A.D Banker Comprehensive Exam

2. Time Limit on Certain Defenses (Incontestable)

Time Limit on Certain Defenses (Incontestable) ◦ Misrepresentations may be contested within 2 years of policy issue ◦ Statements are incontestable after 2 years ◦ No time limit for fraud

COBRA

(Consolidated Omnibus Budget Reconciliation Act of 1985) This Act states employers with 20 or more employees must provide a health coverage continuation option to all covered employees and dependents up to 18 months in the event of: Termination of employee (unless it is for cause as defined by federal law) Reduction of hours for employee, so they no longer qualify as a full-time employee Coverage may continue up to 29 months if an employee or dependent is totally disabled at the time of a qualifying event

12. Change of Beneficiary Provision

(required) applies to death benefit policies. policy owner has the right to change beneficiaries only if the beneficiary is not irrevocable

9. Payment of Claims Provision

(required) defines how proceeds are to be paid out + requirements to initiate death benefit claim

The Legal Actions provision

(required) defines the periods during which the insured can take legal action against the insurer because it didn't pay the claim. Insured MUST wait 60 days but NOT later than 3 YEARS after proof, before legal action may be brought against the insurer.

Assignment of Benefits

- A method where the person receiving medical benefits (the insured) assigns the payment of those benefits to the provider of services (a physician or hospital). Assignment of benefits makes the claims process easier for the insured.

Assignment of Benefits (AOB)

- A method where the person receiving medical benefits (the insured) assigns the payment of those benefits to the provider of services (a physician or hospital). Assignment of benefits makes the claims process easier for the insured.

Self-Funded Plan

- A plan in which the sponsor (employer, labor union, fraternal organization) chooses to pay claims from its own resources. -A self-funded plan may or may not be insured. -The employee/member ultimately retains liability for all expenses incurred. - In California, labor unions, fraternal organizations, and co-ops may opt for a self-insured medical and disability plan, but not death benefits.

Life Income (Pure or Straight Life)

- Annuity is payable for as long as the annuitant lives, and upon death all payments cease. This option provides the highest monthly income than any of the other options.

Life Income Period Certain

- Annuity is payable for life, or for a specified period of time, whichever is longer. If the annuitant lives beyond the stated period, benefits continue for life of the annuitant. If the annuitant dies prior to the end of the period certain a beneficiary receives the balance of the payments for the remaining time period.

Life Income with Refund (Installment or Cash Refund)

- Annuity is payable for the lifetime of annuitant. Upon death, if an annuitant has not received an amount equal to the total of all payments made into the annuity (not the growth), the balance is refunded to the beneficiary as a lump sum, cash refund, or in installments, sometimes referred to as the installment refund.

Life Income Joint and Survivor

- Annuity is payable to 2 annuitants (in one check) while both are living. -Upon the death of the FIRST annuitant, survivor benefits continue, either paying the full amount or reduced to 2/3 or 1/2 for the survivor's income until the survivor dies. -Depending on which option is selected, these options may be referred to as Joint and Full Survivor, Joint and 2/3 Survivor, or Joint and ½ Survivor.

Joint Life Annuity

- Annuity is payable to 2 or more named annuitants while both are living. Upon the death of the first annuitant, the benefits stop.

usual, customary, and reasonable (UCR)

- Benefits are based on the average fee charged by all providers in a given geographical area. --- This is the allowable charge insurers are willing to pay. Any amount charged over the (UCR) amount and the balance of any overcharges or costs of any disallowed services are the insured's responsibility.

Increasing Term

- Commonly used as a hedge against inflation. - The death benefit increases over the life of the policy while the premiums remain level. -This type of term is normally written as a rider for the return of premium on a term policy over a set number of years

Conditional Receipt

- Provides that coverage is effective as of the date of application or date of completed medical exam (if required), whichever is LATER, as long as the insurer would have issued the policy as standard or better. -This receipt provides conditional coverage even if the underwriting process has not been completed. If an applicant is a substandard risk, there is no conditional coverage.

Indemnity (Reimbursement) Plan

- The insured can choose any doctor or hospital without referrals or a primary care physician. The plan requires the insured to pay up front for services, and then submit a claim for reimbursement. The insurer will pay benefits directly to the insured as specified in the policy up to the amount of expenses incurred. Indemnity plans are generally marketed through commercial insurers.

Service Plan

- The plan pays benefits directly to the providers of health care rather than as a reimbursement to the subscriber. ---Plan participants are called SUBSCRIBERS and pay a premium or subscription fee in exchange for the service provided. ---Service plan providers include Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs) and Point of Service plans (POS). ---The plans have a contractual agreement with a healthcare provider to accept a negotiated fee for services.

Guaranteed Level Premium

- The policy premium is guaranteed to be LEVEL throughout the term of the policy

Non-guaranteed Level Premium

- The premium can be INCREASE to a new premium level for the remainder of the term

Indeterminate Premium Term

- The premium may FLUCTUATE between the current charge and a maximum rate stated in the policy based on the insurer's mortality, expenses, and investment returns

Level Term

--- both Face amount (death benefit) & premium stay the same for the life of the policy

Health Insurance Counseling and Advocacy Program ( HICAP)

--- do NOT sell insurance --- Provides Health Insurance counseling to Seniors that have questions about MEDICARE benefits, LTC care, Medicare Supplement. --- Part of the California Department of aging founded through the department of insurance Functions: - free assistance -education -Consumer advocacy -Legal assistance with problems regarding claims, benefits, billing and appeals

Decreasing Term

--- the face amount of the policy decreases over time in scheduled steps. Most often used to cover a debt obligation (mortgage) If the insured dies. --- But premium remains level ---The premiums paid for decreasing term are lower than the premiums payable for level term since the benefit decreases throughout the term of the policy.

Business Overhead Expense (Business Disability Insurance)

------Premiums paid by the business are tax deductible. ------Benefits received are taxable to the business owner and must be reported as income. ------The taxes are NOT TAXABLE when the money is used to pay business expenses other than the owner's personal income.

Key Person Disability Insurance (Business Disability Insurance)

-----When an employer purchases a disability income policy on a key employee and is also the beneficiary, the premiums are NO TAX deductible to the business. ----Benefits received are NOT taxable.

The General Enrollment Period

-----between January 1st and March 31st each year for those who did not enroll in Medicare Part B when they first became eligible. ----For individuals enrolling during the general enrollment period, coverage begins on July 1.

Disability Buy-Sell Agreement (Business Disability Insurance)

----Premiums are NOT tax deductible. ----Benefits received are NOT taxable.

The Initial Enrollment Period Medicare

----lasts 7 months and begins 3 months before the month of an individual's 65th birthday and ends 3 months after the month following when the individual turned age 65. The actual month of eligibility is the month of the individual's birthday.

The SDI programs are:

---state-mandated and funded through employee payroll deductions. ---SDI provides short-term benefits to eligible workers who contribute a small percentage of their gross wages each pay period up to the annual maximum. --- Workers covered by SDI are covered by two programs: Disability Insurance and Paid Family Leave.

Time of payment of claims provision

--All claims are to be paid immediately upon written proof of loss. -- Loss of time benefits (disability income) will be paid not less frequently than monthly

Automatic Premium Loans (APL)

--This provision must be elected by the policyowner and can be cancelled at any time. --It enables the insurer to automatically borrow against the cash value to cover a premium payment to prevent the contract from lapsing unintentionally. -- APL is available on cash value policies only and does not require an additional premium. --It becomes effective at the end of a grace period. -- The APL loan is treated the same as all other loans. -- If the APL is used to pay premiums, interest on the loan accumulates on an annual basis.

The types of receipts that can be issued when a premium is submitted with the application are:

-Conditional Receipt -Temporary Insurance Agreement

Types of Policies The types of level term include:

-Guaranteed Level Premium -Non-guaranteed Level Premium -Indeterminate Premium Term

Temporary Insurance Agreement

-It is a receipt that provides immediate coverage during the underwriting period (rather than a specified number of days) until a policy is issued or the application is declined.

surrender period

-It is the time the owner must wait before funds can be withdrawn without a penalty.

When premiums pay by employer

-Non-contributory - Plan requires a 100 % participation of eligible employees

Annually Renewable Term

-Renews each year without proof of insurability -Premiums increase due to attained age upon renewal - The simplest form of term life insurance is for one year. -The death benefit remains level and the premiums increase yearly as the policy renews up to a specified age. - While it initially is very inexpensive compared to other types of life insurance, over time it can become cost prohibitive. -The death benefit is paid by the insurer if the insured dies while the policy is in force

The classifications of healthcare plans are

-Service, Reimbursement (Indemnity), and Self-Funded plans, Usual, Customary, Reasonable (UCR)

cost containment

-methods used to control the cost of healthcare -to get a second opinion

8. Time of payment of claims provision

-the insurer must pay all claims immediately after receiving proof of loss.

Optional Uniform Provisions protect the interest of the INSURER. --- included at the insurers option

1. Change of occupation 2. Misstatement of Age 3. Other insurance with this insurer 4.Insurance with other insurers 5. Relations of Earnings to insurance 6. Unpaid premiums 7. Conformity with State statutes 8. Illegal occupation/Act 9.Intoxicants and Narcotics 10. Cancellation

3 Mandatory Uniform Provisions protect the interests of the INSURED --These provisions are REQUIRED to be in alL health policies.

1. Entire contract 2. Time limit on certain defenses 3. Grace Period Provision 4. Reinstatement Provision 5. Notice of claim 6. Claim forms 7. Proof of loss 8. Time of payment claims 9. Payment of claims 10. Physical exam and autopsy 11. Legal Actions 12. Change of Beneficiary

An agent who violates any replacement regulations is liable for an administrative penalty of no less than how many dollars for the first violation? A $1,000 B $750 C $250 D $500

A $1,000 An agent who violates any replacement regulations is liable for an administrative penalty of no less than $1,000 for the first violation

Errors and Omissions (E&O) policies are typically offered with a minimum limit of liability of how much? A $1,000,000 B $100,000,000 C $10,000,000 D $100,000

A $1,000,000

A $100,000 policy with a waiver of premium rider and $30,000 of cash value is in force when the insured dies at age 65. The beneficiary receives how much of the policy's values? A $100,000 B $70,000 C $130,000 D $30,000

A $100,000 ---Only the face amount is paid out to the beneficiary

An evaluation of Simon's past earnings reveals his average earned monthly income to be about $4,000 monthly. The greatest amount of benefit that Simon will likely be able to purchase under a Disability Income Policy, in order to reduce malingering in the event of a claim, is: A $2,500 monthly B $2,000 monthly C $1,000 monthly D $4,000 monthly

A $2,500 monthly Benefits are usually determined as a percentage of the insured's current earnings, normally 60 to 70%. Simon would be unlikely to obtain 100% of his income as a disability benefit.

Which of the following is not part of the Affordable Care Act? A $5,000,000 Lifetime and $1,000,000 annual benefit limits B Guaranteed issue C No pre-existing conditions exclusions D Dependent continuation to age 26

A $5,000,000 Lifetime and $1,000,000 annual benefit limits It is prohibited to impose lifetime or annual limits on the dollar value of health benefits.

***A $100,000 policy with a waiver of premium rider and $30,000 of cash value is in force. The base policy costs $750 and the rider is $50. What is the total premium annually the policyowner must pay to keep the policy in force if the policyowner decides to cancel the rider? A $750 B $800 C $50 D $700

A $750 Riders such as the waiver of premium are a provided benefit for an additional cost, therefore if canceled, the annual premium would then become $750 ($800 - $50).

***Jeanne has a $100,000 whole life insurance policy that has $1,000 of dividend additions, a $6,000 outstanding loan that includes unpaid interest, and a monthly premium of $500. If she dies during the grace period, which of the following insurance settlements would be permitted? A $94,500 B $92,500 C $100,000 D $93,000

A $94,500 It is prohibited for any settlement to be less than the amount of the death benefit, plus dividends, less policy loans and loan interest outstanding, less any unpaid premium. Relevant Content: Life Policy Provisions and Options 4.3

One of your clients just reinstated his health insurance plan. When is coverage effective for sickness and accident? A 10 days for sickness, and immediately for accidental injuries B 10 days for accident and 48 hours for sickness C Immediately for both accident and sickness D 30 days for sickness, immediate coverage for accidents

A 10 days for sickness, and immediately for accidental injuries

COBRA applies to employers with: A 20 or more employees B 2 to 50 employees C 51 or more employees D 10 or fewer employees

A 20 or more employees --COBRA states that employers with 20 or more employees must provide a health coverage continuation option to all covered employees and dependents.

A Viatical Settlement is an agreement between a policyowner and a third-party buyer to purchase the life policy covering a person who is diagnosed as terminally ill with less than how many months remaining life expectancy? A 24 B 48 C 36 D 60

A 24

In the event that an organizational license terminates, the organization may continue to transact insurance under the former license if a new application for an organizational license is submitted within: A 30 days B 60 days C 90 days D 45 days

A 30 days ---Under the California Insurance Code, in the event that an organizational license terminates, the organization may continue to transact insurance under the former license if a new application for an organizational license is submitted within 30 days.

If the insured is receiving regular disability income payments, the insurer can require notice of continuance of claim every ______ months. A 6 B 12 C 9 D 3

A 6

If a Medicare Supplement policy replaces another Medicare Supplement policy that has been in force for _____ months or more, the replacing insurer cannot impose an exclusion or limitation based on a preexisting condition. A 6 B 4 C 5 D 3

A 6 Relevant Content: Senior Needs 11.9

Under the PPACA, the special enrollment period in the Individual Marketplace lasts ______ days from the date of the qualifying event. A 60 B 30 C 20 D 45

A 60 Under the Patient Protection and Affordable Care Act, the special enrollment period in the Individual Marketplace lasts 60 days from the date of the qualifying event and lasts 30 days in the Small Business Health Options (SHOP) Marketplace.

Which of the following could initiate the Accelerated Benefits Provision or Rider of a life policy? A A condition that is terminal B A presumptive disability C A total disability not reducing life expectancy D Inability to perform some activities of daily living

A A condition that is terminal ---The qualifying event in the Living Needs rider is the terminal status of the insured (i.e. projected to die within 1 or 2 years).

***Which of the following could initiate the Accelerated Benefits Provision or Rider of a life policy? A A condition that is terminal B A total disability not reducing life expectancy C A presumptive disability D Inability to perform some activities of daily living

A A condition that is terminal The qualifying event in the Living Needs rider is the terminal status of the insured (i.e. projected to die within 1 or 2 years). Relevant Content: Federal Tax Considerations and Retirement Plans 7.1

In the event a policy is delivered by an agent to the insured, and the premium payment is to be collected at the time of this delivery, normally what else must the agent obtain to make the delivery complete? A A statement of good health B Postage and handling fees C Additional payment reflecting lost interest D An affidavit from the applicant

A A statement of good health ---It is the agent's responsibility to deliver the policy and verify that the insured has remained in good health.

The annuity pay-in period is also referred to as the ________ period. A Accumulation B Settlement C Annuity D Deferred

A Accumulation ----The Pay-In Period is considered the accumulation period, during which taxes are deferred. Accumulation periods are found within deferred annuities.

A and B are married. They have two minor age children. A and B feel that all family members should have coverage on their lives, not just A. What would be the least expensive way to accomplish this? A Add a term life insurance rider to this policy to provide additional coverage on the spouse and children B Buy traditional whole life policies on B and the two children C Buy a traditional whole life policy on B, and juvenile policies on the children D Add accidental death coverage riders on B and the two children

A Add a term life insurance rider to this policy to provide additional coverage on the spouse and children ----The policyowner may add a term rider to this policy to provide additional coverage on the primary insured, a spouse, or children.

_____________ is/are not considered material to the policy issuance. A Age and/or gender B Hazardous occupations and/or hobbies C 12 driving under the influence tickets within 6 months prior to application D Recent major inpatient hospital surgeries

A Age and/or gender

A long-term care policy can exclude from coverage all of the following, except: A Alzheimer's disease B Rest cures C Intentionally self-inflicted injuries D Hospitalization (acute care)

A Alzheimer's disease --Alzheimer's disease cannot be excluded from long-term care coverage.

***What will cause the time period of the fixed amount settlement option to be extended? A An increase in interest credited B Lower mortality C A decrease in the insurer's expenses D A stock market rally

A An increase in interest credited Fixed Amount Payments are for a specified dollar amount paid monthly until the benefits along with interest are exhausted. An increase in declared interest will extend the time period in which the benefits are paid.

A person making application, for themselves or another, to be insured under an insurance policy is called the: A Applicant B Sponsor C Fiduciary D Beneficiary

A Applicant

***The person offering him/herself or another person to be insured by the contract best defines the: A Applicant B Policyowner C Beneficiary D Insured

A Applicant The applicant is the party making the application, offering him/herself or another to be insured. The applicant may possibly also be the insured and/or policyowner, but not necessarily.

Which of the following allows reimbursement benefits to be paid directly to medical providers? A Assignment of benefits B Precertification C Change of insured D Schedule of benefits

A Assignment of benefits --When a policy pays on a reimbursement basis, benefits are paid directly to the insured. The exception to this is if the insured assigned benefits to the provider(s), in which case they would then be paid directly to the provider.

All insurers, brokers, agents and others engaged in the business of insurance owe a consumer all of the following duties, except: A Best prices B Honesty C Good faith D Fair dealing

A Best prices All insurers, brokers, agents and others engaged in the business of insurance owe a consumer a duty of honesty, good faith, and fair dealing.

When the Code requires a notice to be provided to a policyowner, which of the following would not be an acceptable method of delivery? A By U.S. Mail to the current address of the policyowner with less than $0.50 additional postage due B By U.S. Mail postage paid to the last known address of record of the policyowner C By Federal Express, UPS, or other prepaid delivery service D By email to a policyowner who had opted in to electronic delivery of notices

A By U.S. Mail to the current address of the policyowner with less than $0.50 additional postage due U.S. Mail is an acceptable delivery, but a notice must be mailed postage paid.

A Life-Only Agent who is not also licensed as an Accident and Health Agent may transact: A Certain disability benefits as riders to life or annuity contracts and are subject to specific continuing education requirements B Free insurance as long as the insurer authorizes the sale C 24-hour Care Coverage D Workers' Compensation

A Certain disability benefits as riders to life or annuity contracts and are subject to specific continuing education requirements

If a beneficiary is designated as irrevocable, then all of the following require the irrevocable beneficiary's approval, except: A Changing the mode of premium B Policy assignment C Reducing the coverage D Taking a policy loan

A Changing the mode of premium The policyowner may not change an irrevocable beneficiary unless the beneficiary dies or provides written consent for the change. If an irrevocable beneficiary is named, the owner may not make changes to the policy that affect the coverage or benefits without consent of the beneficiary. Relevant Content: Life Policy Provisions and Options 4.5

All of the following are exclusions under an LTC policy, except: A Chemical dependency on one's own prescription drugs B Nervous or mental disorders that have no demonstrable organic cause C Injury arising due to committing a felony D Rest cures

A Chemical dependency on one's own prescription drugs ---Chemical dependency would not be excluded if it results from the administration of drugs under a physician's prescription and direction.

