Practice Exam 7
If an insurer pays an insured $25,000 in lost wages, $45,000 for physicians visits and hospital cost, and $15,000 for physical therapy treatments, and later discovers that the claim was fraudulent, the insured may be fined as much as:
$170,000
In a seven year vesting schedule, What percentage of employer contributions must be vested after seven years of service?
100%
After the deductible, what portion does a patient pay for covered expenses under Medicare Part B?
20%
The blackout period starts when the youngest child reaches the age of:
??? answer not there guess: 21 or 25
An agent must submit all of the following to the insurer, except:
A copy of all the printed communications used for the presentation
Viatical settlements are accomplished through the use of:
Absolute assignment
A person responsible for collecting premium payments in addition to paying claims is which of the following?
An administrator
A representation in an insurance contract qualifies as which of the following?
An implied warranty
All of the occurrences listed below are examples of an insurable event as defines by the CA Insurance Code, except:
An insured suffers a financial loss in the state lottery
The process whereby a mutual insurer becomes a stock company is called:
Demutualization
Which non-forfeiture option uses cash surrender values to purchase paid-up term insurance for the full face amount of the policy?
Extended term insurance
Life insurance settlement option include all of the following, except:
Extended term option
All of the following would fall under the category of an "adverse underwriting decision," except:
Failure of the agent to submit the application to an insurance company
An agent acting as an insurance agent, broker, solicitor, life-only agent, or bail agent acts in which capacity when handling premiums or return premiums for an insured?
Fiduciary
An agent who acts as an insurance agent, broker, solicitor, life-only agent, or bail agent, acts in which capacity when handling premiums or return premiums for an insured?
Fiduciary
Retirement benefits under social security are available only for workers who are:
Fully insured
Which of the following is not an option for the use of the policy dividends?
Fund the addition of monthly income payments
Which settlement option allows only the death benefit earnings to be paid to the beneficiary?
Interest option
Which statement best describes a life insurance policy dividend?
It is the distribution of excess of funds accumulated by the insurer on participating policies
Who are owners/members of the Medical Information Bureau?
Life insurance companies
Which of the following functions is best defines as an insurance company's identifying and selling to potential customers?
Marketing
Members of the Medical Information Bureau are required to report:
Medical impairments found during the underwriting process
Which type of insurance policy provides a death benefit that matches the projected outstanding debt on an individual's home?
Mortgage protection
What is the difference between a conditional premium receipt and a binding premium receipt?
Only a binding receipt always provides insurance that is effective from the date the receipt is given
What is required when an applicant reveals conditions that require more information?
Physical examination
According to Employee Retirement Income Security Act of 1974 (ERISA) fiduciary standards, benefit plans are operated for:
Plan participants and beneficiaries
Which risk classification carries the lowest premium?
Preferred
A life-only agent's records must include all of the following, except:
Printed material in general use which has been distributed by the insurer
The price of insurance for each exposure unit is called the:
Rate
Which life insurance classification carries the highest premium?
Substandard
Which retirement plan was designed for employees of public school systems?
TSA
For more serious offenses and convictions, an application for a license can be denied without a hearing. Which of the following circumstances would allow for an application to be denied for an insurance license, without a hearing?
The applicant for the license has had a previous license denied for cause within the previous 5 years
A life insurance application is important for all of the following reasons, except:
The beneficiary must sign the application before the insurer will issue the policy
A policy owner has the right to change all of the following, except:
The dividend schedule
All of the following apply to the life insurance cost-of-living rider, except:
The face value of the policy raises or lowers as the cost of living index increases or decreases
After a life insurance policy has been in effect for two years, What prevents it from being rescinded by the insurer?
The incontestability clause
What rule is used to determine the importance of a representation?
The materiality of concealment
What is the difference between a defined contribution plan and a defined benefit plan?
The penalties for early distribution
What is the written instrument called in which the insurance contract is set forth?
The policy
According to state law, what size print must be used for the licensee's license number on all price quotes, business cards, and printed material?
The same size print as the licensee's phone number, fax number or address
Whose benefits are affected by the blackout period?
The surviving spouse
What is it called when an insurer uses higher rates based solely on religion, race, or ethnic group?
Unfair discrimination
Frank and Ernest are 25 year identical twins. They are both in excellent health. Both buy life policies that have $500 annual premiums. Frank buys a 5 year renewable term policy. Ernest buys a whole life policy. Which statement is not true?
*see explanation at the end of the workbook
Which retirement plan utilizes non-deductible contributions?
Roth IRAs
The social security blackout period ends when the surviving spouse reaches the age of:
60
The conversion privilege allows a person to change coverage from:
A group policy to an individual policy
Any situation that presents the possibility of a loss in known as:
A loss exposure
The complete transfer by the existing owner of all rights in an insurance policy to another person is:
Absolute assignment
An agent's appointment with an insurer will be discontinued if all of the following circumstances exist, except:
Another insurer submits an employment application
When must insurance records for insurance agents and insurance brokers be made available to the Insurance Commissioner?
At all times
A worker dies while he is credited with six quarters of the last 13 quarter period. What status does the worker have under social security?
Currently insured
In which plans do employers make specific contributions to an employee's retirement account?
Defined contribution plans
When referring to an insurance contract, when must a representation be made?
Either at the time of or before policy issuance
A group insurance plan is contributory when the:
Employee pays part of the premium
All of the following statements about qualified pension plans are true except:
Employer contributions are taxable to employees in the year they are contributed
In order to obtain group life insurance without providing evidence of insurability, what do eligible individuals generally have to do?
Enroll within a specified eligibility period
In a relation to the frequency of premium payments paid by the insured, which of the following statements is true concerning the total of premium paid by the end of the year:
Is greater if paid semi-annually rather than annually
If a person was in violation of Section 770 of the CA Insurance Code, what action would the insurance Commissioner most likely take if the violation dealt with loans on the security of real or personal property?
Issue a cease and desist order for a violation of more than one transaction
If no other method of payment is selected, which of the following is the automatic mode of settlement for life insurance policy proceeds?
Lumps-sum settlement in cash
Which of the following is the best definition of premium?
Money the insured pays to the insurer to obtain benefits in the policy
Yearly probabilities of death are shown in:
Mortality tables
Social Security provides protection against the financial consequences of all of the following, except:
Poor investments
Every admitted insurer in the state of California is required to maintain a unit or division to investigate which of the following?
Possible fraudulent claims made by insureds
In a reinsurance agreement, the insurance company that transfers its loss exposure to another insurer is called:
Primary insured
A return of premium rider is a rider that:
Provides for the periodic return of a percentage of the premiums that have been paid if the insured becomes and remains disabled
Which non-forfeiture option uses an existing policy's cash value to purchase a paid-up policy with a lower face value than the original policy?
Reduced paid-up insurance option
To authorize the release of an attending physician's report, the applicant must:
Sign a consent form
The request for an attending physician's report must be accompanied by a copy of the:
Signed authorization
In order to determine the amount of a premium an insured will pay, the insurer multiplies the rate by:
The number of exposure units
A policy holder stops making payments on a 20-pay life policy and converts the cash surrender value to extended term insurance. All of the following statements are true, except:
The term policy will have the same loan value as the original policy
The social security normal retirement age depends upon:
The worker's year of birth
The purpose of laws regarding the replacement of life and annuity contracts includes all of the following, except:
To protect the interest of life insurers and their agents
What do we call the process whereby insurers decide which customers to insure, and what coverage to offer?
Underwriting