Guaranteed Exam #2

If an insured pays a health insurance premium each month, how long would the grace period be under the policy?

10 days

Within how many days after the application was submitted must an insurer file a notice of agent appointment with the Commissioner if the insurer issues a policy written by the agent who is not specifically appointed by that insurer?

14 days

A Medicare Supplement policy must have a free look period of at least

30 days

What is the elimination period for Social Security disability benefits?

5 months

What are the continuing education requirements for agents who market long term care insurance policies?

8 hours of long term care specific education included in the regular CE requirements

Which of the following statements is INCORRECT concerning Modified Endowment Contracts (MECs)

An MEC must always pass the 7 pay test

Under HIPAA, which of the following is INCORRECT regarding eligibility requirements for conversion to an individual policy?

An individual who was previously covered by a group health insurance for 6 months is eligible

In which of the following situations is it legal to limit coverage based on marital status?

It is never legal to limit coverage based on marital status

Which of the following statements pertaining to Medicare Part A is correct?

Medicare Part A is automatically provided when an individual qualifies for Social Security benefits at age 65

Which of the following statements is INCORRECT?

Medicare and Medigap policies provide coverage for long term custodial or nursing home care

All of the following are true regarding key person disability income insurance EXCEPT

Premiums are tax deductible as business expense

According to the life insurance replacement regulations, which of the following would be an example of policy replacement?

a policy is reissued with a reduction in cash value

A deductible is

a specified dollar amount that the insured must pay first before the insurance company will pay the policy benefits

Life settlement contracts are put into effect by which of the following?

an absolute assignment

An agent solicited a policy for a client who originally qualified for standard premiums. During the underwriting process, the applicant was rated as a substandard risk and assigned a higher premium. Upon policy delivery, the agent failed to mention that the premiums would be higher, and the client filed a lawsuit against the insure. This is an example of

an omission and will be covered by an Errors & Omissions policy

Which statement below is INCORRECT regarding the type of term insurance that fits best with the applicants needs?

applicants who may require a larger death benefit in the future should buy convertible term insurance

What is it called when a doctor accepts the Medicare approved amount?

assignment

Which of the following is NOT normally an excluded cause of disability in an individual disability income policy?

complications from pregnancy

For a retirement plan to be qualified, it must be designed for the benefit of

employees

When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option?

extended term

Under which installments option does the annuitant select the amount of each payment, and the insurer determines how long they will pay benefits?

fixed amount

What kind of policy does NOT typically require proof of insurability?

group insurance

All of the following are features of catastrophic plans EXCEPT

high premiums

Under which of the following conditions would life insurance proceeds be taxable by the federal government?

if there is a transfer for value

Hazards are conditions or situations that

increase the likelihood of a loss occurring

Restoring an insured financially after a claim is known as

indemnity

To purchase insurance, the policyowner must face the possibility of losing money or something of value in the event of loss. What is this concept called?

insurable interest

The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose?

interest only option

Which of the following is provided by skilled medical personnel to those who need occasional medical assistance or rehabilitative care?

intermediate care

What is the benefit of choosing extended term as a nonforfeiture option?

it has the highest amount of insurance protection

You're client wants to provide a retirement income for his elderly parents in case something happens to him. He wants to make sure that both beneficiaries are guaranteed an income for life. Which settlement option should this policyowner select?

joint and survivor

Who would be the insured in business disability insurance?

key employee

An annuitant pays the annuity premium on the 14th of each month. Which of the following best describes this arrangement?

level

A policyowner no longer needs a life insurance policy and agrees to sell it to a third party for more than its cash value. This type of transaction is called a

life settlement

What does an annuity protect the annuitant against?

living longer than expected

In a disability income policy, all of the following are considered presumptive disabilities EXCEPT

loss of one eye

Which of the following is NOT a component of an insurance policy premium?

number of beneficiaries

Among people in the same class and life expectancy, which of the following factors can be used to influence premium rates?

occupation

An example of "adverse underwriting decisions" in a policy involving individually underwritten coverage would be

placing coverage with a residual marketing mechanism such as an unauthorized insurer that offers other than preferred and standard rates