Alice is the insured, Bill is the primary beneficiary, and Claire is the contingent beneficiary. Bill dies, then Alice dies, so who receives the policy proceeds? A Claire B The treasury of the state where Alice lives C Bill D Alice's estate

A Claire

The type of impairment that involves the loss of memory and deductive or abstract reasoning due to an organic mental illness, including Alzheimer's disease and senile dementia, is referred to as: A Cognitive B Chronic C Intensive D Acute

A Cognitive ---Cognitive impairment involves the loss of memory and deductive or abstract reasoning due to an organic mental illness, including Alzheimer's disease and senile dementia. It also includes impairment due to traumatic brain injury, such as a stroke or blunt-force trauma.

***All of the following are methods of managing risk, except: A Contracting the risk B Retaining the risk C Avoiding the risk D Transferring the risk

A Contracting the risk Risk may be avoided, transferred, or retained, in addition to being shared or reduced.

Medicare Plan A provides the ____ benefits that must also be included in all other Medigap plans. A Core B Indemnity C Comprehensive D Extended

A Core

***The Individual Exchange and Small Business Health Options Exchange (SHOP) will coordinate with the Department of Health Care Services (DHCS) and California _________ to ensure that individuals are seamlessly transitioned between coverage programs if their eligibility changes. A Counties B Districts C Insurers D Cities

A Counties Relevant Content: Health Concepts and Tax Considerations 14.1

Upon receipt of all of the necessary information, the home office underwriters can issue the coverage applied for in all of the following ways, except: A Declined B Preferred C Substandard D Standard

A Declined Declined means that the policy would not be issued. The other choices indicate an acceptable risk at different pricing based on insurability.

***Surrender charges typically ____________ over time. A Decrease B Increase C Remain the same D Vary

A Decrease Surrender charges decrease over time until they disappear at which time the cash value and the cash surrender value are the same amount. Relevant Content: Annuities 5.2

The Commissioner may disapprove the use of any true or fictitious name for all of the following reasons, except the name: A Describes the true nature of the work the licensee is authorized to transact B Implies that the licensee is an underwriter, though the licensee can use the designations of Chartered Life Underwriter when entitled C Interferes with a name already filed by another licensee D Infers that the licensee will engage in activities not permitted under licenses held

A Describes the true nature of the work the licensee is authorized to transact

***An employment-related group health insurance plan in California is issued to the: A Employer B Trustee representing the employees and dependents C Employees D Employee's beneficiaries

A Employer An employment-related group health insurance plan in California is issued to the employer with premiums being paid by the employer, employee, or jointly.

***All of the following are risk management techniques, except: A Enhancement B Retention C Transfer D Avoidance B Retention C Transfer D Avoidance

A Enhancement Relevant Content: General Insurance 1.8

The California Financial Information Privacy Act adds to the consumer safeguards provided by: A Federal law B The Commissioner of Insurance C HIPAA D State law

A Federal law The California Financial Information Privacy Act (sometimes known as 'Cal-GLBA'), adds to the consumer safeguards provided by Federal law.

***An insurer organized in a state other than one in which it is authorized to do business is known as which type of insurer? A Foreign B Admitted C Alien D Domestic

A Foreign A foreign insurer is organized under the laws of a state or jurisdiction within the United States other than one it is admitted to do business in (though it may also be admitted in its home state or jurisdiction). Relevant Content: General Insurance 1.4

Offering any kind of insurance as an inducement to the purchase of property or services without a separate fee charged to the insured for the insurance is a violation and is considered: A Free Insurance B Discrimination C Defamation D Replacement

A Free Insurance ---No insurer or agent may offer any kind of insurance or annuities in this state as an inducement to the purchase or rental by the public of any property, or services, without any separate charge to the insured for such insurance. Offering free insurance is a violation that may result in suspension or revocation of a license.

Sylvia is a participant in a Preferred Provider Organization and finds that if she opts to use a provider outside the network: A Her PPO will pay a reduced amount with Sylvia paying the balance B Her PPO will cover any charges in full C Her PPO will pay only if the circumstances for care were precipitated by an emergency D Her PPO will not pay at all

A Her PPO will pay a reduced amount with Sylvia paying the balance ---Sylvia's PPO will provide the maximum benefit when she uses in-network providers.

Sylvia is a participant in a Preferred Provider Organization and finds that if she opts to use a provider outside the network: A Her PPO will pay a reduced amount with Sylvia paying the balance B Her PPO will cover any charges in full C Her PPO will not pay at all D Her PPO will pay only if the circumstances for care were precipitated by an emergency

A Her PPO will pay a reduced amount with Sylvia paying the balance Sylvia's PPO will provide the maximum benefit when she uses in-network providers

Part A of Medicare is known as: A Hospital Insurance B Outpatient Insurance C Medicare + Choice D Medical Insurance

A Hospital Insurance ---Part A of Medicare is formally known as Hospital Insurance. --- Part B is formally known as Medical Insurance

Which statement is inaccurate regarding the Change of Occupation Provision? A If the insured changes to a more hazardous occupation, benefits will be reduced to the amount which the premiums paid would purchase at the more hazardous occupation B The insured must notify the insurer of a change of occupation, or the policy will be cancelled C If the insured changes to a less hazardous occupation, he/she may apply for a rate reduction D If the insured works at two occupations, rates for the most hazardous occupation will be charged

A If the insured changes to a more hazardous occupation, benefits will be reduced to the amount which the premiums paid would purchase at the more hazardous occupation. **Failure to notify the insurer of a change of occupation will not result in cancellation of the policy.

Under the California insurance code an insurer is entitled by law to rescind a policy in all of the following cases, except: A Immaterial misrepresentation B Intentional or unintentional concealment of information material to the risk being insured C Violation of a warranty D An intentional and fraudulent omission of matters proving the falsity of a warranty

A Immaterial misrepresentation Under the California insurance code an insurer is entitled by law to rescind a policy in the case of material misrepresentation.

***Under the California insurance code an insurer is entitled by law to rescind a policy in all of the following cases, except: A Immaterial misrepresentation B Intentional or unintentional concealment of information material to the risk being insured C Violation of a warranty D An intentional and fraudulent omission of matters proving the falsity of a warranty

A Immaterial misrepresentation Under the California insurance code an insurer is entitled by law to rescind a policy in the case of MATERIAL misrepresentation. Relevant content 15.2 The California Insurance Code

All life insurance HIV tests require what from the proposed insured? A Informed consent B An exclusion C A wavier D Payment in advance

A Informed consent

A person applying for coverage through an indemnity provider is known as a(n): A Insured B Patient C Senior D Subscriber

A Insured

***A life insurance applicant wants a combination of savings and insurance protection with guarantees. If the applicant is willing to pay premiums only until the age of 65, at which time the policy is fully paid-up, which of the following should he/she purchase? A Limited Pay Whole Life-Age to age 65 B Adjustable Life with a large death benefit and minimal premiums C An Ordinary Straight Whole Life policy with a Level Term rider to age 65 D Indeterminate Premium Whole Life

A Limited Pay Whole Life-Age to age 65 A life policy payable to age 65 is a limited payment policy. If the insured does not die within the limited premium period, premiums cease because the policy is fully paid up (i.e. no more premiums are due). Death always results in the payment of the policy proceeds as long as the policy is in force. Cash values build as in any other Ordinary Whole Life policy.

A policy is issued for a premium of $500 per year, but a condition that would have caused the premium to be substantially more was misrepresented in the application. This information is deemed by the insurer to be: A Material B Non-disclosed C Waived D Warrantied

A Material ---A statement is material if its disclosure or lack of disclosure would change the insurer's decision to issue a policy for the same premium.

Based upon Optional Uniform Provisions, an insurer would have the right to deny claim payment in all of the following circumstances, Except: A Misstatement of age on the application B A claim involving an injury sustained in a bank robbery C A claim is covered by another insurer D A broken leg injury suffered as the result of ingesting an illegal drug

A Misstatement of age on the application Misstatement of age would not avoid a claim, but could cause a reduced benefit to be paid. The Insurance With Other Insurers, Illegal Occupations and Actions, and Intoxicants and Narcotics are each OPTIONAL PROVISIONS that could allow an insurer to avoid liability for a claim. Relevant Content: Individual Policy Provisions 12.2

Under the PPACA, eligibility for premium tax credits or eligibility for Medi-Cal is determined on the basis of: A Modified Adjusted Gross Income (MAGI) B Alternative Minimum Tax (AMT) C Adjusted Gross Income (AGI) D Number of household members

A Modified Adjusted Gross Income (MAGI) Under the Patient Protection and Affordable Care Act, eligibility for premium tax credits or eligibility for Medi-Cal is determined on the basis of Modified Adjusted Gross Income (MAGI).

Common exclusions in accident and health insurance policies include all of the following, except: A Newborn infant B Commission of a felony C Elective cosmetic surgery D Medical expenses covered under Workers' Compensation

A Newborn infant Commission of a felony, elective cosmetic surgery and expenses covered by Workers' Compensation are common exclusions. Newborns are required to have coverage.

What is the maximum amount of credit life insurance that can be written on an insured? A No more than the outstanding debt B $100,000 C $250,000 D $50,000

A No more than the outstanding debt ----Credit life insurance cannot be written for more than the outstanding debt, since that is the limit of the creditor's insurable interest.

If Mr. Stanley is injured while attempting to escape from the police after committing a bank robbery, his A & H coverage will probably pay: A Nothing B Full claim, less the deductible C One half of normal benefit D Amount scheduled Good Job!

A Nothing ---Since Mr. Stanley is injured while committing an illegal act, the Illegal Occupation/Act Provision (an Optional Uniform Provision) provides the insurer's right to deny liability.

***In the event a parent becomes disabled or dies while paying premiums on a life insurance policy for a minor child, which provision would allow the policy to continue in force until the child reaches a predetermined age? A Payor Benefit (Waiver of Payor Premium) B Return of Premium Rider C Cost of Premium Rider D Minor Child Rider

A Payor Benefit (Waiver of Payor Premium) A Payor benefit rider waives the policy premium in the event of the death or total disability of the premium payor. Usually found in policies covering children to the child's age 21 or 25. Relevant Content: Types of Policies and Riders 3.7

If renewal fees are paid and continuing education requirements are satisfied, but an agent has no active Notice of Appointment on file with the Commissioner, the license will be: A Placed on inactive status B Terminated C Cancelled D Revoked

A Placed on inactive status

***Which of the following Medicare Supplement policies have Core Benefits? A Plans A through N B Plan A through C only C Plans C through J only D Plan A only

A Plans A through N The Core Benefits found in Plan A must be found in all plans. Relevant Content: Senior Needs 11.7

The free look period provisions apply to which one of the following situations? A Policies issued in connection with a new purchase or a replacement purchase B Policies issued in connection with a conversion privilege C Policies issued in connection with a contractual policy change D Policies issued in connection with a credit transaction

A Policies issued in connection with a new purchase or a replacement purchase --The free look provision rules does not apply to policies issued in connection with a credit transaction, contractual policy change, or conversion privilege.

The __________ has the right to change the premium mode. A Policyowner B Insured C Revocable beneficiary D Irrevocable beneficiary

A Policyowner

All of the following are correct regarding Key Employee Life Insurance, except: A Premiums are deducted from the employee's salary B The employer has an insurable interest in the key employee C The beneficiary (the employer) typically receives the death benefit free of federal income tax D The employer is the owner/applicant of the policy

A Premiums are deducted from the employee's salary Key Employee Life Insurance is designed to indemnify a company against the loss of a key employee. The employer has an insurable interest in the key employee, and is the owner, premium payor and beneficiary. The premiums are not tax deductible, and the death benefit is federal income tax free.

***Medicare Advantage plans are offered by ___________ that contract with Medicare to provide both Part A and Part B benefits and typically prescription drugs. A Private insurance companies B Physician groups C Hospitals D State governments

A Private insurance companies Medicare Advantage plans are offered by private insurance companies that contract with Medicare to provide both Part A and Part B benefits and typically prescription drugs. Relevant Content: Senior Needs 11.4

In Errors and Omissions claims a(n) ________ may be found guilty of negligence, whether the mistakes were intentional or unintentional. A Producer B Agency C Insurer D Applicant

A Producer --The producer may be guilty of negligence whether the mistakes are intentional or unintentional. -Errors and Omissions insurance is usually offered with a minimum limit of liability of $1 million (1,000,000). Policies usually include a significant retention (or deductible) of $2,500 or $5,000.

Under the California Insurance Code, an Insurance Solicitor is employed to aid a property and casualty broker-agent acting as an insurance agent or insurance broker in transacting ____________ insurance. A Property and casualty B Disability C Life D Health

A Property and casualty

Which of the following risks may be protected against by insurance? A Pure Risk B Catastrophic risk C Speculative risk D Intentional Risk

A Pure Risk

Anna has a contract that includes the Non-Emergency Hospital Preauthorization Admissions Provision. For a scheduled hospital stay, she must first get preauthorization through her insurer. If she does not, the insurer may: A Reduce her normal benefits B Cancel her contract C Pay the benefit, but send her a bill for additional premium D Check her out of the hospital

A Reduce her normal benefits --If Anna does not comply with this provision, she may have her normal benefit level reduced.

The face amount of an Ordinary Whole Life Policy _________ over the life of the policy. A Remains the same B Decreases C Increases D Varies

A Remains the same The face amount is the same as the death benefit and is the amount payable to the beneficiary upon the insured's death. Over the life of the policy it remains level.

The face amount of an Ordinary Whole Life Policy _________ over the life of the policy. A Remains the same B Decreases C Increases D Varies

A Remains the same The face amount is the same as the death benefit and is the amount payable to the beneficiary upon the insured's death. Over the life of the policy it remains level. ----the policy. Unlike term insurance, a whole life policy cannot be convertible or renewable.

*****Guaranteed Renewable means: A Renewable with adjustable premiums, by classification only B Renewable with guaranteed premium C Renewable with adjustable premiums determined by frequency of claim D Renewable only at the option of the insurer

A Renewable with adjustable premiums, by classification only --The Guaranteed Renewable Provision does allow the insurer to adjust premiums upon renewal, but by class only, not on an individual basis. A class of insureds is based on age or other uniform, nondiscriminatory method.

An oral or written statement made at the time of application or before issuance of the policy that is believed to be true to the best of the knowledge of the applicant is called a(n): A Representation B Absolute warranty C Disclosure D Implied warranty

A Representation

Which of the following is not within an agent's authority? A Representing the insured in an insurance transaction B Accepting premiums on behalf of the insurer C Providing quotes D Completing applications on insurer's behalf

A Representing the insured in an insurance transaction --An agent represents an insurer. -- A broker represents the insured.

Which of the following is not a factor in premium determination? A Reserves B Mortality C Expenses D Interest

A Reserves Premiums are based on expected mortality, interest, and expenses.

Self-insurance is an example of which of the following type of risk management? A Retaining the risk B Avoiding the risk C Pooling the risk D Eliminating the risk

A Retaining the risk

The shifting of risk of loss to another party is known as which of the following? A Risk transfer B Risk avoidance C Risk reduction D Risk assumption

A Risk transfer

With a managed health care plan, an 'emergency' is whatever the insured believes it to be, but the insured is expected to not use the emergency room for ________ healthcare needs. A Routine B Complex C Critical D Extraordinary

A Routine

A lump sum of money is placed into an account from which the annuitant will draw periodic benefits beginning more than a year from the date of purchase. This describes a: A Single Premium Deferred Annuity B Flexible Premium Deferred Annuity C Flexible Premium Immediate Annuity D Single Premium Immediate Annuity

A Single Premium Deferred Annuity ---A single premium (lump sum) is put into an annuity from which the annuitant will draw the benefits at some specified time in the future, more than 1 year from the issue date. ---Regardless of how it is funded, by definition a deferred annuity does not begin its income stream for at least 13 months. Typically, the deferral period is many years, not just one.

***An employee who becomes entitled under the terms of the group policy to have an individual policy issued without evidence of insurability must: A Submit an application along with the initial premium B Request the coverage within 90 days C Document the need for coverage D File for unemployment

A Submit an application along with the initial premium If an employee under a group policy becomes entitled under the terms of the policy to have an individual policy issued without evidence of insurability, he/she must submit an application with the initial premium. Relevant Content: Markets and Social Security 6.1

If an agent permits an unlicensed employee to perform acts for which a license is required, the agent is subject to having his/her license: A Suspended or revoked B Denied C Decertified D Withheld

A Suspended or revoked --Under the California Insurance Code, an agent is responsible for the actions of his/her employees, and if an agent permits an unlicensed employee to perform acts for which a license is required, the agent is subject to having his/her license suspended or revoked.

Which one of the following regarding the State Disability Insurance (SDI) program is true? A The State Disability Insurance (SDI) program benefits received for a period of disability are not taxable as income, but benefits received for time off under the Paid Family Leave program are federally taxable as income B The State Disability Insurance (SDI) program benefits received for a period of disability are taxable as income, but benefits received for time off under the Paid Family Leave program are not federally taxable as income C The State Disability Insurance (SDI) program benefits received for a period of disability and benefits received for time off under the Paid Family Leave program are federally taxable as income D The State Disability Insurance (SDI) program benefits received for a period of disability and benefits received for time off under the Paid Family Leave program are not federally taxable as income

A The State Disability Insurance (SDI) program benefits received for a period of disability are NOT TAXABLE as income, but benefits received for time off under the Paid Family Leave program are federally TAXABLE as income

Which of the following is true about a Stock Insurance Company? A The company is directed by officers and directors and has a stated amount of capital stock owned by stockholders B An insurance company whose home office is in some other state, but does business in this state C Any insurance company whose home office is in this state and is incorporated in this state D Policyholders own the insurance company

A The company is directed by officers and directors and has a stated amount of capital stock owned by stockholders A Stock Insurance Company is owned by its stockholders.

Which of the following is true? A The insured and the policyowner are usually the same, but not necessarily B The insured and the policyowner are always the same C The applicant, insured, and policyowner must approve any changes to a policy in writing D Any changes to a policy must be approved by both the insured and policyowner in writing

A The insured and the policyowner are usually the same, but not necessarily

When an insured is discharged from the military, what happens to health insurance coverage that was in place prior to being called up for active military service? A The insured will be permitted to resume coverage and premiums without any waiting periods B The insured will be subject to service-related pre-existing condition exclusions C The insured will have to apply for new coverage, but can obtain a military discount D The insured will have to go through the normal waiting period as if it were a reinstatement

A The insured will be permitted to resume coverage and premiums without any waiting periods ---Under the military suspension provision, individual plans may suspend coverage (and premium) during active military service. When the insured is no longer serving, these individuals will be permitted to resume coverage and premiums without any waiting periods.

All of the following are factors that are taken into consideration when using the Human Life Value approach in determining the proper amount of life insurance coverage, except: A The insured's educational background B The insured's planned retirement age C The insured's annual income D An inflation assumption

A The insured's educational background

The change of occupation provision in a disability income policy is designed to protect which party if the insured changes occupations without notifying the insurer? A The insurer B The insured's beneficiaries C The insured D The insured's employer

A The insurer

The change of occupation provision in a disability income policy is designed to protect which party if the insured changes occupations without notifying the insurer? A The insurer B The insured's beneficiaries C The insured D The insured's employer

A The insurer ---The change of occupation provision in a disability income policy is designed to protect the INSURER if the insured changes occupations without notifying the insurer. --This could result in a change of benefits depending on the new occupation, or the INSURER COULD CHANGE The amount of premium to fit the occupational rating for the current level of benefit. ---The more hazardous the occupation, the less benefit and/or the higher the premium. Consideration is also given to any hazardous hobbies or avocations which would affect the rating or require an exclusion rider. ---In addition to occupation, other factors influence both underwriting and rates, including age and gender, and a person's current health status and prior health history.

