct statement? A) The individual life policy will require more medical information B) The group policy will require more medical information C) Both require the same amount of medical information D) No answers are correct
A) The individual life policy will require more medical information
It is to the advantage of the insured that companies use the Law of Large Numbers to predict losses: A) True B) False
A) True
An individual has a hospital indemnity policy that pays $500 a day. This person is hospitalized for two days and the bills are $400 a day. How much will the company pay? A) $800 B) $1000
B) $1000
Mr. Thomas has just bought a home with 20-year mortgage. He would like to buy life insurance to guarantee that the mortgage will be paid if he should die while the debt still exists. Which type of insurance policy is especially suited to Mr. Thomas' needs: A) 20 year level term policy B) 20-year decreasing term policy C) 20-year endowment policy D) No answers are correct
B) 20-year decreasing term policy
When a group plan is contributory, what percentage of eligible employees must participate? A) 50% B) 75% C) 100% D) Percentage depends on the size of the group
B) 75%
Of the following to whom would it be most appropriate to sell a variable annuity contract? A) A 35-year old man with a $25,000 income and $30,000 in a money market fund who has little tolerance for chance B) A 45- year old woman with $60,000 income and $150,000 in mutual funds C) A 70 year old woman on Social Secularist who has a little savings and wants $100 a month income from her investment
B) A 45- year old woman with $60,000 income and $150,000 in mutual funds
All of the following would be considered unfair trade practices, except: A) Making a statement to the public about a person in the insurance business that is untrue or misleading B) Committing an act of discrimination whether it be fair or unfair C) Filing with any public official a false statement of financial condition concerning an Insurer D) Making any statement misrepresenting terms of any Policy
B) Committing an act of discrimination whether it be fair or unfair
A life annuity with a 10-year period certain: A) Will pay the annuitant only for 120 months B) Is guaranteed to pay for minimum of 120 months or a maximum of the life of the annuitant C) Will pay the annuitant for 10 years and continue to pay the annuitant after 10 years but the amount will be less D) Will pay the annuitant for life and the beneficiary for 10 years after the death of the annuitant
B) Is guaranteed to pay for minimum of 120 months or a maximum of the life of the annuitant
Which of these describes a "term" contract: A) it will liquidate a capital amount by payments of principal and interest B) It pays the face amount only in the event of death and within a stated number of years C) It pays the face amount whenever death occurs during the entire span of life D) It pays the face amount either in the event of death within a stated period or at the end of that period
B) It pays the face amount only in the event of death and within a stated number of years
Who can sell Medicare supplement policies? A) Fire and casualty agents only B) Life agents only C) Life analysts D) Any licensed agent
B) Life agents only
An annuity is designed to protect the annuitant form: A) Dying too soon B) Living too long C) Cost from suffering a disability D) No answers are correct
B) Living too long
Which policy would have the highest premium if all factors were the same? A) Guaranteed renewable B) Non-cancelable C) Cancelable D) Optionally rewable
B) Non-cancelable
Under a group plan a period of time utilized to insure that the company is protected from adverse selection or bad risk is known as: A) Contestable period B) Probationary period C) Eligibility period D) Renewal period
B) Probationary period
Lynn receives a large bonus from her company. She purchases an annuity that will start paying her $400/month immediately. This is: A) Deferred annuity B) Single premium immediate annuity C) Accumulation annuity D) Variable annuity
B) Single premium immediate annuity
The insured has two jobs-one is more hazardous than the other. If he wants health insurance coverage on both jobs, the premium rate will be based upon: A) The occupation with the most time B) The most hazardous occupation C) An equal split between the two jobs D) None of the above
B) The most hazardous occupation
A level term policy is one on which: A) The premium is the same as the protection reduced B) The premium and the protection remain constant for the term of the policy C) Protection remains level while the premium is decreased D) Protection remains constant for the term of the policy while the premium increases
B) The premium and the protection remain constant for the term of the policy
All of the following would be true about COBRA except: A) It extends coverage under a group plan for 18-36 months when an employee leaves the employment of the company with a sponsored plan B) The premium for the coverage would be based on an individual rate C) The premium for the coverage would continue on a group rate D) Dependents also are covered under the plan
B) The premium for the coverage would be based on an individual rate
What is true about a variable annuity? A) The number of annuity units changes B) The value of the annuity unit may change C) The value of an annuity unit is immaterial D) No answers are correct
B) The value of the annuity unit may change
Regarding Utmost Good Faith, what would be the best choice? A) Two parties lying to one another B) Two parties are truthful and sincere while transferring information C) Two parties conceal information D) One party tells the other party faulty information
B) Two parties are truthful and sincere while transferring information
An amount that must be paid after the basic health policy benefits are exhausted and before the excess coverage becomes effective is: A) coinsurance B) corridor deductible C) extended benefits D) co-payment
B) corridor deductible
Rocky has an annuity for which he has paid $50,000 in after tax dollars over the last 20 years. At 65 he will receive $4,000/year annual income based on a life expectancy of 25 years which will yield $100,000. The amount of taxable income will be: A) Nothing B) $800 C) $2,000 D) $4,000
C) $2,000
If as person purchases a CD (Certificate of Deposit) $10,000 or an annuity for $10,000 and both earn the same rate of interest: A) At the end of 10 years both would have the same value after deferred taxes are paid B) The CD will be worth more at the end of 10 years as there is no commission charged C) At the end of 10 years the annuity will a have a greater value because of tax-deferred growth D) At the end of 10 years the annuity will be worth less
C) At the end of 10 years the annuity will a have a greater value because of tax-deferred growth
Term insurance differs from permanent insurance in that term: A) Builds cash value but pays no death benefit B) Insurance repays money to a living insured C) Builds no cash value; pays a death benefit only D) Has a higher premium per $1,000 of insurance