Policies written on a third-party ownership basis are usually written to cover which of the following?

policyowner's minor children or business associates

Certain conditions, such as dismemberment or total and permanent blindness, will automatically qualify the insured for full disability benefits. Which disability policy provision does this describe?

presumptive disability

The Guaranteed insurability rider allows the owner to purchase additional amounts of life insurance without proof of insurability at all of the following EXCEPT

purchase of a new home

An insured purchases a health insurance policy with a renewability clause that states the policy is "Guaranteed Renewable" This means that as long as the required premiums are paid, the policy will continue until the insured

reaches age 65

Policy dividends issued by mutual companies can be described as

refunds

If a basic medical insurance plans benefits are exhausted, what type of plan will then begin covering those losses?

supplementary major medical

Upon the surrender of a life insurance policy, any cash value accumulated in excess of the premium payments is

taxed as ordinary income

Which of the following is a permissible reason for an insurance company to contest payment of a claim based on statements in the application?

the application contains material misstatements

Once the initial benefit limit in Medicare Part D is reached, how is the beneficiary affected?

the beneficiary is then responsible for a portion of prescription drug costs

All of the following are true of a Multiple employer Trust (MET) EXCEPT

the employee has a right of conversion upon leaving the group coverage

All of the following are advantages of a qualified retirement plan EXCEPT

the income at retirement is tax free

An applicant completes an application for a disability policy and pays the initial premium. The producer gives the applicant a conditional receipt. Insurance coverage for the applicant will become effective when

the insurance company accepts the risk

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??

the insured can select any specialist, but non network specialists will have higher out of pocket costs

Considering the California Insurance Code's definition of an insurable event, which of the following statements is true?

the more predictable a loss, the more insurable it is

Which of the following is NOT true regarding term health coverage?

the owner may renew the policy for a specified term

All of the following are characteristics of group health insurance plans EXCEPT

the parties that hold a group health insurance contract are the employees and the employer

Who is the annuity owner

the person who purchases the annuity

All of the following are true regarding the waiver of cost insurance rider EXCEPT

the rider expires when the insured reaches age 60

All of the following are true regarding copayments, EXCEPT

they are expressed as a percentage of the cost

How are contributions to a tax-sheltered annuity treated with regards to taxation?

they are not included as income for the employee but are taxable upon distribution

Medicare is a health insurance program for all of the following individuals EXCEPT

those with low income and low assets

Which of the following types of insurance is investment based, has a level fixed premium, and a nonguaranteed cash value?

variable whole life

Which of the following becomes part of the contract, is guaranteed to be true, and if untrue, may be grounds for rescinding the policy?

warranty

All of the following are available under Social Security EXCEPT

welfare benefits

Which of the following types of insurance policies would perform the function of cash accumulation?

whole life

An employee that becomes ineligible for group coverage because of termination of employment or change in status, must exercise extension of benefits under COBRA

within 60 days

Which of the following is provided by an HMO?

1 & 2

The Probationary Period is

A specified period of time that a person joining a group has to wait before becoming eligible for coverage.

Gross premium for a life insurance is determined by adding which two components?

Net premium and expenses

A qualifying retiree has access to all parts of the Social Security Medicare program. Which of these parts requires a monthly payment from the insured?

Part B

Which of the following is the cause of loss?

Peril

Regarding the PPACA health care tax credit, which of the following is true?

Persons receiving Medicaid are not eligible

If an insured purchases an insurance policy with a large deductible, what risk management technique is the insured exercising?

Retention

In contrasting stock insurers with mutual insurers, which statement is true?

Stock insurers are owned by the shareholders and issue nonparticipating policies

What is the main purpose of Medi-Cal?

To provide coverage for medical services for individuals with limited income

Group members that are covered by group life insurance policies will be issued which of the following?

a certificate of insurance

Medicare Part B covers all of the following EXCEPT

long term care services

The legal term "nolo contendere" means

no contest

Which of the following terms describes the specified dollar amount beyond which the insured no longer participates in the sharing of expenses?

stop loss limit