An insured owns a $50,000 permanent life policy that she purchased 4 years ago that has a disability waiver of premium. The insured becomes disabled and pays premiums during the waiting period until the waiver begins. Once the waiver begins, what happens to the premiums she paid during the waiting period? B It is held in escrow until the disability is over then refunded C It is kept by the insurer as part of the cost of providing the benefit D It is added to the policy's cash values

A The insurer refunds it Once the waiver of premium takes effect, it is retroactive to the date of the disability. The insurer refunds the premiums paid during the waiting period essentially recognizing the fact that the disability was covered from the first day.

***A Credit Life Policy will be cancelled if: A The loan is paid off or refinanced B The coverage is less than the total debt outstanding C The premiums increase by more than 10% D The insurer's credit rating falls below A+

A The loan is paid off or refinanced Relevant Content: Markets and Social Security 6.2

When an insurance policy is not clear, the court will usually interpret in favor of the insured because: A The policy is a Contract of Adhesion B The policy is a Conditional contract C The policy is an Aleatory contract D The policy is a Bilateral contract

A The policy is a Contract of Adhesion A Contract of Adhesion is a contract between two parties that does not allow for negotiation, i.e. take it or leave it. An insurance policy, drawn up by the insurer, is such a contract. Any ambiguity in the contract is construed against the party who drew it up. Chap 1

All of the following are true of the Law of Large Numbers, except: A The prediction of individual losses is based upon past experience B It relates to the determination of the probability of loss C The prediction of group loss is based upon past experience D There is a decreased degree of error in predicting losses of large groups

A The prediction of individual losses is based upon past experience ---The Law of Large Numbers cannot predict individual losses.

If an annuity policyowner stops putting money into their periodic or flexible premium annuity what happens to the policy values? A They are protected by the nonforfeiture provision B They are forfeited to the insurer for breach of contract C They are refunded to the policyowner in a lump sum D They automatically purchase an immediate payout option

A They are protected by the nonforfeiture provision Just like with life insurance any policy values contained in the contract are nonforfeitable for nonpayment of premium. They can be used for surrender or buying a paid up annuity.

Life insurance policy illustration requirements apply to which one of the following? A Traditional whole life insurance B Individual and group annuity contracts C Credit life insurance D Variable life insurance

A Traditional whole life insurance --Policy illustration requirements apply to all group and individual life insurance policies, except: Variable life insurance, Individual and group annuity contracts, Credit life insurance, Life insurance policies with no illustrated death benefits on any individual exceeding $10,000.

When does the annuitization period begin? A When the contract owner elects to convert the annuity into an income benefit payment B At the specified age stated in the policy, usually age 100 C When the annuitant reaches age 70 1/2 D When the annuitant reaches age 59 1/2

A When the contract owner elects to convert the annuity into an income benefit payment

Long-term care suitability standards determine all of the following, except: A Whether issuing long-term care insurance coverage is in the best interest of the insurer and agent B The applicant's goals or needs regarding long-term care C The advantages/disadvantages of long-term insurance in meeting the applicant's goals or needs D The applicant's ability to pay for the proposed coverage

A Whether issuing long-term care insurance coverage is in the best interest of the insurer and agent Long-term care suitability standards determine whether issuing long-term care insurance coverage to an applicant is appropriate.

An insured forgets to pay his insurance premium. Instead of the policy lapsing, the premium is paid by the company. This would suggest that a __________ policy was purchased. A Whole Life B Level term C Decreasing term D Renewable term

A Whole Life Only cash value policies can provide for missed premium payments to be paid with the policy's cash value through an automatic premium loan

An insured forgets to pay his insurance premium. Instead of the policy lapsing, the premium is paid by the company. This would suggest that a __________ policy was purchased. A Whole Life B Level term C Decreasing term D Renewable term

A Whole Life Only cash value policies can provide for missed premium payments to be paid with the policy's cash value through an automatic premium loan.

Which of the following risks may not be insured by a non-admitted company? A Workers' Compensation B International maritime transportation C Marine builders risk D Property and liability insurance for aircraft or spacecraft

A Workers' Compensation The Insurance Code requires employers to obtain Workers' Compensation insurance only from an admitted insurer.

Does the insured have the right to change the beneficiary designation of a health insurance policy? A Yes, unless the beneficiary is designated as irrevocable B Yes, the beneficiary designation is always revocable in health policies C No, the beneficiary designation in health policies is always irrevocable D No, only the insurer has that right in health policies

A Yes, unless the beneficiary is designated as irrevocable The Change of Beneficiary Provision (a Mandatory Uniform Provision) establishes the insured's right to change the beneficiary, unless it is designated as irrevocable.

Family Plan (Family Protection Plan)

A Family Plan, or Protection Plan, provides a base policy of whole life insurance on the primary insured and the spouse and children are covered by level term riders. The spouse's coverage is written to a specified age, such as 65, and is usually convertible to a whole life policy any time prior to expiration without proof of insurability. The children are covered by a single level term insurance rider with one premium covering all of the children under age 18 who meet underwriting guidelines. Newborn or adopted children will automatically be covered once they are 15 days old without an additional premium as long as the insured is notified in writing. The children's coverage is also convertible to a whole life policy at a specified age (up to age 25) without proof of insurability.

Non-Admitted (Unauthorized) Insurer

A non-admitted insurance company is NOT authorized to transact insurance in California, because it cannot meet financial or other requirements, or because it has NOT applied for a CERTIFICATE OF AUTHORITY or has had its Certificate revoked.

Non-Admitted (Unauthorized) Insurer

A non-admitted insurance company is not authorized to transact insurance in California, because it cannot meet financial or other requirements, or because it has not applied for a Certificate of Authority or has had its Certificate revoked.

Subscriber

A person applying for coverage through a service provider

Insured

A person applying for coverage through an indemnity provider

Nonmedical Application

A policy requested when the applicant's age, medical history or amount of coverage does not require a medical examination for underwriting. Health questions on the application are asked by the producer and are the only medical information required. On the basis of answers provided in a nonmedical application, the underwriter may order additional medical testing, such as collection of blood and urine, EKG, physician exam, etc., prior to accepting the proposed insured.

A Family Maintenance policy

A policy that combines Whole Life insurance and a Level Term Rider, but both cover the same person. ----If the insured dies while the rider is in force, the death benefit of the rider is paid in equal monthly installments (including interest) for the full number of years for which the rider was issued. ----This benefit is in addition to the face amount of the whole life policy. ----If the insured is still living at the end of the level term, the rider drops and the premium decreases.

10. Physical Exam and Autopsy

A provision that allows an insurer, at its own expense, to have an insured physically examined when a claim is pending or to have an autopsy performed where not prohibited by law.

Qualified Health Plan (QHP)

A qualified health plan is any plan which provides coverage for the 10 Essential Health Benefits and provides a minimum actuarial value of 60%.

Single Premium Immediate Annuity (SPIA)

A single premium (lump sum) is put into an annuity from which the annuitant may immediately begin drawing benefits (within a year of the issue date). A retirement plan rollover, savings account balances or CDs, mutual funds, deferred annuity values, or the death proceeds of a life insurance policy might be used to purchase a SPIA.

Single Premium Deferred Annuity (SPDA)

A single premium (lump sum) is put into an annuity from which the annuitant will draw the benefits at some specified time in the future, more than 1 year from the issue date.

Concurrent Review

A utilization review conducted while services are being provided. The insurer monitors the insured's hospital stay to make certain that everything is proceeding according to schedule. The length of hospital stay is monitored.

Admitted (Authorized) Insurer

An admitted insurance company, whether domestic, foreign or alien, is authorized to transact insurance in California by the California Department of Insurance (CDI). An Admitted or Authorized insurer must have a CERTIFICATE OF AUTHORITY granted from the California Department of Insurance

An Admitted or Authorized insurer

An admitted insurance company, whether domestic, foreign or alien, is authorized to transact insurance in California by the California Department of Insurance (CDI). An Admitted or Authorized insurer must have a CERTIFICATE OF AUTHORITY granted from the California Department of Insurance

Admitted (Authorized) Insurer

An admitted insurance company, whether domestic, foreign or alien, is authorized to transact insurance in California by the California Department of Insurance (CDI). An Admitted or Authorized insurer must have a Certificate of Authority granted from the California Department of Insurance.

Foreign Insurer

An insurer NOT organized under the laws of California, but in one of the other states or jurisdictions within the United States, whether or NOT it is admitted to do business in the state or jurisdiction

Foreign Insurer

An insurer not organized under the laws of California, but in one of the other states or jurisdictions within the United States, whether or not it is admitted to do business in the state or jurisdiction.

Domestic Insurer

An insurer organized under the laws of California, whether or not it is admitted to do business in this state.

Alien Insurer

An insurer organized under the laws of any jurisdiction OUTSIDE of the United States, whether or not it is admitted to do business in this state

Alien Insurer

An insurer organized under the laws of any jurisdiction outside of the United States, whether or not it is admitted to do business in this state.

Trial Application (aka Request for Offer)

Application submitted w/out premium; no coverage until submission of full consideration & completed Statement of Continued Good Health.

Assignment

Assignment is the transfer of ownership. There are two types of assignments

***To be permitted to operate as a Life Settlement Broker, a life insurance producer must be licensed as a life agent for at least: A 9 months B 1 year C 6 months D 3 months

B 1 year A life insurance producer licensed as a life agent for at least 1 year or as a licensed nonresident producer meets the licensing requirements and is permitted to operate as a Life Settlement Broker by notifying the Commissioner and paying the life settlement broker license fee. Relevant Content: Types of Policies and Riders 3.8

Insurers must reply to a notice of loss within how many days of receiving it? A 10 B 15 C 5 D 20

B 15

B's policy had a $1,000 annual premium. B has not paid it for 2 years and wants to put the policy back in force. The insurer charges 10% interest on overdue premiums. What does B have to pay in order to reinstate their policy? A 2 years of premiums B 2 years of premiums, plus interest due on overdue premiums amounts C 2 years of premiums, a reinstatement fee, and interest D One month's premium, plus a reinstatement fee specified in the policy

B 2 years of premiums, plus interest due on overdue premiums amounts In order to reinstate the policy, the insured must provide evidence of insurability and the owner must pay all back premiums from the date of lapse plus interest. This means B needs to pay 2 years of unpaid premiums, plus the interest charged for overdue premiums. There is no additional reinstatement fee needed.

***The Insurance Code specifies larger groups that are eligible for group life insurance, such as elementary and secondary school teachers, employees of the state colleges and universities, and members of the National Guard as long as they have at least: A 20 members B 25 members C 10 members D 15 members

B 25 members While group life insurance is available to employee groups as small as two persons, the Insurance Code defines a number of specific larger groups that are eligible for group life insurance, such as elementary and secondary school teachers, employees of the state colleges and universities, and members of the National Guard which must have at least 25 members. Relevant Content: Markets and Social Security 6.1

The grace period for an individual health insurance policy being paid on a quarterly basis is: A 45 days B 31 days C 10 days D 7 days

B 31 days ---7 days for weekly ----10 days for monthly ---31 days for all other payment modes (quarterly, semi-annual, and annual).

Under the Legal Actions Mandatory Uniform Provision, an insured must wait at least _____ days after providing proof of loss before he or she can take legal action against the insurer. A 45 days B 60 days C 180 days D 90 days

B 60 days --An insured must allow a reasonable passage of time for an insurer to live up to its contractual obligations. In this case, reasonable is 60 days.

Medicare Part B is optional and enrollment can be delayed when employer coverage is primary due to active employment of the individual at age: A 60 B 65 C 55 D 62

B 65 Medicare Part B is optional and enrollment can be delayed when employer coverage is primary due to active employment of the individual at age 65.

Joe has a whole life policy with a guaranteed insurability rider. He was 21 at the time the policy was issued. If he exercises all of the options at the ages specified under the typical rider, how many policies will he end up with? A 6 B 7 C 2 D 3

B 7 Under the typical guaranteed insurability rider, Joe would have options to buy additional policies of the same type and face amount at ages 25, 28, 31, 34, 37, and 40, therefore he would buy 6 more to bring his total policies owned to 7 --Allows the insured to purchase stated amounts of additional insurance every 3 years based on certain ages.

California LTC Partnership policies must include 5% compound inflation protection unless the applicant is _____ years of age or older. A 65 B 75 C 62 D 70

B 75

California LTC Partnership policies must include 5% compound inflation protection unless the applicant is _____ years of age or older. A 65 B 75 C 70 D 62

B 75 California LTC Partnership policies must include 5% compound inflation protection unless the applicant is 75 years of age or older.

What is the name of the document that shows the cash accumulation in a life policy over a minimum of 20 years on both a 'guaranteed' (maximum cost of insurance, minimum interest credits) and a 'nonguaranteed' (current cost of insurance and interest credits assumptions) basis? A Sales literature B A basic life insurance illustration C A life insurance policy D An in-force illustration

B A basic life insurance illustration -----A basic life insurance illustrations should be presented to be understandable and not misleading. A basic life insurance illustration is a document that shows the cash accumulation in a life policy over a minimum of 20 years on both a 'guaranteed' (maximum cost of insurance, minimum interest credits) and a 'nonguaranteed' (current cost of insurance and interest credits assumptions) basis.

Which of the following best describes Third-Party Ownership? A A business partner buying a life insurance policy on him/herself B A policy owned by one person insuring the life of another person C A key employee buying a life insurance policy on him/herself D A policy owned by the insured

B A policy owned by one person insuring the life of another person

A Variable Annuity is different from a Fixed Annuity because it must be sold with which of the following documents? A Regulator approved sales literature B A prospectus C A copy of the insurer's business formation documents D A copy of the producer's licensing exam test score

B A prospectus A prospectus is a disclosure document that provides the prospective buyer with information about all fees, charges, expenses, and risks. It must be provided by the producer prior to sale of the variable annuity.

Every LTC Policy that provides benefits of homecare or community-based services must provide all of the following, except: A Hospice services B Acute care C Adult day care D Respite care

B Acute care (hospitalization) Acute Care is an excluded coverage.

Which of the following types of coverage provides custodial care outside the home for individuals not requiring confinement? A Hospice Care B Adult Day Care C Home Health Care D Respite Care

B Adult Day Care ---Adult Day Care provides custodial services outside the home for individuals not requiring a 24-hour confinement in a nursing home.

Insureds that are less desirable than average risks and tend to seek insurance coverage to a greater extent than better risks is called which of the following? A Estoppel B Adverse selection C Sharing D Law of Large Numbers

B Adverse selection --Adverse selection is the insuring of risks more prone to loss than average risks.

Regarding ERISA employer-sponsored employee retirement and welfare and benefit plans, which one of the following is false? A An employer is required to provide a Summary Plan Description filed with the Department of Labor explaining benefits to the employee on an annual basis B An annual financial report must be filed with the state of California's Department of Insurance C ERISA provides protections for participants and beneficiaries in employee benefit plans, including providing access to plan information D Individuals who manage plans (and other fiduciaries) must meet certain standards of conduct under the fiduciary responsibilities specified in the law

B An annual financial report must be filed with the state of California's Department of Insurance ---Regarding ERISA employer-sponsored employee retirement and welfare and benefit plans an annual financial report must be filed with the IRS.

The period of time over which distributions of the accumulated balance is made to the annuitant is referred to as the: A Beneficiary Period B Annuitization Period C Actuarial Period D Accumulation Period

B Annuitization Period Annuities that provide income payments to annuitants have entered the annuity period by design or request.

Which of the following transactions is not defined as a replacement? A Any transaction in which new life insurance or an annuity is to be purchased and it is known that the existing contract will be converted to reduced paid-up insurance, continued as extended term insurance, or otherwise reduced in value by the use of nonforfeiture benefits or other policy values B Any transaction in which the proposed life insurance is to replace life insurance issued by the same insurer C Any transaction in which new life insurance or an annuity is to be purchased and it is known that the existing contract will be subjected to borrowing for amounts in the aggregate exceeding 25% of the loan value set forth in the policy D Any transaction in which new life insurance or an annuity is to be purchased and it is known that the existing contract will be lapsed, forfeited, surrendered, or terminated

B Any transaction in which the proposed life insurance is to replace life insurance issued by the same insurer ---Replacement does not include proposed life insurance that is to replace life insurance issued by the same insurer.

Before a licensed agent may transact insurance, the agent must first be _________ by an admitted insurer or a licensed agency which has a marketing agreement with one or more insurers. A Certified B Appointed C Authorized D Licensed

B Appointed

Long-Term Care policies CANNOT be written as which of the following? A As riders or endorsements B As short-term policies C As individual policies D As group policies

B As short-term policies Generally, LTC policies must provide benefits for a minimum of 1 year. They may be written as riders or endorsements on LIFE policies.

The technical name of the person who makes a policy assignment is the: A Assignee B Assignor C New owner D Old owner

B Assignor The original owner (the assignor) will name a new owner of the policy (the assignee).

The premium charged for new policies obtained by exercising the Guaranteed Insurability Rider is based upon the: A Attained age of the policyowner B Attained age of the insured C Original policy issue age of the insured D Original policy issue age of the policyowner

B Attained age of the insured

Which is not a classification of a healthcare plan? A Service B Blue Cross/Blue Shield C Reimbursement D Self-Insured

B Blue Cross/Blue Shield

Which of the following business disability plans can create a taxable event: A Disability buy-sell agreement B Business overhead expense C Key person disability insurance D Accidental death and dismemberment

B Business overhead expense ---Benefits received from the business overhead expense plan are TAXABLE to the business owner and must be reported as INCOME; however, to the extent that benefits are offset by deductions for payments made to others (to suppliers for inventory items, employees' salaries, taxes, rent, and other business expenses), only the net benefit is taxable as income.

Rank the following renewability provisions in order from least favorable to most favorable in terms of benefit to an insured: A Guaranteed renewable, noncancellable, cancellable B Cancellable, conditionally renewable, guaranteed renewable C Noncancellable, guaranteed renewable, optionally renewable D Guaranteed renewable, optionally renewable, conditionally renewable

B Cancellable, conditionally renewable, guaranteed renewable

A Life-Only Agent who is not also licensed as an Accident and Health Agent may transact: A 24-hour Care Coverage B Certain disability benefits as riders to life or annuity contracts and are subject to specific continuing education requirements C Workers' Compensation D Free insurance as long as the insurer authorizes the sale

B Certain disability benefits as riders to life or annuity contracts and are subject to specific continuing education requirements

All of the following are required uniform provisions in individual health insurance policies, EXCEPT: A Reinstatement B Change of occupation C Grace period D Entire contract

B Change of occupation The grace period, entire contract clause, and reinstatement provision are considered mandatory provisions while the change of occupation is an optional provision.

****Which of the following is a Cost Containment Provision used by insurers to monitor hospital stays? A Precertification B Concurrent Review C Managed Health Care D Prospective Review

B Concurrent Review --Once an insured is admitted to the hospital, the insurer monitors the insured's hospital stay to make certain that everything is proceeding on schedule through the Concurrent Review Provision.

