insurance exam

Which of the following best describes an applicant's avocations?

Hobbies

What type of insurance would be used for a Return of Premium rider?

Increasing Term

The types of perils which are usually excluded from coverage and which do not allow for an accurate pattern of predictability and will adversely slant the law of large numbers is known as

Catastrophic Losses

If a client has purchased a long term care policy that a HICAP counselor determines to be inadequate for the needs of the client, the counselor will

Inform the client of the inadequacies in the policy.

A person who does not lock the doors or does not repair leaks shows an indifferent attitude. This person presents what type of hazard?

Morale

Attempting to determine how much insurance a family would require based upon their financial objectives is known as

Needs approach.

Qualified long-term care policies covering home care must provide benefits if the insured is impaired in at least two of the six activities of daily living (ADL). The term "impaired" means

Needs substantial hands on or standby assistance with ADLs.

Which of the following can surrender a deferred annuity contract?

Only the annuity owner

All of the following are true regarding insurance policy loans EXCEPT

Policy loans can be made on policies that do not accumulate cash value.

HSAs are owned by the individual, not the employer, which means the individual is not dependent on a particular employer to enjoy the advantages of having an HSA. What term best describes this?

Portable

All of the following long-term care coverages would allow an insured to receive care at home EXCEPT

Skilled care

An insured had $500 left in his Health Reimbursement Account when he quit his job. What happens to that money?

The insured can have access to the $500 at his previous employer's discretion.

Which of the following are generally NOT considered when underwriting group insurance?

The insureds' medical history

In forming an insurance contract, when does acceptance usually occur?

When an insurer's underwriter approves coverage

Which of the following describes the taxation of an annuity when money is withdrawn during the accumulation phase?

Withdrawn amounts are taxed on a last in, first out basis.

In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe?

unilateral

All of the following entities regulate variable life policies EXCEPT

The guaranty association

The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called

Waiver of premium

An insured pays a monthly premium of $100 for her health insurance. What would be the duration of the grace period under her policy?

10 days

The Department of Insurance contacts an agent about a claim that was settled two months ago. Within what timeframe must the agent issue a complete response?

21 days

How many hours of continuing education in ethics must agents complete each licensing term?

3

In addition to penalties, fines, and possible imprisonment for violating the provision relating to misrepresentation, the Commissioner may suspend the license of such person for a period up to

3 years

Benefit periods for individual short-term disability policies will usually continue from

6 months to 2 years.

What is the penalty for excessive contributions to an IRA?

6%

Most policies will pay the accidental death benefits as long as the death is caused by the accident and occurs within

90 days.

Which of the following would automatically qualify for Medi-Cal benefits?

A person receiving Supplementary Security Income assistance

In general terms, IRA contributions

Are tax deductible.

What document describes an insured's medical history, including diagnoses and treatments?

Attending Physician's Statement

Occasional visits by which of the following medical professionals will NOT be covered under LTC's home health care?

Attending physician

Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium?

Automatic premium loan

Any insurance agent who engages in the insurance business and violates the Code with respect to insurance replacement shall on the first violation

Be fined a sum of $1,000.

All of the following are requirements of eligibility for Social Security disability income benefits EXCEPT

Being age 65.

If a loss occurs, insurance policies pay the proceeds to

Beneficiary

The purpose of managed care health insurance plans is to

Control health insurance claims expenses.

The rider that may be added to a Disability Income policy that allows for an increase in the benefit amount under certain conditions is called

Cost of Living (COLA).

Creditable coverage includes

Coverage under a state health benefits risk pool.

Which of the following is NOT a legitimate use of annuities by businesses?

Creating a tax shelter

Which of the following would be the beneficiary in credit life insurance?

Creditor

Under which of the following employer-provided plans are the benefits taxable to an employee in proportion to the amount of premium paid by the employer?

Disability income

Which of the following statements about occupational vs. nonoccupational coverage is TRUE?

Disability insurance can be written as occupational or nonoccupational.

An insured has the right to return the new insurance policy for a full refund during the

Free-look period

In the state of California, who selects the Insurance Commissioner and for how long?

General election, for no more than two four-year terms

You did not enroll in Medicare Part B when you first became eligible. Which of the following would allow you another opportunity to enroll?

General enrollment period

How are HMO territories typically divided?

Geographic areas

A new employee who meets HIPAA eligibility requirements must be issued health coverage on what basis?