C) Builds no cash value; pays a death benefit only
Which policy would have the lowest premium if all factors were the same? A) Guaranteed renewable B) Non-cancelable C) Cancelable D) Optionally renewable
C) Cancelable
What term describes the concept that the insurer and the insured share in the cost of medical expenses, with the insurer bearing the greater share? A) Deductible B) Stop-loss limit C) Coinsurance D) Benefit restoration
C) Coinsurance
Which of the following is not an example of cost sharing in a health insurance policy? A) Coinsurance B) Co-payment C) Coordination D) Deductible
C) Coordination
A life annuity with period certain pays the annuitant: A) During that certain period after which all payments cease B) An amount equal to the purchase price in a specified number of installment C) For a specified minimum number of years or the rest of his or her life whichever is longer D) Until death at which time the beneficiary begins receiving payments for the rest of his or her life
C) For a specified minimum number of years or the rest of his or her life whichever is longer
As regards the returning of life/ annuity contracts issued to senior citizens which is correct: A) It applies to group and individual policies B) It defines a senior as 65 years of age as of the date of the application C) It allows for the return of the contract within 30 days of delivery for a full refund of premiums D) All answers are correct
C) It allows for the return of the contract within 30 days of delivery for a full refund of premiums
The max amount an Insurance Company will pay in a loss is known as the: A) Loss reserve B) ACV C) Limit of liability D) Condition
C) Limit of liability
A life annuity offer protection against the risk of: A) Death during the earning years B) Disability during the earning years C) Living longer than anticipated D) Death after the age of retirement
C) Living longer than anticipated
An annuity is designed to protect the annuitant from: A) Dying too soon B) Becoming disabled C) Outliving one's resources D) Need custodial care
C) Outliving one's resources
Medicare supplement policies: A) Are provided by the federal government B) Only pay for the same health services covered by Medicare C) Pay some or all of Medicare's deductibles and co-payments D) Are usually necessary if an individual is covered by medical
C) Pay some or all of Medicare's deductibles and co-payments
If the insured's health policy is in the grace period because of an unpaid policy premium and the insured sustains an injury, what will the insurer do? A) Pay the full amount of the claim B) Pay half of the claim C) Pay the claim, but deduct the unpaid premium D) Pay the claim, and then terminate the policy
C) Pay the claim, but deduct the unpaid premium
The type of annuity that guarantees to pay total income at least equal to the purchase price of the contract is a: A) Straight life annuity B) Life annuity with period certain C) Refund life annuity D) Temporary life certain
C) Refund life annuity
Fred and Hetty are married. Fred works for Alpha Company and Hetty works for Bravo Company. Each is covered for health insurance through their respective jobs and each policy covers spouses. Both policies include a coordination of benefits provision. What is a true statement? A) If Fred has a claim, Bravo Compnay would be primary B) If Hetty has a claim, Alpha Company would be primary C) To avoid over-insurance, one policy would not pay benefits paid by the other D) To avoid over-insurance, one policy would not pay any benefits if the other policy any partial or total costs
C) To avoid over-insurance, one policy would not pay benefits paid by the other
Robert paid a year's premium on his health policy on January 1, 1997. On October 1, 1997 there was still three months left of coverage. How do you refer to the last three months? A) Short rate B) Earned C) Unearned D) Pro-rate
C) Unearned
If the payment a person is receiving is determined by taking the number of accumulation units times the value of the separate account, what type of contract is this? A)Fixed annuity B) Endowment policy C) Variable annuity D) Cash Value policy
C) Variable annuity
All term policies automatically provides: A) Convertible privileges B) Renewable privileges C) Cash value accumulations D) A death benefit
D) A death benefit
The California Code of Regulation (CCR) is comprised of the rules and regulations approved by the Insurance Commissioner to set Code administrative standards for: A) Mother vehicle insurance B) Surplus lines C) Health insurance D) All Answers are correct
D) All Answers are correct
The reasons for replacement rules regarding life insurance an annuities are: A) Make sure the agent acts appropriately when replacing a policy B) To make sure the insurer handles the replacement correctly C) To protect applicants for life insurance and annuities in order that they understand replacement D) All answers are correct
D) All answers are correct
What is true regarding group insurance? A) The employer signs the application for insurance and provides the insurance company with information regarding employees B) The employer is responsible for the payment of premium C) The employer retains the master contract and the employees receive certificates of insurance D) All answers are correct
D) All answers are correct
Which is correct about retirement plans? A) Profit sharing is a type of defined contribution plan B) IRA's enjoy internal interest growth with deferred taxation C) Contribution to 401k plans by employees are 100% vested regardless of the employer's vesting schedule D) All answers are correct
D) All answers are correct
Which of the following is true about individual certificate of insurance delivered by the employer to the employee? A) It contains a statement as to the amount of insurance and to whom payable. B) It provides information concerning the employee's ability to convert the group policy to an individual life policy, without evidence of insurability, up to 31 days following termination C) If the insured dies within the 31-days conversion period, the claim will be covered by the group plan. D) All answers are correct.
D) All answers are correct.
Which is true regarding a non-cancelable policy? A) The insurer cannot cancel except for non-payment B) The insurer cannot change the terms of the policy C) The insurer cannot refuse to renew D) All of the above
D) All of the above
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: A) The policy owner begins to receive $200 monthly payments from the insurer that will continue for life B) The policy is surrendered and the policy owner is paid $10,000 by the insurer C) The cash value is used to purchase a $50,000 term policy that is paid-up for 10 years D) The cash value is used to purchase a $20,000 paid-up policy
D) The cash value is used to purchase a $20,000 paid-up policy