***Which provision in a health insurance plan is used to avoid overinsurance when a person is covered by more than one plan? A Extension of Benefits B Coordination of Benefits C Schedule of Benefits D Primary Care Coverage

B Coordination of Benefits The purpose of the Coordination of Benefits provision is to prevent overinsurance. The 'COB' provision appears in both group and individual health policies. Relevant Content: Group Health Insurance 13.3

When replacing a Medicare Supplement policy, the agent must be sure that the replacement does not result in: A Increased benefits at a decrease in premium B Decreased benefits at an increase in premium C Increased benefits at an increase in premium D Decreased benefits at a decrease in premium

B Decreased benefits at an increase in premium When replacing a Medicare Supplement policy, the agent must be sure that the replacement does not result in decreased benefits at an increase in premium.

An article that includes false statements about the financial condition of an insurer is an example of: A Coercion B Defamation C False advertising D False publishing

B Defamation Defamation is a maliciously critical statement about an insurance company's financial condition.

Before taking an application for an annuity, it is important to: A Ascertain if the insurer is still issuing the product B Determine the suitability of the product to the intended purchaser C Investigate the background and work history of the applicant D Determine the education level of the prospect

B Determine the suitability of the product to the intended purchaser

This type of coverage is used for replacing the insured's loss of earnings. A Long-term care B Disability income C Medical expense D Dental expense

B Disability income --Disability Income (Loss of Time or Income) is a valued contract that pays weekly or monthly benefits due to injury or sickness. The benefit is either a percentage of the insured's past earnings or a flat dollar amount.

A(n) __________ annuity has its interest credit linked to the positive performance of a stock market index. A Variable B Equity-Indexed C Fixed D Market Value Adjustment

B Equity-Indexed An Indexed (or Equity-Indexed) Annuity is an annuity product with interest rates that are linked to the positive performance of a stock market (equity) index, such as the Standard & Poor's 500 Index.

Under the Patient Protection and Affordable Care Act, minimum health standards are identified as ________ Health Benefits: A Core B Essential C Basic D Necessary

B Essential

An insured has a $175,000 permanent life insurance policy and is having difficulty keeping up with the premium payments. Which Nonforfeiture Option would allow him to forego the premiums and retain the same face amount until the cash surrender value is exhausted? A Reduced Paid-Up B Extended Term C Premium Reduction D Cash Surrender

B Extended Term --Cash Surrender is a Nonforfeiture Option that terminates the policy. Extended Term continues the same coverage until the cash value from which the premium is paid is exhausted.

Every licensee must file with the Commissioner in writing the true name of the individual or organization and all _______names under which business will be conducted. A Marketing B Fictitious C Trade D Brand

B Fictitious Under the California Insurance Code, every individual and organization licensee and every applicant for a license must file with the Commissioner in writing the true name of the individual or organization and all FICTITIOUS names under which business will be conducted and, after licensing, must file with the Commissioner any change in or discontinuance of such names.

***For which of the following may any funds remaining at year-end not be rolled over to the next year? A Individual Retirement Account B Flexible Spending Account C Health Savings Account D Medical Savings Account

B Flexible Spending Account FSAs are a 'use it or lose it' type of an account. Relevant Content: Health Concepts and Tax Considerations 14.2

Geographic location or personal information such as occupation, marital status, and relationship of insured to beneficiary or known or suspected homosexuality or bisexuality cannot be used to require a(n): A Eye exam B HIV test C Dental exam D Foot exam

B HIV test

An Administrator who collects any charges or premium from or adjusts claims on California residents in connection with life, health, or annuity insurance meet all of the following requirements, except: A Hold a Certificate of Registration issued by the Commissioner B Hold a Certificate of Authority issued by the Commissioner C Have a written agreement with an insurer D Keep a copy of a written agreement for 5 years after the agreement has ended

B Hold a Certificate of Authority issued by the Commissioner ---An administrator is any person who collects any charges or premium from, or who adjusts or settles claims on, residents of this state in connection with life, health or annuity insurance coverage and must hold a CERTIFICATE OF REGISTARTION as an administrator issued by the Commissioner. --- An administrator must have a written agreement with an insurer. A copy of the agreement must be kept for 5 years after the agreement has ended.

***The income-earning ability lost to dependents by the insured's premature death is a way to evaluate an individual's insurance needs. This method is known as the: A Future Earning Value Approach B Human Life Value Approach C Needs Analysis Approach D Family Values Approach

B Human Life Value Approach The objective of the Human Life Value Approach is to provide the proper amount of coverage as determined by the value of the insured individual to his/her dependents. Relevant Content: Life Basics 2.9

The MIB obtains its information from which of the following? A Hospitals B Insurers C Producer's agencies D Physicians

B Insurers The primary purpose of the Medical Information Bureau (MIB) is to collect adverse medical information about an applicant's health that is known to INSURERS to which the applicant has previously applied for coverage. Chap 2

All of the following are true about a buy/sell agreement, except: A It provides the funds necessary to carry out the terms of the agreement B It can only be funded with term life insurance C It contractually establishes the intent to buy and sell a business interest D It contractually establishes a price for the business interest

B It can only be funded with term life insurance The agreement contractually establishes a price with the intent to purchase, at a predetermined value, the assets of a business should one of the contract participants predecease the other participant(s). It is funded with life insurance to assure that the funds are available to carry out the agreement, but it can be funded with permanent or term insurance.

A hazard is best defined as which of the following? A It increases the amount of loss B It increases the chance of loss C It eliminates the chance of loss D It is a cause of loss

B It increases the chance of loss

What is a High Deductible Health Plan? A It is a health plan offered by large companies who are trying to minimize the growing cost of providing employee health insurance B It is a health plan which requires the insured to absorb a relatively high deductible in exchange for a much reduced out of pocket premium C It is a tax-favored savings account established by an employer for each covered employee D It is a tax-favored Health Reimbursement Account established by an employer for its highly compensated executives

B It is a health plan which requires the insured to absorb a relatively high deductible in exchange for a much reduced out of pocket premium --A High Deductible Health Plan is designed for those who are proactive about managing their health care expenses. By opting for this type of plan, the premium savings can be substantial. If an insured stays healthy, they also save out of pocket costs for health care such as for office visits, prescriptions, medical tests, etc. These savings can be used to fund a Health Savings Account. Chapter 14

What is the name of the life insurance policy that is written on the life of a minor, is owned and paid for initially by a parent, and whose face amount increases to 5 times its original amount at age 21? A Whole Life with an increasing term rider B Jumping Juvenile C Variable Universal Life with death benefit option B D Universal Life with death benefit option B

B Jumping Juvenile

***A buy-sell agreement can be used in all of the following businesses, except: A A partnership B Large publicly held corporations C Closed corporation stockholders D A sole proprietorship

B Large publicly held corporations A buy-sell agreement may be used with a sole proprietorship, a partnership, or with stockholders of a closed corporation.

All of the following are Optional Uniform Provisions, except: A Illegal Occupation B Legal Actions C Change of Occupation D Misstatement of Age

B Legal Actions --Legal Actions is a Mandatory Uniform Provision. All other responses are Optional Uniform Provisions.

No one may transact insurance in California without a(n): A High school diploma B License C Industry recognized professional designation D College degree

B License

***Under the California Insurance Code, all life __________ are agents when transacting life or disability insurance, regardless of the language the insurance company may use in its agency agreements, advertising, or other communication. A Brokers B Licensees C Applicants D Solicitors

B Licensees Under the California Insurance Code, all life licensees are agents when transacting life or disability insurance, regardless of the language the insurance company may use in its agency agreements, advertising, or other communication. Relevant Content: California Ethics and Laws 15.11

Under the California Insurance Code a(n) _____-only agent is a person authorized to transact insurance coverage on human lives including endowments and annuities. A Property and Casualty B Life C Life Settlement D Accident and Health

B Life

Jasmine has deposited $100,000 into a single premium immediate annuity. If Jasmine were to die before receiving $100,000 in payments, the balance of the $100,000 would be paid to her sister. Jasmine has selected the: Ç B Life Income Joint and Survivor Option C Life Income Period Certain Option D Joint Life Option

B Life Income Joint and Survivor Option

A sale of a new ____________ plan to a Medicare Advantage (PART C) enrollee will result in automatic disenrollment from Medicare Advantage. A Medical expense B Medicare Supplement C Hospital indemnity D Long-term care

B Medicare Supplement

When a producer, agent, or broker makes a false statement about the benefits or the nature of an insurance policy, the person is guilty of: A Intimidation B Misrepresentation C Twisting D Defamation

B Misrepresentation

When a producer, agent, or broker makes a false statement about the benefits or the nature of an insurance policy, the person is guilty of: A Intimidation B Misrepresentation C Defamation D Twisting

B Misrepresentation ---Making any statement that misrepresents the benefits or true nature of an insurance policy is known as Misrepresentation.

When an individual pays the full cost of disability income insurance, a disabled employee's benefit will be _____________. A Taxable in full, regardless of the employee's wage B Nontaxable in full, regardless of the employee's wage C Nontaxable up to 60% of the employee's pretax wage D Taxable in part, up to 60% of the employee's pretax wage

B Nontaxable in full, regardless of the employee's wage ---Individual insurance premiums are not deductible and the benefits payable are not taxable.

When the employer pays some or all of the cost of health insurance for its employees, the annual amount of each employee's claims is _______________. A Taxable to the employer B Not taxable to the employee C Taxable to the insurance company D Deductible to the employer

B Not taxable to the employee --Health insurance premiums paid by the insured's employer are deductible to the employer and not taxable to the employee. --- The benefits paid are not taxable to the employee because the employee did not derive any income benefit. Taxes, if any, would be paid by the service provider.

Which provision is an Optional Uniform Provision? A Physical Examination B Other Insurance With This Insurer C Claim Forms D Payment of Claims

B Other Insurance With This Insurer Other Insurance With This Insurer is an Optional Uniform Provision. All of the other answers are Mandatory Uniform Provisions.

Similar to life insurance, this party has all of the rights in the annuity contract. This party is referred to as the: A Annuitant B Owner C Beneficiary D Insurer

B Owner The owner is the individual who controls the contract, is responsible for making payments into the contract, and has all of the contractual rights in the policy.

Which of the following is not a way to access the money accumulated in a traditional ordinary permanent life insurance policy? A Policy loan B Partial withdrawal C Endowment D Cash surrender

B Partial withdrawal --Partial withdrawals are typically available only on universal life insurance types of policies.

Policies that may pay dividends to the policyowner are known as: A Proactive B Participating C Interactive D Mutual

B Participating The question is describing a 'Participating' policy. Participating policies have the potential to pay dividends. 'Nonparticipating' policies do not generate dividends.

***The Insuring Clause under an individual A&H policy would contain all the following, except: A What perils are covered B Premium or rate calculations C The length of the policy period D The name of the insured and insurer

B Premium or rate calculations Premiums or rates would be part of the Consideration Clause. All of the other answers would be part of the Insuring Clause. Relevant Content: Individual Policy Provisions 12.3

The social insurance supplement (SIS) rider reduces over-insurance by matching Social Security as closely as possible and was developed by: A State government B Private insurers C Federal government D Non-profit organizations

B Private insurers

A person may not fund an HSA unless they also do which of these? A Purchase basic health insurance through an Exchange B Purchase a High Deductible Health Plan C Designate up to $2500 of pre-tax income to be withheld for payment of medical expenses D Fully fund their 401(k), 403(b), or Roth IRA

B Purchase a High Deductible Health Plan --Funding an HSA is only permitted in a year in which the contributor is covered by a High Deductible Health Plan ("HDHP").

Martin is age 30 when he applies for life insurance. The underwriter classifies him the same as a person age 40 and his policy is issued with a premium for a person age 40. What substandard rating has been applied to Martin's policy? A Tabular B Rated-up Age C Flat D Graded

B Rated-up Age As the name implies, Rated-up Age is a substandard rating assigned to the insured whose insurable characteristics appear to be the same as those for someone much older, resulting in a higher premium than anticipated.

All of the following are common exclusions and limitations that apply to disability income policies, except: A Pre-existing conditions as defined in the contract B Regular fare-paying passengers on a commercial airline C Foreign travel D Attempted suicide and intentional self-inflicted injuries including intoxication or misuse of prescription medication

B Regular fare-paying passengers on a commercial airline Common exclusions and limitations that apply to disability income policies include aviation (pilots and crew).

All Medicare Supplement application forms must include questions to determine if at the date of application a Medicare supplement policy or certificate is intended to: A Provide benefits for one or both of the spouses applying for coverage B Replace any other disability policy or certificate presently in force C Be funded with a single premium or annual premium payments D Be primary coverage to any other health insurance policies or benefits the applicant may have

B Replace any other disability policy or certificate presently in force

The two types of care specifically provided in a licensed facility and maintain a daily medical record of each patient are: A Intermediate and custodial B Skilled nursing and intermediate C Skilled nursing and custodial D Assisted living and adult day care

B Skilled nursing and intermediate Skilled nursing and intermediate care must be provided in a licensed facility, operated according to the laws of the state, and maintains a daily medical record of each patient.

All Internet advertisements by nonresident agents directed to California insurance consumers must clearly indicate the: A Email address B State of resident licensing C Home address D Phone number

B State of resident licensing

If an agent permits an unlicensed employee to perform acts for which a license is required, the agent is subject to having his/her license: A Withheld B Suspended or revoked C Denied D Decertified

B Suspended or revoked

What type of a receipt provides immediate coverage during the underwriting period (rather than a specified number of days) until a policy is issued or the application is declined? A Guaranteed B Temporary insurance agreement C Trial D Conditional

B Temporary insurance agreement

Under COBRA, coverage for dependents of an employee may continue up to 36 months for any of the following events, except: A Death of the employee B Termination of the employee C Divorce or legal separation between employee and spouse D The employee's eligibility for Medicare benefits

B Termination of the employee --If the qualifying event under COBRA is termination of employment, the coverage may be continued only for 18 months.

The predictability of loss improves when the number of similar units increase because of which principle? A The Law of Averages B The Law of Large Numbers C Accumulated Experience D The Golden Rule of Underwriting

B The Law of Large Numbers ---The Law of Large Numbers is an underlying principle of insurance, stating that the greater the number of units of exposure, the greater the accuracy in predicting a loss.

***In the event that an insured receives a periodic benefit as the result of exercising the Accelerated Death Benefit Rider, what information must the insurer provide to the insured? A The life expectancy of the insured on a semi-annual basis B The amount of the accelerated payment, the remaining death benefit and cash values C The amount of taxable income that they will be reporting to the IRS D Verification and update of the policy ownership and beneficiary designations

B The amount of the accelerated payment, the remaining death benefit and cash values The Accelerated Death Benefit Rider advances a terminally ill insured a portion of the death benefit. Relevant Content: Federal Tax Considerations and Retirement Plans 7.1

Insurance contracts are required to include all of the following, except: A The parties between whom the contract is made B The financial rating of the insurance company C The premium rate or basis for determining the final rate D The period during which the insurance is to continue

B The financial rating of the insurance company

Variable Whole Life and Variable Universal Life are similar, except for: A The investment risk borne by the policyowner B The guaranteed death benefit C The licensing and registration required in order to sell it D The offering document required to presented to the client prior to purchase

B The guaranteed death benefit --Since all premiums are credited to a separate account, there is no guaranteed minimum death benefit in a Variable Universal Life policy.

All of the following are reasons why a new policy issued through a term conversion costs more, except: A The new policy has cash values B The insured's health has changed for the worse C The new policy was issued at the attained age D The new policy is permanent

B The insured's health has changed for the worse ---Conversion is done without proof of insurability.

Who do producers represent when transacting the business of insurance? A Themselves B The insurer C The Commissioner D The insured

B The insurer Producers or agents always represent their principle, which in insurance, is the insurer.

Which of the following statements about Equity Indexed Life insurance is TRUE? A To sell Equity Indexed Life, a producer only needs a securities license B The interest credited to the policy is based off of the performance of a stock market index like the S&P 500 C The policyowner can decide which separate accounts to invest the policy's cash values into D The insured/owner bears all risk regarding cash surrender value, as negative stock market performance can cause the cash values to decrease

B The interest credited to the policy is based off of the performance of a stock market index like the S&P 500 The attraction of this policy is that potentially the interest credit can be higher than what a typically insurer's general account can pay by tying the potential interest credit to a stock market index. Based on the design of the policy, if the index falls in value there is no negative impact to existing cash values. Relevant Content: Types of Policies and Riders 3.4

Which rating classification is typically used in the senior marketplace so that policies can be issued without a medical exam? A The flat amount B The lien plan C Rated up age D Substandard table rate

B The lien plan --With the lien plan, initially, only the premium would be refunded in case of death. The death benefit increases over time with the full face amount eventually payable. This is generally used with Senior Life Insurance plans to provide minimal benefits without a medical examination. Chap 2

The human life value approach in determining the amount of life insurance someone needs takes into consideration all of the following, except: A Occupation B The number of cars the insured and family members own C Planned retirement age D Personal and financial information

B The number of cars the insured and family members own

The insuring agreement in a life insurance policy states which of the following? A The insurance company will not pay death claims in the event of suicide or other exclusion named in the policy unless all premiums are paid in advance B The obligation of the insurance company to pay the policy proceeds upon presentation of valid proof of the death of the insured which occurred while the policy is in force C The insurance company may refuse to pay a death claim in the event a mistake is found in the original application for insurance at the time of the insured's death D The policyowner will indemnify the insurance company of the policy proceeds if the beneficiary is not named in the application

B The obligation of the insurance company to pay the policy proceeds upon presentation of valid proof of the death of the insured which occurred while the policy is in force ---The insuring agreement is the basic promise to pay the benefit described in the policy when a claim is proved. In life insurance, a true certified copy of the death certificate is valid proof of death

An insured's spouse bought a whole life policy 15 years ago and it has accumulated a cash value of several hundred dollars. Who has the right to change beneficiaries and access the cash value? A The insurer B The policyowner C The beneficiary D The insured

B The policyowner Ownership provides privileges. Only the owner, in this case the spouse, controls the rights in the policy. This is an example of third-party ownership. Relevant Content: Life Policy Provisions and Options 4.1

***Before the process of underwriting begins, who will make the final determination as to whether insurable interest exists? A The applicant B The underwriter C The insured D The agent

B The underwriter Before the process of underwriting begins, the underwriter will make the final determination as to whether insurable interest exists. Relevant Content: Life Basics 2.4

***Which of the following pertaining to most LTC policies is true? A They provide coverage only for skilled nursing care B They are issued guaranteed renewable C They deny coverage for those with a destructive brain disease D They can be cancelled on the grounds of age

B They are issued guaranteed renewable Every Long-Term Care Policy must contain a renewal provision that is no less favorable to the insured than guaranteed renewable. The other choices are prohibited provisions. Relevant Content: Senior Needs 11.13

Which of the following is not a reason that insurers limit disability income benefits to 70% or less of the insured's past earnings? A To prevent over-insurance B To keep their expenses down C To account for other sources of income the insured may have during a disability D To discourage malingering

B To keep their expenses down Insurers control expenses by operating efficiently, not by limiting benefits.

All of the following are generally the main business uses of life insurance, except: A To provide funds for the continuation of the business B To provide funds for the deceased's heirs C To cover the unexpected death of a business partner D To cover the unexpected death of a key employee

B To provide funds for the deceased's heirs ---Business uses of insurance often mirror individual needs - to cover the unexpected death of business partners, executives, and key employees by providing funds for the continuation of the business, not for the heirs of the decedent.