Guaranteed

In insurance transactions, fiduciary responsibility means

Handling insurer funds in a trust capacity.

A married couple owns a permanent policy which covers both of their lives and pays the death benefit only upon the death of the first insured. Which policy is that?

Joint Life Policy

Concerning Juvenile Life insurance, which of the following statements is INCORRECT?

Juvenile Life is classified as any life insurance purchased by a minor.

A set of legal or regulatory conditions that affect an insurer's ability to collect premiums commensurate with the level of risk incurred would be considered a(n):

Legal Hazard

All of the following are true regarding the Medical Information Bureau (MIB) EXCEPT

MIB reports are based upon information supplied by doctors and hospitals.

A Medicare SELECT policy does all of the following EXCEPT

Prohibit payment for regularly covered services if provided by non-network providers.

All of the following are the responsibilities of every long-term care insurer in California EXCEPT

Provide enough business to solicit long-term care insurance.

Insurers may change which of the following on a guaranteed renewable health insurance policy?

Rates by class

Which of the following insurance options would be considered a risk-sharing arrangement?

Reciprocal

Regarding health insurance premiums, all of the following statements are true EXCEPT

Substandard risks are not insurable and are always rejected.

Which of the following would basic medical expense coverage NOT cover?

Surgeons's services

Which of the following is called a "second-to-die" policy?

Survivorship life

Which of the following entities may NOT be an insurer?

The commissioner

Which of the following is NOT a feature of a guaranteed renewable provision?

The insurer can increase the policy premium on an individual basis.

Which of the following is true regarding elimination periods and the cost of coverage?

The longer the elimination period, the lower the cost of coverage

Not all losses are insurable, and there are certain requirements that must be met before a risk is a proper subject for insurance. These requirements include all of the following EXCEPT

The loss may be intentional

If an insurer issued a policy based on the application that had unanswered questions, which of the following will be TRUE?

The policy will be interpreted as if the insurer waived its right to have an answer on the application.

Which of the following is NOT the purpose of HIPAA?

To provide immediate coverage to new employees who had been previously covered for 18 months

The insurer must be able to rely on the statements in the application, and the insured must be able to rely on the insurer to pay valid claims. In the forming of an insurance contract, this is referred to as

Utmost good faith.

A Return of Premium term life policy is written as what type of term coverage?

increasing

Who is the beneficiary in a credit health policy?

lending institution

Charges for services provided through a HICAP agency are

never made to the client

Which renewal provision(s) must be included in a long-term care policy issued to an individual?

noncancellable and guaranteed renewable

An insured decides to surrender his $100,000 Whole Life policy. The premiums paid into the policy added up to $15,000. At policy surrender, the cash surrender value was $18,000. What part of the surrender value would be income taxable?

$3000

An insured is covered under 2 group health plans - under his own and his spouse's. He had suffered a loss of $2,000. After the insured paid the total of $500 in deductibles and coinsurance, the primary insurer covered $1,500 of medical expenses. What amount, if any, would be paid by the secondary insurer?

$500

Which of the following is NOT allowed under the no-loss/no-gain provision?

Pre-existing Condition exclusion

What is the penalty for IRA distributions that are below the required minimum for the year?

50%

How long does the initial enrollment period for Medicare Part B last?

7 months

How many eligible employees must be included in a contributory plan?

75%

The maximum amount than can be contributed to an MSA is what percentage of the family deductible for those with family coverage?

75%

Jason is insured under his employer's group health insurance. He splits the cost of the premiums with his employer. This is an example of

A contributory plan.

The protection of the insurer from adverse selection is provided in part by

A profitable distribution of exposures.

Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. What contract characteristic does this describe?

Adhesion

An agent is acting ethically in all of the following situations EXCEPT

Always representing the insured.

Assuming that all of the following people are covered by a High Deductible Health Plan and are not claimed as dependents on anyone's tax returns, which would NOT be eligible for a Health Savings Account?

Amanda is 67 and is covered by a basic medical expense policy

When an insured incurs medical expenses during the last 90 days of a calendar year, the Carry-Over Provision allows them to

Apply such expenses to the new year's deductible.

Which of the following is true regarding inpatient hospital care for HMO members?

Care can be provided outside of the service area.

Which of the following elements in an Indexed Universal Life policy is tied to an index?

Cash values

If a Medicare insured uses a non-participating in Medicare physician, he or she may be asked to sign a private contract. Which of the following conditions will NOT apply when the insured signs a private contract with the provider?