A Surplus Line Broker must do all of the following, except: A Not issue a binder for insurance unless prior written approval has been given to the broker by the insurer B Use only an insurer identified in the List of Approved Non-admitted Insurers C Make a diligent search of admitted insurers prior to placing business with a non-admitted insurer D Report to the Commissioner the effort made to place business with an admitted carrier within 60 days of placing business with a non-admitted insurer

B Use only an insurer identified in the List of Approved Non-admitted Insurers --Although a Surplus Line Broker may use any of the Approved non-admitted insurers on the list, the Department's list is not exclusive.

***Which of the following is TRUE regarding Indexed Annuities? A The premiums paid are usually invested in separate account(s) B Values and benefits may increase, but not decrease C They have a level number of annuity units with a fluctuating unit value D Values and benefits are determined by the performance of a separate account

B Values and benefits may increase, but not decrease Because of the way Indexed Annuities are designed, they offer a portion of the potential upside of the index selected to determine the policy's interest credits, but in no case will the policy values or benefits go down if the index chosen falls in value. Relevant Content: Annuities 5.4

Which of the following annuities uses unit values rather than dollars to account for its value? A Market Value Adjustment B Variable C Indexed D Fixed

B Variable Deposits buy accumulation units, distributions are from liquidation of annuity units. Units are like shares of a mutual fund.

Which of the following annuities typically offers no guarantees? A Fixed B Variable C Bonus Interest Rate Annuities D Indexed

B Variable ---The variable annuity holder assumes all investment risk.

All of the following life insurance policies have a cash value that increases based on interest being credited to the cash value, except: A Equity-Indexed Whole Life B Variable Universal Life C Universal Life D Current Assumption Whole Life

B Variable Universal Life --Variable Universal Life's cash values grow based on the performance of the separate accounts chosen by the policyowner, while the other three policies have interest credited to the cash values by the insurer.

Timothy is the insured/owner of a universal life insurance policy and is concerned that in the event of disability, the policy might lapse. Which rider would keep the policy from lapsing if he became disabled? A Guaranteed Insurability Rider B Waiver of Cost of Insurance C Return of Premium Rider D Waiver of Premium Rider

B Waiver of Cost of Insurance ---Tim has a Universal Life Policy which needs to have enough cash value in it in order to pay the monthly cost of insurance. If he is disabled, the Waiver of Cost of Insurance will keep the policy in force.

What is the purpose of nonforfeiture values? A It is a way for the insurance company to charge extra for this optional benefit B Without them, any cash values would be retained by the insurer when the policy lapses due to non-payment of premium C The NAIC mandates nonforfeiture values D Federal insurance law requires them

B Without them, any cash values would be retained by the insurer when the policy lapses due to non-payment of premium

Misstatement of Age

Benefits paid will be based on what the premium paid would have purchased at the correct age. If the misstatement leads the insurer to provide coverage beyond the age limit, liability is limited to a refund of premiums.

P has a traditional participating whole life insurance policy with a death benefit of $100,000, $5,000 in dividend additions, and a $4,000 policy loan and loan interest. P reaches age 100. What is the amount the insurance company owes P? A $91,000 B $100,000 C $101,000 D $95,000

C $101,000 ---It is prohibited for an insurance company to offer any settlement at maturity of less value than the amount insured by the policy, plus dividend additions, less any outstanding policy loans and loan interest and less any unpaid premium. $100,000 + $5,000 - $4,000 = $101,000 Chapter 4

K has a $100,000 traditional whole life policy with $30,000 of cash values and a $10,000 loan outstanding. What is the maximum additional amount she could borrow from the policy at this time? A $40,000 B $60,000 C $20,000 D $30,000

C $20,000 She can borrow up to the policy's cash value. She already has a loan of $10,000, so she could borrow another $20,000 at this time.

L is no longer eligible for the employer's $50,000 group life insurance plan. L dies 28 days later without sending in the required conversion paperwork. What will their beneficiaries receive? A Nothing, since L is no longer in the group plan B Nothing, since L has not paid the required premium C $50,000, less any premiums due D $50,000

C $50,000, less any premiums due The conversion period is also a grace period. In the event a terminated or ineligible employee dies during the conversion period, whether they were going to elect individual coverage or not, a death claim will be paid by the group policy, less the premium due for the benefit.

A small business owner used her life insurance policy as collateral for a bank loan. The face amount of the whole life policy was $100,000 and the original amount of the loan was $20,000. If the outstanding loan balance at the time the small business owner died was $10,000, how much will the policy's named beneficiary receive? A $70,000 B $80,000 C $90,000 D $100,000

C $90,000 The collateral assignee, the bank, will take a priority claim on the policy's death benefit limited to the amount of the loan outstanding at the time of death, the named beneficiary will receive the balance. In this case $90,000 ($100,000 - $10,000).

In California, upon receiving any communication from a claimant, regarding a claim, that reasonably suggests that a response is expected, every licensee shall immediately, but in no event more than _____ calendar days after receipt of the communication, furnish the claimant with a complete response based upon the facts as known. A 10 B 7 C 15 D 21

C 15 Such response is due no more than 15 calendar days after receipt of the communication.

The PPACA extends dependent children's coverage through age _____ based strictly on the parent - child relationship. A 22 B 23 C 25 D 21

C 25

A Medicare Supplement or LTC policy's free look period is: A 45 days B 15 days C 30 days D 60 day

C 30 days

***If the insured is receiving regular disability income payments, the insurer can require notice of continuance of claim every ______ months. A 9 B 12 C 6 D 3

C 6 Relevant Content: Individual Policy Provisions 12.1

Medicare Part B is optional and enrollment can be delayed when employer coverage is primary due to active employment of the individual at age: A 62 B 60 C 65 D 55

C 65 ----Medicare Part B is optional, and may be rejected penalty free at age 65 if a beneficiary is covered by an employer-sponsored plan as an employee or spouse. -------Enrollment can be delayed when employer coverage is primary due to active employment of the individual at age 65. ------Failure to enroll in Part B, when required, may result in a lifetime cumulative premium penalty of 10% for each 12 month period a beneficiary was not enrolled in Part B. Once eligible, individuals are required to enroll in Medicare Parts A and B for coverage to begin

As specified by the California Insurance Code, under the facility of payment clause, a group life insurer may pay to a relative or anyone it deems entitled to the group life benefits in the absence of: A An exclusion B A claim form C A designated beneficiary D A death certificate

C A designated beneficiary

If a medical exam is required as part of the underwriting process, who normally conducts the exam? A A chiropractor B The producer C A physician or nurse D The producer's manager in the agency's office

C A physician or nurse Physicians, nurses, or paramedics are the ones who conduct medical exams which may include blood tests, urine tests, EKGs, and medical histories among other things.

What type of agent is authorized to transact coverage for sickness and bodily injury, disability income, long-term care, supplemental benefits, and 24-hour care coverage? A Property and Casualty B Life C Accident and Health D Annuity

C Accident and Health

Kirk has just reinstated an individual A&H policy that had lapsed and wants to know how soon coverage will be in effect for any accident or sickness. You, the agent, would say: A Accidents immediately, sickness after 30 days B Sickness immediately, accidents after 30 days C Accidents immediately, sickness after 10 days D Sickness immediately, accidents after 10 days

C Accidents immediately, sickness after 10 days

***The period of time from the first deposit into an annuity to the selection of a settlement option is considered the ___________ period. A Annuity B Deferred C Accumulation D Annuitization

C Accumulation The period of time from the first deposit to the selection of a settlement option is considered the accumulation period, during which taxes are deferred. Accumulation periods are found within deferred annuities. Relevant Content: Annuities 5.2

The __________ value of a health plan equals the percentage of the total average costs that a plan pays for Essential Health Benefits. A Intrinsic B Taxable C Actuarial D Economic

C Actuarial

Which of the following types of coverage provides custodial care outside the home for individuals not requiring confinement? A Hospice Care B Home Health Care C Adult Day Care D Respite Care

C Adult Day Care Adult Day Care provides custodial services outside the home for individuals not requiring a 24-hour confinement in a nursing home.

If the Insurance Commissioner has reason to believe that a producer has engaged in unfair competition, he/she is required to: A Levy a fine B Revoke the producer's license C Advise the producer that he/she is entitled to a public hearing D Put the producer in jail

C Advise the producer that he/she is entitled to a public hearing --If it is believed the person has violated a trade practice, the Commissioner will issue a statement of charges, a statement of potential liability for civil penalties, a show cause order as to why a cease and desist should not be issued, and a 30-day notice of a hearing.

What is meant when a life insurance policy becomes incontestable? A After 2 years, the insurer will only pay for suicide if the insured was insane at the time of death B After 2 years, the policyowner cannot sue the insurer for misstatements made by the producer in the sale of the policy C After 2 years, the insurer will not refuse to pay a death claim based on misinformation in the original application for insurance D After 2 years, the insurer will not argue about which beneficiary is primary or contingent

C After 2 years, the insurer will not refuse to pay a death claim based on misinformation in the original application for insurance Incontestability means that the insurance company cannot use the statements in the original application for insurance as a reason to avoid paying a death claim. The policy becomes incontestable after 2 years in most states.

***The JKL Insurance Company is incorporated in Switzerland has its home office in Florida and is authorized to conduct the business of insurance to Californians through its branch office in Rancho Mirage. To the State of California, JKL is a: A Domestic insurer B Foreign insurer C Alien insurer D Sovereign insurer

C Alien insurer Since JKL is incorporated in another country it would be an alien insurer to CaliFORNIA Relevant Content: General Insurance 1.4

All of the following are true regarding an Attending Physician's Statement (APS), except: A Applicants must sign a release in order for their physician to respond to an APS request B The insurer pays the physician for completing and forwarding the APS C An MIB report can be used in place of an APS D They are used in cases where the application or medical records reveal conditions that require further explanation

C An MIB report can be used in place of an APS ---An Attending Physician's Statement (APS) is used in cases in which the individual application and/or medical reports reveal conditions for which more information is required. An applicant must sign a written release to enable a release of the APS. The insurer pays for this.

***The California Financial Information Privacy Act provides for all of the following as compared to the GLBA, except: A Penalties for identity theft perpetrators are doubled B Financial profiling of consumers is greatly restricted C An Opt-Out standard concerning information sharing with unrelated third parties D Consumers have the final say in the sharing of their information

C An Opt-Out standard concerning information sharing with unrelated third parties The California Financial Information Privacy Act provides that the Opt-Out provisions of GLBA were changed to an Opt-In standard concerning information sharing with unrelated third parties. Relevant Content: General Insurance 1.7

A policy is issued with a rider. Years later the policyowner would like to drop the rider in order to save some money. Who has the authority to effect that policy change? A The insured B The producer C An executive officer of the insurer D The beneficiary

C An executive officer of the insurer Any policy changes or modifications must be in writing and signed off at the home office by an executive officer. A producer cannot change, alter, modify, or waive any policy provisions.

All of the following terms are the same regardless of if the policy is life insurance or an annuity, except: A Owner B Insurer C Annuitant D Beneficiary

C Annuitant --The annuitant in an annuity is the equivalent of the insured in a life insurance policy.

If a group Medicare Supplement policy is replaced with another group Medicare Supplement policy, the replacing insurer must offer the same coverage to all persons covered under the former policy without: A Any premium increases B Any application forms or questions being asked of any of the applicants C Any new or additional waiting periods and exclusions D Any new premium required

C Any new or additional waiting periods and exclusions

Under the California Insurance Code, an insurance agent cannot act as a broker for any insurer by which the agent is actively: A Soliciting B Selling C Appointed D Licensed

C Appointed

What is the name of the person named in the annuity contract to potentially receive any residual benefits? A Owner B Insured C Beneficiary D Annuitant

C Beneficiary The beneficiary is the individual or person named in the contract to potentially receive benefits if the owner and/or annuitant die prior to annuitization or if the settlement option selected offers any residual benefit after the annuitant's death

Which of the following is not an element of an insurable risk? A Accidental loss B Large number of homogenous units C Catastrophic perils D The ability to set a measurable value on it

C Catastrophic perils Insurers want to avoid catastrophic perils.

In California, the Individual Exchange and Small Business Health Options Exchange (SHOP) is an independent public entity within the state government and operates under the name of Covered California to allow individuals and small businesses to: A Determine eligibility to become a member of the program B Conduct background checks on insurers, providers, and medical facilities C Compare plans and buy health insurance in the private market D Determine, if an individual, if he/she is too old to apply, or if a business, if it is too big or small to qualify

C Compare plans and buy health insurance in the private market

Which of the following describes both the premium paid by the insured and the promise by the insurer to pay a covered loss and defend the insured in a lawsuit? A Legal Purpose B Offer C Consideration D Acceptance

C Consideration Consideration is the term used to describe the rights, money, promises or property exchanged between the parties as part of a contract transaction. Relevant Content: General Insurance 1.10

What rider is designed to help the insured offset the effects of future inflation on the policy's face amount? A Accelerating Benefits B Living Needs C Cost of Living D Decreasing Term

C Cost of Living ---The Cost of Living Rider allows for the policy's death benefit to keep up with inflation without having to prove insurability but with an increase in premium to reflect the added risk to the insurer.

***If the insurer issues a policy after receiving an application for health insurance in which questions regarding preexisting conditions were left blank, what would be the consequence to the insured's coverage if a preexisting condition caused a claim shortly after the policy was issued? A The policy would be cancelled B The policy would be reissued C Coverage would be as stipulated in the policy because the company issued the policy even though the question was left blank D The policy would be sent back to underwriting for approval

C Coverage would be as stipulated in the policy because the company issued the policy even though the question was left blank If a policy is issued with questions unanswered, the contract will be interpreted as if the question had not been asked and is therefore waived by the insurer. However, if the insurer can demonstrate that an inadvertent omission is a material concealment, the policy may be voided, because intentional or unintentional concealment allows the insurer to void the policy. Relevant Content: Health Basics 8.5

***Abigail has a preexisting condition noted in her new A & H policy. If she submits a claim for this condition within a specified time stated in the contract, what will the insurer do? A Pay benefits if the claim is nonoccupational B Pay half the usual benefit C Deny the claim D Pay benefits in full

C Deny the claim Since Abigail's claim occurred during the waiting period for preexisting conditions stated in her policy, the insurer would deny the claim. Relevant Content: Individual Policy Provisions 12.3

A(n) _________ plan calls for the business to purchase life insurance policies on each of the business owners. A Credit Protection B Group C Entity D Cross Purchase

C Entity An entity plan calls for the business to buy life insurance policies on the business owners. A cross purchase plan calls for the partners to buy life insurance policies on one another.

A(n) _________ plan calls for the business to purchase life insurance policies on each of the business owners. A Credit Protection B Group C Entity D Cross Purchase

C Entity An entity plan calls for the business to buy life insurance policies on the business owners. A cross purchase plan calls for the partners to buy life insurance policies on one another.

Which of the following is considered the responsibility of the California Commissioner of Insurance? A Sets insurance rates B Alters or amends insurance legislation as passed by the state legislature or governing body C Established policies and procedures for dealing with insurer insolvency D Issues a Certificate of Authority to any insurer that requests one

C Established policies and procedures for dealing with insurer insolvency The Commissioner has no authority to establish laws or alter or amend /insurance laws, that is the responsibility of the legislature. The Commissioner establishes policies and procedures for carrying out the laws. He or she does not set rates. Certificates of Authority go only to authorized insurers. Relevant Content: California Ethics and Laws 15.4

When an insurer relies on the prior claims history of the group to be insured in determining the rate to be charged, it is called: A Cost rating B Claims rating C Experience rating D Community rating

C Experience rating --If an insurer bases premiums on the group's prior claims history, the coverage is said to be Experience Rated.

No insurer or agent may unnecessarily replace a policyholder's Long-Term Care insurance policy or replace it with a policy that offers: A Fewer benefits and a lower premium B More benefits and a lower premium C Fewer benefits and a greater premium D More benefits and a greater premium

C Fewer benefits and a greater premium

Which of the following is FALSE about the Automatic Premium Loan Provision (APL)? A It is only available on cash value policies B It is designed to prevent unintentional policy lapse C For it to be included in the policy, there is an additional premium charge D The APL is treated like any other policy loan

C For it to be included in the policy, there is an additional premium charge The Automatic Premium Loan provision automatically becomes effective at the end of the grace period to prevent the policy from lapsing. There is no charge for having this provision in a cash value policy.

The _________ Enrollment Period provides an open enrollment period from January 1 to March 31 each year for those who did not enroll in Medicare Part B when they first became eligible. A Medicare Open B Special C General D Initial

C General

***C has a $100,000 traditional whole life insurance policy with a $30,000 cash surrender value. He applies for and receives a $10,000 policy loan from the insurer. All of the following about this transaction are true, except: A If the policy is surrendered, C would receive $20,000 less any outstanding interest charges B The loan carries a fixed or variable interest rate C If C were disabled, his beneficiaries would receive $70,000, less any outstanding interest charges D If C died, his beneficiaries would receive $90,000, less any outstanding interest charges

C If C were disabled, his beneficiaries would receive $70,000, less any outstanding interest charges Policy loans carry a fixed or variable loan interest rate. If the policy is surrendered or a death claim is paid, the proceeds are reduced by the outstanding policy loan and policy loan interest. Relevant Content: Types of Policies and Riders 3.4

James is nearing retirement and has accumulated $175,000 in an annuity. He wants the largest possible monthly benefit for as long as he lives. Which option should he choose? A Joint Life B Life Income with Refund C Life Income D Fixed Amount

C Life Income The Life (Life Only or Straight Life) Income option provides the largest possible payment to the annuitant because the insurance company offers no residual values upon his death.

Dividend options do not include which of the following choices? A Reduce premiums due B Refund in cash C Lifetime income D Paid-up additional insurance

C Lifetime income Income for life is an annuity form of death benefit settlement option.

***A product designed to provide coverage for necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services provided in a setting other than an acute care unit of a hospital is called: A Retirement Benefits B Medicare Supplement C Long-Term Care D Outpatient Care

C Long-Term Care The question is describing a Long-Term Care Policy. Medicare Supplement covers acute care expenses and related post-hospitalization skilled nursing care only. Relevant Content: Health Basics 8.2

Which of the following annuities will be directly impacted by rising and falling interest rates? A Variable B Fixed C Market Value Adjustment D Indexed

C Market Value Adjustment If the interest rates on which the MVA is based are higher than when the annuity was purchased, the MVA will likely be negative. I f the interest rates on which the MVA is based are lower than when the annuity was purchased, the MVA will likely be positive.

Medi-Cal pays for ________ health care including: physician visits, hospital and nursing home care, home health care, laboratory and x-ray services, prescriptions, medical equipment, ambulance services, eyeglasses, prenatal care, preventive care, and hospice. A The customary expenses of B The usual costs of C Medically necessary D The reasonable costs and expenses of

C Medically necessary --Medi-Cal pays for 'medically necessary' health care including: physician visits, hospital and nursing home care, home health care, laboratory and x-ray services, prescriptions, medical equipment, ambulance services, eyeglasses, prenatal care, preventive care, and hospice.

Which of the following is the most expensive premium mode overall? A Semi-annually B Annually C Monthly D Quarterly

C Monthly --The greater the frequency the higher the overall cost is.

Accident and Health insurers would use which of the following formulas in determining premium rates? A Mortality + Interest - Expenses B Mortality - Interest + Expenses C Morbidity - Interest + Expenses D Morbidity + Interest - Expenses

C Morbidity - Interest + Expenses --Mortality is used for life insurance -- Morbidity for health insurance

What taxes apply to the benefits under an individual Disability Income Policy on which the insured has paid the premiums? A FICA tax B Capital gains tax C No tax D Income tax

C No tax ----Benefits received from an individual Disability Income Policy are not subject to taxation.

What type of term life insurance policy has a policy premium that can be increased to a new premium level for the remainder of the term? A Adjustable B Indeterminate C Non-guaranteed level D Flexible

C Non-guaranteed level Non-guaranteed level premium has premiums that can be increased to a new premium level for the remainder of the term.

In general, which of the following Medicare plans does not require additional premium? A Part B B Part D C Part A D Part C

C Part A Parts B, C, and D are optional and require an additional premium ----At age 65, enrollment in Medicare Part A is mandatory for all citizens and legal residents. Enrollment is automatic and "premium-free" for those who are fully insured under Social Security. ----For those who are not fully insured at age 65, enrollment is still automatic but there is a PREMIUM REQUIREMENT. Failure to enroll in Part A and pay premiums beginning at age 65 may result in a 10% premium PENALTY for TWICE the number of months a beneficiary should have been enrolled in Part A. ---A worker may continue to earn credits up to the 40 required for fully insured status, after which time the Part A premium will end. ---Individuals with less than 30 credits will pay a higher monthly premium than individuals with 30-39 credits.

All of the following are TRUE of Policy Loan Rate provisions, except: A Policies with adjustable loan interest rates have a maximum interest rate based upon Moody's corporate bond yield average B The policy loan amount cannot exceed the available cash value C Policies with fixed interest loan rates have a maximum interest rate of 10% D Interest, if not paid when due, is added to the total debt

C Policies with fixed interest loan rates have a maximum interest rate of 10% --The policies with fixed interest loan rates usually have a maximum interest rate of 8%

The individual who has the ownership rights of a policy is called the: A Beneficiary B Insured C Policyowner D Applicant

C Policyowner Typically, the owner, insured and applicant would be the same person, but not always, as in the case of third-party ownership (e.g. juvenile policies, key person policies, etc.) In this case, even though the owner is not the insured, he or she still controls every right that the policy affords.

Which of the following is not an example of a cost containment measure? A Utilization review B Pre-certification for cancer therapy C Replacement D Mandatory second opinion

C Replacement Mandatory second opinions, utilization review and pre-certification are all considered cost containment measures. ***Replacement can apply to any policy that is cancelled when a new policy is issued and is not specific to managed care plans.

The annuity __________ option selected can provide a temporary or lifetime payment. A Interest B Investment C Settlement D Accumulation

C Settlement The annuity settlement option selected can provide a temporary or lifetime payment. If a lifetime benefit is selected, in most cases it is an irrevocable election.

Which of the following policies would be deemed a MEC? A Universal Life B Variable Universal Life C Single Premium Whole Life D 10-pay Whole Life

C Single Premium Whole Life ---Since a single premium life insurance policy clearly does not pass the 7-pay test, it will automatically be deemed a MEC.

Which of the following policies would be deemed a MEC? A Universal Life B Variable Universal Life C Single Premium Whole Life D 10-pay Whole Life

C Single Premium Whole Life Since a single premium life insurance policy clearly does not pass the 7-pay test, it will automatically be deemed a MEC

___________ insurance is used to provide coverage when insurance is not available from an admitted carrier. A Alien B Domestic C Surplus D Facultative

C Surplus Non-admitted business must be transacted through a Surplus lines broker or producer. Relevant Content: General Insurance 1.4

In California, Arthur wants to personally place business with RTS Insurance Company who is a non-admitted carrier. The only way Arthur can rightfully place such business is if he seeks a: A General Agent's License B Fire/Casualty Agent's License C Surplus Lines Broker's License D Life Agent's License

C Surplus Lines Broker's License Arthur will need to seek a Surplus Lines Broker's License in order to represent non-admitted carrier(s).

Under the California Insurance Code, a licensee may terminate an insurance license by: A Failing to meet the CE requirements B Becoming appointed with a different insurer C Surrendering it to the Commissioner D Shredding it

C Surrendering it to the Commissioner Under the California Insurance Code, a licensee may terminate his/her license by surrendering it to the Commissioner. Relevant Content: California Ethics and Laws 15.11

A young couple just starting out on a limited budget, but having a large need for life insurance coverage, most likely would be best suited for ________ life insurance: A Variable B Universal C Term D Whole

C Term ---Term is for the price conscious. It provides the largest amount of coverage for the lowest premium initially. ---This coverage is often referred to as temporary, as it is usually written to cover a short time period. ---This policy does not build cash values and the benefit will remain level, increase, or decrease depending on the type of policy. ---It is typically used to cover mortgages, short term obligations, or for younger couples.

All of the following are traits of a Fixed Annuity, except: A The insurer's general account assets guarantee the fixed annuity contract B The purchasing power of a fixed dollar benefit amount decreases as the cost of living increases C The actual rate of interest credited will be based on the state-published interest rate index D The insurer bears any investment risk

C The actual rate of interest credited will be based on the state-published interest rate index ----The actual rate of interest credited is based on the insurer's general account assets.

Policy loan provisions include all of the following, EXCEPT: A Unpaid interest is added to the value of the loan B Outstanding loans will be deducted from the face amount at time of claim C The death benefit of a policy is automatically reduced when a loan is requested D Interest is charged annually

C The death benefit of a policy is automatically reduced when a loan is requested Policy loans do not automatically reduce the death benefit in a policy. If an outstanding loan exists at the time of death, the amount of the loan will then reduce the benefit paid to the beneficiary.

If the insured outlives all of the beneficiaries named in the policy and then dies, by default who receives the death benefit? A The state Guarantee Association B A tertiary trust C The insured's estate D The treasury of the state where the insured resided

C The insured's estate When no named beneficiaries are alive at the time the insured dies, the estate of the insured receives the death benefit.

***Which one of the following statements about occupations, hobbies, and avocations in regards to disability income insurance policies is false? A The more hazardous the occupation the less benefits will be offered B The more hazardous the occupation the higher the premium C The less hazardous the occupation, hobby, or avocation the more likely a rating or an exclusion will be part of the policy D The less hazardous the hobbies or avocations the lower the premium

C The less hazardous the occupation, hobby, or avocation the more likely a rating or an exclusion will be part of the policy The more hazardous the occupation, the less benefit and/or the higher the premium with consideration also given to any hazardous hobbies or avocations which would affect the rating or require an exclusion rider.

****Which statement concerning individual health policy renewal provisions is most correct? A The renewal provision has no impact on the cost of the policy to the insured B The more favorable the renewal provision to the insured, the lower the premium C The more favorable the renewal provision to the insured, the higher the premium D Renewal provisions only apply to property and casualty contracts and are not included under individual health policies

C The more favorable the renewal provision to the insured, the higher the premium The more favorable a renewal provision is to the insured, the higher the premium will be. A noncancellable policy will cost the most because its premium may not be changed in the future. Relevant Content: Individual Policy Provisions 12.4

The grace period in a life insurance policy is typically 60 days, which allows: A The insurance company to delay payment of the death benefit while it determines the validity of the proof of death B The payment of the premium after the due date with a maximum 5% penalty C The payment of the premium after the due date without a penalty or lapse in coverage D The policyowner to reinstate the policy before it lapses

C The payment of the premium after the due date without a penalty or lapse in coverage ---The grace period allows payment of the past due premium without a penalty or lapse in coverage. Any claim arising in the grace period is payable, but any unpaid premium will be deducted from the claim when paid.

A contingent beneficiary has the right to which of the following? A Prevent the policyowner from taking a loan against the cash value B The policy proceeds if the primary beneficiary is a minor child C The policy proceeds only when there is no primary beneficiary D Share in the death benefit with the primary beneficiary

C The policy proceeds only when there is no primary beneficiary A contingent beneficiary has no interest in the policy proceeds if there is a surviving primary beneficiary. Contingent and primary beneficiaries do not share the death benefit. Only an irrevocable primary beneficiary has the right to interfere with certain of the owner's rights in a life insurance policy.

Which of the following states the parties to an insurance contract? A The producer/agency and the insurance company B The beneficiary and the insurance carrier C The policyowner/insured and the insurance company D The agent/agency and the insured

C The policyowner/insured and the insurance company

When a disability buy-sell is funded by the partnership, what is the tax liability? A The premiums are tax deductible and the value of the benefit is taxable as income B The premiums are tax deductible and the value of the benefit is not taxable C The premiums are not deductible and the value of the benefit is not taxable as income D The premiums are not tax deductible and the value of the benefit is taxable as income

C The premiums are not deductible and the value of the benefit is not taxable as income ---A buy-sell funded plan provides that premiums are not deductible, but benefits will be received by the business tax-free.

Which of the following best describes the consideration on the part of an insurer? A The acceptance of the contract B The offer of the contract C The promise to pay in the event of a covered claim D The purpose of the contract must be legal

C The promise to pay in the event of a covered claim

Which of the following is a specification that must be included in an insurance contract? A Information of a party's own judgement upon the matters of a contract B Information already known by both parties C The risks insured against D Information that should be known by both parties

C The risks insured against All insurance contracts must include a statement of the premium, or a statement of the basis and rates upon which the final premium was determined, the property or life insured, the interest of the insured or property, the risks insured against, and the period during which the insurance is to continue.

If an applicant is a minor, who signs the application? A The producer B A probate court judge C Their guardian D Any adult

C Their guardian

*****What happens if a Return of Premium Term policy is not held to the end of term? A All premiums paid can be 'rolled-over' into an annuity using the IRS Code 1035 exchange rules B There will be no return of any premium paid C There will be a nominal return of premiums paid, the amount will depend upon how long the policy was in-force D All premiums paid can be used to offset the first year cost of a traditional whole-life insurance policy

C There will be a nominal return of premiums paid, the amount will depend upon how long the policy was in-force ---A Return of Premium Term policy charges a higher premium than level term insurance with the additional premium providing a nonforfeiture value which will offer a nominal return of premiums paid if the policy is not held to the end of term depending upon how long the policy was in-force. Relevant Content: Types of Policies and Riders 3.5

***Which of the following may result when any producer, agent, or broker knowingly commits an unfair trade practice? A There is no penalty for violating an unfair trade practice if a specific statute was not violated B Any company with whom they have an agency contract will be fined C They may have their license revoked D It is considered a felony and the agent will face a minimum of 10 years in prison

C They may have their license revoked Generally, the States provide that a producer's, agent's, or broker's license may be revoked if the licensee knowingly violates certain state insurance laws or regulations. Relevant Content: California Ethics and Laws 15.7

What is one of the main reasons for a Universal Life policy to have a surrender charge? A It is a way to recoup interest paid, but not earned by the policyholder B It encourages large additional premium deposits from policyowners C This provides a means for the insurer to recapture their upfront expenses involved in issuing the policy D It motivates the producer to properly sell the policy

C This provides a means for the insurer to recapture their upfront expenses involved in issuing the policy Surrender charges provide a means for the insurer to recapture their upfront expenses involved in issuing the policy. chap 4

***Causing a person to give up an existing contract through surrender, lapse, or other forfeiture is known as: A Boycott B Coercion C Twisting D Rebating

C Twisting Causing a person to give up an existing contract through surrender, lapse, or other forfeiture (such as exchanging a whole life policy for a reduced paid-up or extended term policy), is also known as 'twisting.'

Which of the following policies allow for a partial withdrawal or partial surrender? A Current Assumption Life B Variable Whole Life C Universal Life D Traditional Whole Life

C Universal Life A partial withdrawal of cash value is permitted in a Universal or a Variable Universal Life policy.

Which of the following policies allow for a partial withdrawal or partial surrender? A Variable Whole Life B Traditional Whole Life C Universal Life D Current Assumption Life

C Universal Life A partial withdrawal of cash value is permitted in a Universal or a Variable Universal Life policy. *****A partial surrender is actually paid from the policy value and reduces both the amount of the death benefit and the amount of cash value in the policy. Any amount withdrawn in excess of the premium is subject to taxation. There may be a surrender or withdrawal charge associated with the withdrawal. The insurer may limit the number of withdrawals that can be made annually or the amount of the withdrawal by specifying minimums and maximums. ----The difference between the cash value and the cash surrender value is the surrender charge. ----This provides a means for the insurer to recapture the upfront expenses involved in issuing the policy.

***Which of the following is NOT a type of Term Life Insurance Policy? A Level B Decreasing C Variable D Increasing

C Variable The question is asking about types of Term Policies which are: Level, Increasing, and Decreasing. Relevant Content: Types of Policies and Riders 3.2

Payment of Claims Provision

Claims are paid to the policyowner unless otherwise specified. Any death benefits are paid to the named beneficiary.

Change of Beneficiary Provision

Consent of beneficiary is not required unless the beneficiary is irrevocable. The change becomes effective on owner's signature date upon the insurer's recording the change.

When premiums pay by employee

Contributory -plan requires a 75 % minimum participation of eligible employees

Another form of decreasing term

Credit life insurance that names the creditor as the beneficiary.

Credit Life Insurance - Credit life insurance is a special form of decreasing term. Unlike the standard decreasing term policy, credit life automatically names the creditor as the beneficiary. The policy cannot be written for more than the outstanding debt, since that is the limit of the creditor's insurable interest. Once the loan is paid, the policy ends.

Credit life is usually sold on a group basis to a creditor (beneficiary), such as a bank, finance company or a company selling high-priced items on the installment plan. -The policy generally pays the outstanding balance of the debt at the time of the borrower's death, subject to policy maximums. Debts covered in this way include: -Personal loans -Loans to cover the purchase of appliances, motor vehicles, mobile homes, farm equipment -Educational loans -Bank credit and revolving check loans -Mortgages loans, etc.

Which major medical plan deductible will result in the lowest premium? A $2,000 B $1,000 C $1,500 D $2,500

D $2,500 Deductibles can vary in cost and are designed to allow the insured to assume a portion of the risk. --Changing the deductible will affect the premium cost. ---Higher deductibles result in a lower premium.

An insured has a $25,000 annual renewable term life policy, originally purchased on her birthday, April 1st of last year. She forgot to pay the $250 renewal premium, and dies in an accident on April 15. The beneficiary will receive: A Nothing B $25,250 C $24,750 D $25,000 less the earned premium due

D $25,000 less the earned premium due If a death occurs during the grace period, only the earned premium may be deducted from the death benefit. The insurer cannot retain the entire annual premium, but is entitled to 15 days' premium (about $10.27 in this example). The beneficiary receives the balance of the death benefit.

Paul is the insured and policyowner. Paul named Danny and Kayla as co-primary beneficiaries of Paul's $100,000 policy. What is the payout if Paul dies? A $25,000 to Danny and Danny's spouse and $25,000 to Kayla and Kayla's spouse B $50,000 is split amongst Danny and Kayla's children C $100,000 to Danny and $100,000 to Kayla D $50,000 to Danny and $50,000 to Kayla

D $50,000 to Danny and $50,000 to Kayla It is assumed that proceeds will be paid on a per capita basis unless otherwise specified, meaning Danny and Kayla each receive 1/2 of $100,000 or $50,000 each.

A retiree elected the Life Income with 10 Year Period Certain. He/she dies the day after receiving 119 monthly payments. The beneficiary will receive _______ more payment(s): A 12 B 6 C 10 D 1

D 1 Since the retiree died within the period certain (10 years or 120 months), the contingent payee would receive the balance of the payments. Since the retiree has received 119 monthly payments, only one guaranteed payment remains.

****A license which has been revoked may not be reinstated within: A 3 years B 18 months C 2 years D 1 year

D 1 year Under the California Insurance Code, a license which has been revoked may not be reinstated within 1 year of revocation.

An insured should receive necessary claim forms within _____ days after notice of claim. A 10 B 20 C 5 D 15

D 15 According to the Claim Forms Provision (a Mandatory Uniform Provision), the insured should receive the necessary claim forms within 15 days after notice of claim.

For a replacement policy of individual life insurance and annuities (other than variable contracts), the free look period is at least how many days? A 15 B 7 C 10 D 20

D 20

Which of the following Whole Life insurance policies has the highest annual premium payment per $1,000 of coverage for a 35-year-old, all other factors being equal? A 30-Pay Ordinary Whole Life B Ordinary Straight Whole Life C Limited Pay Ordinary Whole Life to age 85 D 20-Pay Ordinary Whole Life

D 20-Pay Ordinary Whole Life The shorter the premium-paying period, the higher the annual premium

***The California Insurance Code requires all producers who meet with prospective clients age 65 and older in their homes for the purpose of transacting life insurance, annuities, or disability insurance products to first provide a written notice of the first meeting at least _____ hours in advance. A 48 B 72 C 96 D 24

D 24

***A qualified Long-Term Care Policy may exclude losses incurred from preexisting conditions for no longer than ______ months from the effective date of coverage. A 12 B 3 C 8 D 6

D 6 This is the requirement for qualified Long-Term Care Policies under the NAIC Model Act. Relevant Content: Senior Needs 11.12

Under the PPACA, the special enrollment period in the Individual Marketplace lasts ______ days from the date of the qualifying event. A 45 B 20 C 30 D 60

D 60 --Under the Patient Protection and Affordable Care Act, the special enrollment period in the Individual Marketplace lasts 60 days from the date of the qualifying event and lasts 30 days in the Small Business Health Options (SHOP) Marketplace

The Code requires insurers to notify the Fraud Division within how many days of uncovering an incident of actual or suspected fraud? A 20 B 10 C 30 D 60

D 60 All admitted insurers are required to maintain a Special Investigations Unit (SIU) for the express purpose of detecting and investigating fraudulent claims. The Code also requires insurers to notify the Fraud Division within 60 days of uncovering an incident of actual or suspected fraud.

The California Insurance Code defines a senior, or elder, as someone who is what age or older? A 62 B 55 C 60 D 65

D 65

Under the California Annuity Suitability Education Requirements, a life-only agent who sells annuity products to individual consumers must complete an initial _____-hour training course prior to soliciting for sales. A 6 B 4 C 12 D 8

D 8 Under the California Annuity Suitability Education Requirements, a life-only agent who sells annuity products to individual consumers must complete an initial 8-hour training course prior to soliciting for sales.

Medicare Supplement Plan ______ is the basic Medicare Supplement plan offering core benefits and must be offered by all insurers marketing Medicare Supplements. A B B C C D D A

D A Medicare Supplement Plan A is the basic Medicare Supplement plan and must be offered by all insurers marketing Medicare Supplements.

All of the following are examples of third-party ownership, except: A A key employee plan B A cross purchase plan C A grandparent buys life insurance on a granddaughter D A mother buys a policy for herself and names her son as beneficiary

D A mother buys a policy for herself and names her son as beneficiary ---A key employee plan and a cross purchase plan have an owner other than the insured, as does the policy bought by the grandmother on the life of her grandchild.

Which of the following riders is used to increase the death benefit if death is the result of an unintended fatal injury, paying a multiple of the face amount? A Payor Benefit B Disability Benefit C Accelerated Death Benefits D Accidental Death

D Accidental Death ---If death is ruled to be accidental, the Accidental Death Rider pays a multiple (usually double) of the death benefit of the underlying policy.

A and B are married. They have two minor age children. A and B feel that all family members should have coverage on their lives, not just A. What would be the least expensive way to accomplish this? A Add accidental death coverage riders on B and the two children B Buy a traditional whole life policy on B, and juvenile policies on the children C Buy traditional whole life policies on B and the two children D Add a term life insurance rider to this policy to provide additional coverage on the spouse and children

D Add a term life insurance rider to this policy to provide additional coverage on the spouse and children The policyowner may add a term rider to this policy to provide additional coverage on the primary insured, a spouse, or children.

Which of the following is not an example of an unfair trade practice? A Misrepresenting the benefits of an insurance policy B Discriminating between persons of the same class that have essentially the same hazard C False entry D Advertising on the internet

D Advertising on the internet

A Section 1035 Exchange is permitted in each of the following transactions, except: A An annuity contract is exchanged for another annuity contract B A Whole Life Policy is exchanged for a Universal Life Policy C A Variable Universal Life Policy is exchanged for an Equity-Indexed Annuity D An annuity is exchanged for a Whole Life Policy

D An annuity is exchanged for a Whole Life Policy IRC section 1035 does not authorize the exchange of an annuity policy for any kind of life insurance policy.

Which of the following statements would be interpreted the same as if the word 'shall' were used? A An insurer may rescind a policy for misrepresentation of material information B A producer may deliver a policy in person or by mail C An insurer may decline an application if required information is missing D An unlicensed producer may not transact insurance with the public

D An unlicensed producer may not transact insurance with the public ---The word 'may' is normally permissive, but can be considered mandatory by the context in which it is used. ---Here 'may not' is equivalent to 'shall not'.

***A Medicare beneficiary may enroll in a Medicare Advantage plan when they are first eligible for Medicare or during the _____________ Period, where a person may change to another Medicare Advantage plan or switch from Original Medicare to a Medicare Advantage Plan. A Special Enrollment B Medicare Open-Enrollment C General Enrollment

D Annual Election

For which of the following reasons may an insured return the policy for a full refund within the Free Look Period? A Increase in premium B Decline in financial rating of the insurance company C Death of the agent D Any reason

D Any reason The insured/owner has the right to examine the policy for 10 days after delivery. If returned within that period, a full refund of premium is granted. It is the insurer's responsibility to prove the date of delivery.

The ____________ provision prevents a Whole Life Policy from lapsing, as long as there is adequate cash value, if the insured/policyowner forgets to pay the premium by the end of the grace period. A Mode of Premium B Reinstatement C Conservation D Automatic Premium Loan

D Automatic Premium Loan ----The Automatic Premium Loan Provision (APL) gives the insurer the right to borrow sufficient funds from the cash value to prevent a policy lapse. This works only if adequate cash value is available. According to the contract, a policy loan may include annual prepaid interest.

K owns a variable annuity with an assumed interest rate of 4%. If the actual performance of the separate account(s) is 3%, the effect on this month's income benefit check will be such that it: A Becomes higher B All depends on the separate account(s) selected C Remains the same D Becomes lower

D Becomes lower If the actual return is lower than the AIR, the monthly annuity payment will be reduced. If the actual return is equal to the AIR, the monthly annuity payment will remain the same as the previous month. If the actual return is greater than the AIR, the monthly annuity payment will increase from the previous month.

Which of the following is true of Medicare Part B? A It covers routine dental checkups B Provides coverage for inpatient services C It is free for those who qualify D Benefits are funded by a combination of taxes and premium dollars and coverage is elective

D Benefits are funded by a combination of taxes and premium dollars and coverage is elective Part B - Medical Insurance (Outpatient) is a voluntary program of government-subsidized insurance requiring participants to make premium payments.

***Which of the following is not an element of an insurable risk? A Accidental loss B Large number of homogenous units C The ability to set a measurable value on it D Catastrophic perils

D Catastrophic perils Insurers want to avoid catastrophic perils.

Under the California Long-term Care Education Requirements, long-term care training is also required when an agent is transacting accelerated death benefits or riders that require services to the __________ ill insured, such as a long-term care rider. A Terminally B Seriously C Acutely D Chronically

D Chronically ---Under the California Long-term Care Education Requirements, long-term care training is also required when an agent is transacting accelerated death benefits or riders that require services to the chronically ill insured, such as a long-term care rider.

Under Medicare Part B, a(n) _______ is the request for payment and is submitted by Medicare approved participating providers and suppliers to the Centers for Medicare and Medicaid Services (CMS). A Medicare summary notice B Explanation of medical benefits C Assignment D Claim

D Claim

Which one of the following is not a source of underwriting information? A An inspection report B Medical exams C Medical Information Bureau (MIB) D College transcripts

D College transcripts The sources of underwriting information include the application, medical exams, an Attending Physician's Statement, the Medical Information Bureau (MIB), an inspection report, and the agent's report.

In an insurance contract the ___________ is something of value that is exchanged by the parties to the contract. A Acceptance B Offer C Condition D Consideration

D Consideration ---Consideration can take the form of money, such as the premium an insured pays, or a promise to do something, such as the promise by the insurance company to pay for covered losses.

Which of the following describes both the premium paid by the insured and the promise by the insurer to pay a covered loss and defend the insured in a lawsuit? A Acceptance B Legal Purpose C Offer D Consideration

D Consideration --Consideration is the term used to describe the rights, money, promises or property exchanged between the parties as part of a contract transaction.

Health Savings Accounts and Health Reimbursement Arrangements are both types of what form of health insurance? A Individual and Group Medical IRAs B Employer-sponsored group health plans C Flexible spending arrangements D Consumer-driven health plans

D Consumer-driven health plans --HSAs and HRAs are two of the more popular consumer-driven health plan options available in America. --HSAs allow individuals to set aside their own money on a pre-tax basis for the later payment of health care expenses (employers can also contribute). HSAs can be either individual or group plans. -- HRAs are only group plans and are funded exclusively with employer contributions.

Which of the following is not a Metal plan category? A Gold B Silver C Bronze D Copper

D Copper

Upon receipt of an application, the insurer's underwriter may issue the contract with exclusions or limitations. This means that: A Coverage is not issued B Coverage is issued, but at a higher rate than quoted C Coverage is issued at the rate that was quoted D Coverage is issued, but there are limits on the insurer's obligation to pay

D Coverage is issued, but there are limits on the insurer's obligation to pay

The spendthrift laws of each state protect life insurance proceeds against the claims of which of the following? A Contingent beneficiaries only B Primary beneficiaries only C Creditors of the insured only D Creditors of the insured and/or the beneficiary

D Creditors of the insured and/or the beneficiary ---Spendthrift laws and policy provisions protect the death benefit from the claims of creditors of the deceased insured, the policyowner, and those creditors of any named beneficiary to whom the death benefit becomes payable. When death benefit principal is left with the insurance company, spendthrift laws prevent creditors from attacking that money, too.

_______ income benefits received by an employee are subject to taxation in proportion to the amount of premium that the employer paid. That income attributable to the employee's premium is not taxable. A Medical B Long-Term Care C Dental D Disability

D Disability --Disability income premiums paid by the employer are deductible to the employer and are not considered part of the employee's income. Because of this, benefits received are treated as income to the employee to the extent that the employer paid the premiums

***When admission to a hospital's facilities is __________, the insurer may require pre-authorization approval under a managed care plan before claims will be paid. A An emergency B Critical C Non-elective D Elective

D Elective With a managed health care plan when admission to a hospital's facilities is 'elective', the insurer may require pre-authorization approval before claims will be paid. Relevant Content: Individual Policy Provisions 12.5

With a managed health care plan all _________ care must be covered as if it were provided on an in-network basis. A Routine healthcare B Hospital C Physician D Emergency

D Emergency

Under the PPACA, employers with more than 50 employees that don't provide an affordable health plan that provides the minimum essential benefits will be required to pay an __________ penalty if the government has to subsidize at least one employee's individual plan purchased through an exchange. A Employee Shared Responsibility B Advanced Premium Tax C Essential health care D Employer Shared Responsibility

D Employer Shared Responsibility

A licensed producer may not do which of the following? A Solicit business from a loan applicant who has not opted out of information sharing by the lender B Advertise the availability of insurance products approved for sale in California C Provide a binder of insurance for a homebuyer contingent upon close of escrow D Enter into an exclusive relationship with a lender to provide homeowners insurance to loan applicants

D Enter into an exclusive relationship with a lender to provide homeowners insurance to loan applicants ----A person who is required to obtain insurance as a condition of purchasing real or personal property may not be required to obtain insurance from a specific agent, broker, or insurance company.

The date on which insurance coverage is no longer in effect is referred to as the _________ date. A Policy B Renewal C Conversion D Expiration

D Expiration

____________ is the initial step of the total process of insuring a health risk. A Collecting the premium payment B Completing medical exams C The sales presentation D Field underwriting

D Field underwriting Field underwriting is the initial step of the total process of insuring a health risk.

Unless the owner specifically directs that the premium be invested in the mutual funds underlying the variable contract, during the free look period, the premium may be invested only in: A Hedge funds B The agency's premium deposit account C Alternative investments D Fixed-income investments and money market funds

D Fixed-income investments and money market funds During the 30 day cancellation period, the premium for variable annuities may be invested only in fixed-income investments and money market funds, unless the owner specifically directs that the premium be invested in the mutual funds underlying the variable contract chP 5

In which ONE of the following situations would an insurance company most likely use an impairment rider? A S is looking to buy a disability income policy, but is unemployed B T, age 70, wants to buy an individual disability income policy but is retired and receiving home health care C F has cancer and is looking to buy a cancer only policy to help with the cost of treatment D G is looking to obtain a health insurance policy, but is concerned about a current heart condition

D G is looking to obtain a health insurance policy, but is concerned about a current heart condition An impairment rider excludes coverage for a specific ailment or condition that otherwise would be covered, so the applicant is still able to obtain coverage for other health care needs.

If overdue premiums are paid during the __________ period, the policy will remain in effect. A Extended premium paying B Nonforfeiture C Loan D Grace

D Grace There is a grace period for late premiums. Typically it is 30 days (or one month) during which coverage will remain in effect.

All health plans, group and individual, offered through a __________ must provide, at a minimum, essential health benefits. A Self-insurer B Public insurer C Private insurer D Health Insurance Exchange

D Health Insurance Exchange Under the Patient Protection and Affordable Care Act, all health plans, group and individual, offered through a Health Insurance Exchange must provide, at a minimum, essential health benefits in the 10 categories of care and services.

The ______________ clause is the insurance company's promise to pay the policy's death benefit to the named beneficiary, after receiving due proof of death of the insured, as long as the policy is in force. A Entire Contract B Consideration C Incontestability D Insuring

D Insuring

How may the premium in a guaranteed renewable policy be increased? A It may be increased according to the increased risk of the insured's health status B It may be increased only in relation to the number of claims paid in the past year C It may not be increased at all D It may be increased for all insureds in the same age group and risk classification

D It may be increased for all insureds in the same age group and risk classification A guaranteed renewable policy must be renewed upon payment of the current premium. If the insurer wants to raise the premium for an individual insured, it must increase the premium for all insureds that are "similarly situated"—persons who are the same age, all persons in the same state, all persons who own the same policy by "form number". Premium increases cannot be the result of an individual's claims history or a change health status.

Which Payment Option pays an income for the life of the annuitant or for a specified period, whichever is longest? A Life Income B Period Certain C Life Income with Refund D Life Income with Period Certain

D Life Income with Period Certain

All health plans, group and individual, offered through a Health Insurance Exchange must provide, at a minimum, essential health benefits in all of the following categories of care and services, except: A Maternity and newborn care (including prenatal and delivery care) B Hospitalization C Laboratory services D Long-term care

D Long-term care Minimum, essential health benefits must be provided in the following categories of care and services: Ambulatory patient services, Mental health and substance use disorders, including behavioral health treatment, Emergency services, Hospitalization, Laboratory services, Maternity care, Prescription drugs, Pediatric services, including dental and vision care, Preventive care, Rehabilitative services.

Part 1 of the application consists of all of the following information, except: A Gender B Place of residence C Occupation D Medical status of immediate family members, their ages and causes of death

D Medical status of immediate family members, their ages and causes of death. Part 1 of the application consists of general questions about the applicant, such as gender, marital status, residence, date of birth, occupation, and past and present life insurance. Part 2 contains questions pertaining to medical background, past and present health, any medical visits, medications, height/weight, hospitalizations/surgeries in recent years, and the medical status of immediate family members (includes ages, causes of death, etc).

Any person who acts, offers to act, or assumes to act in a capacity for which a license is required without holding a license is guilty of a ___________, punishable by a fine of up to $50,000 and/or 1 year in jail. A Felony B Code violation C Civil infraction D Misdemeanor

D Misdemeanor ----Under the California Insurance Code, any person who acts, offers to act, or assumes to act in a capacity for which a license is required without holding a license is guilty of a MISDEMEANOR, punishable by a fine of up to $50,000 and/or 1 year in jail.

A producer may be guilty of misrepresentation if he/she: A Denied a claim for failure of the policyholder to prove damages B Issued a settlement check that totally releases the insurer C Requested timely written notice of loss for all claims D Misstated the terms of a policy for the purpose of inducing a policyholder to lapse a policy

D Misstated the terms of a policy for the purpose of inducing a policyholder to lapse a policy ****Misrepresentation includes : --- making, issuing, or circulating any estimate, illustration, circular, or statement misrepresenting the terms of any policy issued; using any name or title misrepresenting the true nature of any policy or class of policies; misrepresenting the financial condition of any insurer; or making any misrepresentation to a policyholder insured by any company for the purpose of inducing the policyholder to lapse, forfeit, or surrender a policy.

The California Insurance Code requires all producers who meet with established clients age 65 and older in their homes for the purpose of transacting life insurance, annuities, or disability insurance products to provide the required written notice: A No later than at the time of application B At least 24 hours in advance of the meeting C At least 12 hours in advance of the meeting D No later than at the time of an appointment

D No later than at the time of an appointment The 24 hours in advance requirement applies to prospective clients, not established clients. Established clients may be given the notice at the time of an appointment.

A Single Premium Immediate Annuity (SPIA) begins paying out its benefit: A No later than within 1 month B At a specified date next year C No later than within 60 days, once proper paperwork is completed D No later than within 1 year

D No later than within 1 year Under an SPIA, the idea is to have income begin immediately. There is essentially no accumulation period, and benefits begin within 1 year of the issue date.

***What taxes apply to the benefits under an individual Disability Income Policy on which the insured has paid the premiums? A Capital gains tax B Income tax C FICA tax D No tax

D No tax Benefits received from an individual Disability Income Policy are not subject to taxation. Relevant Content: Health Concepts and Tax Considerations 14.3

Ole Olson owns a Business Overhead Expense Policy whereby if he should become disabled, the policy will continue to cover most business expenses in his absence. The policy would cover all of the following, except: A Ole's utility bills B Ole's office rent C Ole's employee payroll D Ole's personal lost income

D Ole's personal lost income The intent of the policy is to offset expenses, not to replace the disabled owner's personal lost income. If Ole is concerned about his own personal lost income, he should own an individual Disability Income policy.

HMOs are established as either ________, which means the doctor can work with anyone, including HMO members, or ________, which means the doctor can only work with HMO members. A Variable group, fixed group B Open group, specified group C Staff model, group model D Open panel, closed panel

D Open panel, closed panel

Which of the following types of policies is eligible for policy dividends? A Fixed B Variable C Nonparticipating D Participating

D Participating Insurance is either permanent or temporary. Examples of permanent insurance are Whole Life and Endowments, etc. Term is temporary insurance. Participating policies are issued by mutual companies and are eligible for policy dividends if and when declared by the company's board of directors.

Under the PPACA (Patient Protection and Affordable Care Act)all health plans are prohibited from discriminating against or charging higher rates to any individual on the basis of: A Occupations B Vocations C Avocations D Preexisting conditions

D Preexisting conditions

***A licensed life agent may __________ on behalf of a life insurer for which the life agent is not specifically appointed. A Fill out an application, collect the initial premium, and issue a receipt to an applicant/insured B Provide service to a policyholder C Deliver a policy to an applicant/insured

D Present a proposal for insurance to a prospective policyholder

A licensed life agent may __________ on behalf of a life insurer for which the life agent is not specifically appointed. A Deliver a policy to an applicant/insured B Fill out an application, collect the initial premium, and issue a receipt to an applicant/insured C Provide service to a policyholder D Present a proposal for insurance to a prospective policyholder

D Present a proposal for insurance to a prospective policyholder --Under the California Insurance Code, a licensed life agent may present a proposal for insurance to a prospective policyholder on behalf of a life insurer for which the life agent is not specifically appointed.

With a managed health care plan, in a bona fide emergency, when loss of life or serious complications may result if treatment is delayed, an insured will not be required to obtain permission from a ____________ to use a hospital emergency room. A Surgeon B Health care coordinator C Specialist D Primary care physician

D Primary care physician

Insurance is designed to provide protection against which of the following? A Speculative risk B Certain Risk C Involuntary risk D Pure Risk

D Pure Risk In Pure Risk, the only consideration is the possibility of loss or no loss. The contrast is Speculative risk, which entails a chance of gain as well as a chance of loss.

Favorable tax treatment is given to the benefits received from _________ Long-Term Care contracts that meet the state or federal requirements. A Nonqualified B Participating C Partnership D Qualified

D Qualified Favorable tax treatment is given to the benefits received from Qualified Long-Term Care contracts that meet the requirements for 'tax qualified' status.

***All Medicare Supplement application forms must include questions to determine if at the date of application a Medicare supplement policy or certificate is intended to: A Be primary coverage to any other health insurance policies or benefits the applicant may have B Be funded with a single premium or annual premium payments C Provide benefits for one or both of the spouses applying for coverage D Replace any other disability policy or certificate presently in force

D Replace any other disability policy or certificate presently in force Relevant Content: Senior Needs 11.8

Under a group insurance plan, the benefit provided by a succeeding carrier is called: A Continuation benefits B Extension of benefits C Conversion coverage D Replacement coverage

D Replacement coverage ---Replacement Coverage is benefits provided by a succeeding carrier.

***A firm with 50 employees replaces its existing group health plan. With regard to ongoing existing claims, the replacing insurer will be: A Required to keep paying them under the Dual Choice Provision B Required to stop paying them under COBRA C Allowed to deny claims over 60 days old under ERISA D Required to continue paying them under the No Loss-No Gain law

D Required to continue paying them under the No Loss-No Gain law The No Loss-No Gain law (a.k.a. the Hold Harmless Agreement) establishes mandatory risk transfer. Relevant Content: Group Health Insurance 13.5

The termination of a contract from the beginning as if it had never existed is called: A Cancellation B Nonrenewal C Lapsation D Rescission

D Rescission

Which type of LTC coverage is designed to provide relief for the primary caregiver of a long-term care patient? A Home Health Care B Adult Day Care C Hospice Care D Respite Care

D Respite Care Respite care gives a primary caregiver the opportunity to rest from his/her care responsibilities to the insured.

Interest only, life income, fixed amount and fixed period are all forms of which of these life insurance policy options? A Dividend options B Nonforfeiture options C Beneficiary options D Settlement options

D Settlement options --These are all forms of settlement options (how the beneficiary will receive the policy proceeds). Nonforfeiture options are concerned with cash value.

For Medi-Cal beneficiaries there may be a __________ requirement, which requires the beneficiary to spend a certain amount of monthly income toward health care expenses before Medi-Cal begins to cover those expenses. A Spend down B Payment C Funding D Share of cost

D Share of cost

***Under the PPACA individual mandate, all individuals without minimum essential coverage, either group or individual, will be assessed a penalty called the: A Excise tax B Premium tax C ACA penalty D Shared Responsibility payment

D Shared Responsibility payment --Under the Patient Protection and Affordable Care Act individual mandate, all individuals without minimum essential coverage, either group or individual, will be assessed a penalty called the Shared Responsibility payment.

Which Whole Life policy is designed to provide a substantial immediate cash value? A Ordinary Straight Life B Adjustable C Indeterminate D Single Premium Whole Life Policy

D Single Premium Whole Life Policy A single premium policy is paid up (i.e. requires no more premiums due) after only one premium. As a result, it starts with substantial cash value.

An insurer considers all of the following when determining the fixed annuity payments, except: A Expenses B The accumulation amount C Interest rates D Stock market value

D Stock market value The accumulation amount, interest rate, expenses, gender, and age of the annuitant are the important factors when computing any of the available annuitization options benefit payments.

All of the following are options for managing risk, except: A Retaining the risk B Transferring the risk C Avoiding the risk D Subrogating the risk

D Subrogating the risk ----Subrogation is not a risk management technique, but rather a means of collecting a loss payment from a liable party.

A facility where outpatient surgery is performed for those patients that require general anesthesia but are not required to stay overnight is called a(n): A Urgent Care Center B Skilled Nursing Facility C Home Health Care Center D Surgicenter

D Surgicenter A surgicenter is a facility where outpatient surgery is performed for those patients that require general anesthesia but are not required to stay overnight.

Which is not a qualifying event for the continuation of dependent coverage under the Consolidated Omnibus Budget Reconciliation Act? A The employee's eligibility for Medicare benefits B Divorce or legal separation C Death of the employee D Termination of the employee for theft

D Termination of the employee for theft This would be termination for gross misconduct and neither the employee nor his/her dependents would be eligible for continuation under COBRA. Relevant Content: Group Health Insurance 13.7

Under the Modified Endowment Contract rules the 7-Pay Test is defined as: A The cash value at the end of year 7 exceeds the total premiums paid B Any life insurance policy that endows in 7 years C The least amount of premium required to be paid in the first 7 years to maintain the policy to age 70 D The comparison of premiums paid during the first 7 years with the net level premiums that would have been paid on a 7 year pay whole life of the same death benefit

D The comparison of premiums paid during the first 7 years with the net level premiums that would have been paid on a 7 year pay whole life of the same death benefit -----A MEC occurs at any time within the first seven years of a policy (or of a material change to a policy, such as a death benefit increase or decrease) if the sum of premiums paid exceeds the amount of premiums that would be paid in a 7-pay contract.

Which of the following is not a reason why a license may be suspended or revoked after it has been issued? A The licensee has previously engaged in a fraudulent practice or act or has conducted any business in a dishonest manner B The licensee has knowingly misrepresented the terms or effect of an insurance policy or contract C The licensee has submitted to the Commissioner a false or fraudulent certificate of prelicensing or continuing education D The licensee does intend actively and in good faith to carry on as a business with the general public the transactions which would be permitted by the issuance of the license applied for

D The licensee does intend actively and in good faith to carry on as a business with the general public the transactions which would be permitted by the issuance of the license applied for

Each of the following choices are true of whole life, except: A They have nonforfeiture values and options are offered B As an insured ages, the premiums remain the same C The death benefit and cash values are guaranteed D The policy can be converted into a term life insurance plan at anytime

D The policy can be converted into a term life insurance plan at anytime Term can be converted into a permanent plan of life insurance, if convertible, BUT a WHOLE life plan CAN NOT be converted into a Term plan.

What is the primary advantage to the policyowner in the reinstatement of a life insurance policy? A All policy loans that were outstanding at the time of lapse are forgiven and full cash value is restored B The insured is not required to prove insurability if under age 40 C The insurance company cannot start a new period of contestability D The policyowner continues to enjoy the benefits that were provided in the original policy, including the original premium

D The policyowner continues to enjoy the benefits that were provided in the original policy, including the original premium ---Reinstatement restores the policy to its original condition as if it were never lapsed. Even though the policy is reinstated at a later age, the original issue premium is all that the insurer will require.

***Who are the parties in a third-party life insurance ownership situation? A The policyowner, the insurer, and the beneficiary B The insured, the insurer, and the beneficiary C The policyowner, the insured, and the beneficiary D The policyowner, the insured, and the insurer

D The policyowner, the insured, and the insurer The three parties involved in third-party ownership are the policyowner, the insured, and the insurer. The beneficiary is not a party to the contract. Relevant Content: Markets and Social Security 6.4

***Which of the following is a specification that must be included in an insurance contract? A Information already known by both parties B Information that should be known by both parties C Information of a party's own judgement upon the matters of a contract D The risks insured against

D The risks insured against All insurance contracts must include a statement of the premium, or a statement of the basis and rates upon which the final premium was determined, the property or life insured, the interest of the insured or property, the risks insured against, and the period during which the insurance is to continue. Relevant Content: General Insurance 1.10

On a variable universal life policy what is the difference between the cash value and the cash surrender values? A The investment performance B The interest earned C The amount of any outstanding policy loan D The surrender charge

D The surrender charge ---The difference between the cash values and the cash surrender values is the surrender charge which provides an incentive for the policyowner to maintain the policy and allows for the insurer to recoup any policy issuance costs.

Premiums paid by an individual for personally-owned medical expense insurance are only deductible to the extent that _____________. A They exceed the national average cost of health insurance B They are not offset by contributions to a FSA C They exceed what the employer pays for the coverage D They exceed 7.5% of adjusted gross income

D They exceed 7.5% of adjusted gross income --Deductibility of health insurance and long-term care insurance premiums is limited to the amount (with unreimbursed medical expenses) that exceeds 7.5% of adjusted gross income.

***Which provision states that the insurance company must pay claims immediately? A Relation of Earnings to Insurance B Payment of Claims C Legal Actions D Time of Payment of Claims

D Time of Payment of Claims Time of Payment of Claims (a Mandatory Uniform Provision) stipulates that claims are to be paid immediately upon written proof of loss. Relevant Content: Individual Policy Provisions 12.1

Managed Health Care attempts to contain health care costs by controlling the behavior of participants through all of the following, except: A Preventive care B Risk-sharing C Comprehensive case management D Unlimited access to providers

D Unlimited access to providers Managed Health Care attempts to contain health care costs by controlled access to providers, not unlimited access. Relevant Content: Individual Policy Provisions 12.5

All of the following are considered fraudulent activity, except: A Unauthorized transactions B Fictitious accounts C Misuse of customers' funds or securities D Unsolicited trading

D Unsolicited trading Unsolicited trading is not considered fraudulent, but is based on a trade requested by the customer and not recommended by the registered rep.

Which of the following is TRUE regarding Indexed Annuities? A The premiums paid are usually invested in separate account(s) B Values and benefits are determined by the performance of a separate account C They have a level number of annuity units with a fluctuating unit value D Values and benefits may increase, but not decrease

D Values and benefits may increase, but not decrease Because of the way Indexed Annuities are designed, they offer a portion of the potential upside of the index selected to determine the policy's interest credits, but in no case will the policy values or benefits go down if the index chosen falls in value.

During the accumulation phase of a(n) ____________ annuity, premium dollars buy more accumulation units. A Market Value Adjustment B Indexed C Fixed D Variable

D Variable Variable Annuities are valued in terms of units, rather than dollars. The more dollars deposited the more units acquired. Upon annuitization, accumulation units are converted to annuity units, and the income paid is based on the value of the annuity units.

Health Insurance Portability and Accountability Act (HIPAA)

Designed to provide coverage for those with PREEXISTING CONDITIONS

PPACA Terminology Essential Health Benefits All health plans, group and individual, offered through an Exchange must provide, at a minimum, benefits in the following 10 categories of care and services:

Essential Health Benefits 1. Ambulatory patient services 2.Mental health and substance use disorders, including 3. behavioral health treatment 4. Emergency services 5. Hospitalization 6. Laboratory services 7. Maternity and newborn care (including prenatal and delivery care) 8. Prescription drugs 9. Pediatric services, including dental and vision care Preventive, wellness, and chronic disease management 10. Rehabilitative and habilitative services and devices NOT LTC

Flexible Premium Deferred Annuity (FPDA)

Flexible contributions may be made as often and in whatever amount the contract owner desires. However, most insurers set a minimum and a maximum amount for contributions. Benefits begin more than 1 year from the issue date.

Provides health insurance Counseling to Seniors California Residents free of charge:

Health Insurance Counseling and Advocacy Program ( HICAP)

Change of Occupation

If the insured changes to a more hazardous occupation without notifying the insurer prior to submitting a claim, the benefits will be reduced to that benefit which premiums paid would have purchased at the more hazardous occupation. If the insured changes to a less hazardous occupation, the benefits will pay as stated in the policy and the insured may apply for a rate reduction. If the insured works at two occupations, rates for the most hazardous occupation will be charged.

Other Insurance with This Insurer

If the insured has more than 1 policy with the same company, the insured may decide which policy to use. Excess premiums for the excess coverage will be returned. The provision protects insurers against overpayment of claims.

Indexed Universal Life (Equity Indexed)

Indexed Universal Life (IUL) policies are a more recent evolution from traditional UL policies, and base interest crediting on one or more "strategies" linked to the performance of a known stock or similar index (such as S&P 500), which is not under the control of the insurance company. There is no direct investment in any stocks or indexes. In exchange for the potential of higher interest crediting, these policies offer a minimum interest rate guarantee (which could be 0%) to avoid cash value decreases due to negative index performance. IUL policies also offer a "fixed rate" option, which is not affected by changes in the index performance. The insurer controls and sets the fixed rate

Legal Actions

Insured must wait 60 days, but no later than 3 years after providing proof of loss, before legal action can be brought against the insurer.

Twisting -

Intentionally making any false or materially inaccurate representation or comparison of two or more policies which induces any person to lapse, forfeit, surrender, or not take, a policy of insurance.

Section 1035 Exchanges

Internal Revenue Code Section 1035 allows for the exchange of existing insurance policies into another without incurring any tax liability on the interest and/or investment gains in the current contract.

Types of exchanges the IRS will allow on a tax-free basis are from:

Life insurance to life insurance Life insurance to an annuity Annuity to an annuity Life insurance or annuity to long-term care But NEVER an annuity to life insurance

7. Proof of Loss provision

Policy owner has 90 days from date of loss to submit proof of loss to Insurer; valid claim must be paid immediately upon receipt.

What protects life insurance proceeds from the beneficiaries creditor?

Spendthrift Trust Clause

Insuring clause/provision (aka Insuring Agreement)

Summary of coverage including premium & mode of payment, death benefit, beneficiary(ies), exclusions, & promise to pay. --The insuring clause is found on the first page, or declaration page, of the policy and is considered the most important clause in the policy. -The declaration page is the title or first page of the policy. It provides all the basic information the policyowner needs to know: ---The insuring clause ---The name and address of the insurance company ----Information about the issuing agent ----The named insured ----Amount of insurance ---Amount and frequency (mode) of premium payment ----Effective date of coverage

Surplus Line Insurance

Surplus Line coverage includes those types of insurance that cannot be obtained from admitted insurers, usually because the risk is too great, or too difficult to underwrite. The insurance may not be placed with a non-admitted insurer solely to receive financial advantages that would not be available by placing the business with an admitted carrier.

Spendthrift Trust Clause

The Spendthrift Clause denies the beneficiary the right to assign his/her interest in the policy proceeds. The purpose is to prevent creditors of a beneficiary from claiming any benefits payable to the beneficiary before they are actually received. This clause does not protect the beneficiary if the benefits are payable in a lump sum, only when the proceeds are held by the insurance company under a settlement option.

Actuarial Value

The actuarial value of a health plan equals the percentage of the total average costs that a plan pays for Essential Health Benefits. ---If a health plan had an average actuarial value of 60%, insured individuals would be responsible for paying 40% of the costs of covered benefits. --- A plan meets the minimum value requirement if it is designed to pay at least 60% of the total costs for covered benefits.

Absolute assignment

The original owner, the assignor, will name a new owner, the assignee, of the policy. Since a new owner is named, this is considered a permanent assignment. The full amount of the policy is assigned and this is referred to as a transfer of ownership. STOLI arrangements and Life Settlements are both effected through absolute assignments. EX.The owner of a juvenile policy wishes to name the insured child as the new owner once the insured turns age 18. This is considered an absolute assignment.

Types of Beneficiaries Revocable -

The policyowner may change a revocable beneficiary at any time. This beneficiary does not have a vested interest in the policy. Most named beneficiaries are revocable and have no rights.

Types of Beneficiaries Irrevocable -

The policyowner may not change an irrevocable beneficiary unless the beneficiary dies or provides written consent for the change. If an irrevocable beneficiary is named, the owner may not make changes to the policy that affect the coverage or benefits without consent of the beneficiary. These changes include assigning the policy, canceling or surrendering the policy, or taking a policy loan. An irrevocable beneficiary has a vested interest in the policy benefits.

Optional Uniform Provisions

These provisions are included at the insurer's option and are designed to protect the insurer. However, if used, they must conform to the state's insurance code.

Needs Analysis Approach

This approach determines a need for coverage upon the PREMATURE DEATH of an individual. ***It always assumes the DEATH of the individual to be IMMEDIATE and factors the following steps into arriving at the proper amount of coverage needed: ----Calculate all financial needs caused by an immediate death, including debts, medical bills, and final expenses ----Provide lifetime income to the spouse ----Pay off a mortgage or other debt ----Provide funds for children's education ----An Emergency Reserve Fund may be part of the calculation to provide for unexpected emergencies the family might encounter immediately after the death of the insured ----Subtracts any assets available to fund financial needs after death (such as retirement plan assets, other insurance, liquid investments, separate savings)

Human Life Value Approach

This approach is a measure of the PROJECTED FUTURE EARNINGS and services of a person at risk in the event of a PREMATURE DEATH. The objective is to provide the proper amount of coverage as determined by the value of the individual to his/her dependents using the following factors: ---The individual's age and gender ---The individual's occupation ---The individual's annual wage ---The individual's planned retirement age ---Inflation

Entire Contract Clause

This provision describes the parts of the life insurance contract. -- The entire contract consists of the policy, riders (endorsements), amendments, and a copy of the application. --All statements made in the application are, in the absence of fraud, deemed to be representations and not warranties. -- All parts to the contract must be attached and in writing. Nothing can be incorporated by reference.

Creditable Coverage

Under HIPPA if an employee can not met the requirement of credited coverage, a preexisting condition exclusion may be imposed up to : Those who have been insured under a group plan for at least 12 months ( individual plans 18 months) must be covered immediately under a new group plan -No more than 63 day gap in coverage for the preexisting condition HIPPA requirement to be met - 90 day waiting premium if HIPPA does not apply

Third Party Ownership

When a policy is owned by a person other than the insured, it is known as a third-party ownership. ---- The three parties involved in a third-party ownership are the policyowner, insured, and insurer. Examples of third-party ownership policies are: A husband owns a policy on a wife A parent owns a policy on one of his/her children A business owns a policy on a key employee A business partner owns a policy on another business partner

Third-Party Ownership

When a policy is owned by a person other than the insured, it is known as a third-party ownership. The three parties involved in a third-party ownership are the policyowner, insured, and insurer. Examples of third-party ownership policies are: A husband owns a policy on a wife A parent owns a policy on one of his/her children A business owns a policy on a key employee A business partner owns a policy on another business partner

Insurance with Other Insurers

When an insured is covered by more than one policy, claims will be paid according to the policy with the largest benefit, but claims will be apportioned between the various insurers in relation to the amount of premiums paid as a percentage of the total premium the insured has paid for all such policies. The form of this optional provision may vary slightly based on whether the benefits are "expense incurred" or simply "other benefits" which are not expense incurred

Incontestability Clause

Within the first 2 years of a policy, the insurer may contest a claim and void the contract upon proof of a material misstatement or fraud. --- A material misstatement is one in which the insurer would not have issued the policy had they known the true information. ---Except for nonpayment of premiums, the policy will be incontestable after it has been in force for typically 2 years from the policy issue date, even in cases of fraud.

Optional Uniform Provisions

_Change of Occupation _Misstatement of Age _Other Insurance with This Insurer _Other Insurance with This Insurer

The time Limit on certain defenses (incontestable) period is _______ years under individual health and disability contracts. a) 2 b) 3 c) 5 d) 7

a) 2

Juvenile insurance

any policy written on the life of a minor. A popular type is commonly called 'Jumping Juvenile' because it automatically increases the face amount at a given age (usually age 21 to 25) without evidence of insurability ----The premium remains level for the life of the policy, and the usual increase in the face amount is 5 times the issue amount.

Which of the following statements regarding mandatory Uniform provisions is correct? a) Mandatory Uniform Provisions protect the interests of the insurer and Optional Uniform Provisions protect the interests of the insured. b) Mandatory Uniform Provisions protect the interests of the insured and Optional Uniform Provisions protect the interest of the insurer. c) Provision wording may not be changed no matter how favorable it may be to either the insured or insurer. d) A provision may be added

b) Mandatory Uniform Provisions protect the interests of the INSURED ----Optional Uniform Provisions protect the interest of the INSURER .

To reinstate a lapsed health policy, the insurer: a) Cannot require a new application b) Must respond to the application within 30 days c) Must take into account the applicant's religion d) Will require back due premiums be paid

d) Will require back due premiums be paid

A surrender charge schedule

describes in dollar amounts or percentages the amount of the surrender charge in any year.

The Special Enrollment Period begins:

when a person past age 65 who was covered by an employer-sponsored group health plan is no longer covered by the plan (whether the person elects COBRA continuation or not). ----This period lasts 8 months and allows an individual the opportunity to enroll in Medicare Part B without incurring the lifetime premium penalty for failing to enroll at age 65.

collateral assignment

which does not cause a permanent change in ownership. However, the rights of the owner will be subject to the assignment. A collateral assignment is typically used when an insurance policy is used as collateral for a loan. This is a temporary assignment until the debt is paid in full. In this case, the assignor is the original owner and the assignee is the creditor. This assignment takes precedence over any beneficiary designation. It can reduce the dollar amount of the beneficiary's claim at the time of the insured's death because the assignee has a priority claim against the policy and must be paid first. No assignment of the policy will be binding on the insurer unless it is in writing and received at the insurer's home office. The insurer is not responsible for determining the validity of the assignment. EX.An owner of a policy wishes to take out a loan and use an existing life insurance policy as collateral for the loan in case he dies prior to the payoff of the loan. The owner may temporarily assign the policy to the creditor until the loan is repaid. This option is cheaper than purchasing a separate policy to pay off the debt. The beneficiary cannot challenge this decision and may receive a reduced benefit if the insured dies before the loan is repaid. Once the debt is resolved, the assignment will be removed, and all rights will be restored. This is considered a collateral assignment.

6. claim forms provision

◦ 15 days for the insurer to provide proper forms

5. Notice of Claim provision

◦ 20 days for the insured to report a loss

4. Reinstatement Provision

◦ Allows insured to reinstate a policy by paying past due premiums ◦ Proof of insurability may be required ◦ 45 days to make a decision ◦ Accidents covered immediately

3. Grace Period Provision

◦ Period after premium due date before policy lapses ◦ 7 days weekly, 10 days monthly, 31 days all others

1. Entire Contract Provision

◦ Policy, copy of the application, amendments and any riders make up the entire contract ◦ Contract cannot be modified without owner approval