Claims shouldnt be submitted to medicare

What term is used to describe when the medical caregiver provides services to only members or subscribers of a health organization, and contractually is not allowed to treat other patients?

Closed panel

Making use directly or indirectly of any methods of marketing which fail to disclose in a conspicuous manner that a purpose of the method of marketing is solicitation of insurance and that contract will be made by an insurance agent or insurance company is known as

Cold lead advertising

A business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of additional assets to secure the loan. The business owner then decided to use her $250,000 life insurance policy to secure the loan. Which provision makes this possible?

Collateral assignment

An insured and his wife are both involved in a head-on collision. The husband dies instantly, and the wife dies 15 days later. The company pays the death benefit to the estate of the insured. This indicates that the life insurance policy had what provision?

Common disaster

Maurice's health insurance plan covers practically all types of medical expenses. Maurice's insurer provides first-dollar coverage for basic benefits, but applies a deductible for major benefits and then pays 80/20 coinsurance. What type of coverage does Maurice have?

Comprehensive major medical

Which of the following terms is used to name the nontaxed return of unused premiums?

Dividend

Which of the following plans offers a limited choice of health care providers?

EPO

The insurance policy, together with the policy application and any added riders form what is known as

Entire contract.

Which of the following best describes the aleatory nature of an insurance contract?

Exchange of unequal values

An association could buy group insurance for its members if it meets all of the following requirements EXCEPT

Has at least 50 members.

Which of the following types of LTC is NOT provided in an institutional setting?

Home health care

Units with the same or similar exposure to loss are referred to as

Homogeneous

Upon the submission of a death claim under a life insurance policy, when should the insurer pay the policy benefit?

Immediately after receiving written proof of loss

In which of the following locations would skilled care most likely be provided?

In an institutional setting

A typical Accidental Death & Dismemberment policy covers all of the following losses EXCEPT

Income

Who will be affected by the share of cost requirement for Medi-Cal?

Individuals whose income exceed the Medi-Cal limit

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

Interest only option

Which of the following statements best describes the effect the Accelerated Benefit provision would have on the benefits paid to the beneficiary?

It will decrease the benefits paid to the beneficiary.

Shortly after a replacement transaction on a Medicare supplement policy, the insured decided to cancel the policy, but is unsure whether the free-look provision applies. The insured could find that information in the

Notice Regarding Replacement

Based on Human Life Value Approach, which of the following is NOT used to calculate an individual's life value?

Predicted needs of the family after the insured's death.

To achieve the profitable distribution of exposures,

Preferred risks and poor risks are balanced, with average risks in the middle.

Which of the following is NOT among the goals of a Medicare supplement application?

Presuming the applicant is eligible for Medicaid, based on the nature of the policy

All of the following are actual deductibles found in medical insurance policies EXCEPT

Replacement

Blue Cross and Blue Shield organizations are

Service Organizations

The annual contribution limit of a Dependent Care Flexible Spending Account is set by

The IRS

What is the "elimination period" under a long term care policy?

The amount of time during which no benefits will be paid.

If a life insurance policy has an irrevocable beneficiary designation,

The beneficiary can only be changed with written permission of the beneficiary.

Which of the following describes the tax advantage of a qualified retirement plan?

The earnings in the plan accumulate tax deferred.

The importance of a misrepresentation is determined by

The materiality of a given concealment.

Which of the following definitions would make it easier to qualify for total disability benefits?

The more liberal "own occupation"

What is the advantage of reinstating a policy instead of applying for a new one?

The original age is used for premium determination

Which of the following is true regarding a market value adjusted annuity?

The owner is guaranteed a fixed interest rate for a specific period of time.

Which of the following determines the cash value of a variable life policy?

The performance of the policy portfolio

What do living benefit riders do?

They pay part of the policy death benefit to insureds in order to help them fund long-term care or nursing home care.

All of the following are true regarding the guaranteed insurability rider EXCEPT

This rider is available to all insureds with no additional premium.

California law requires an insurance company's dividends be credited

To participating policies on the anniversary date of the policy provided all premiums are current.

Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit?

Universal Life option A

How long will the beneficiary receive payments under the single life settlement option?

Until the beneficiary's death

When an employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy, this is called a(n)

executive bonus

If one takes Social Security retirement benefits at age 62, what needs to be done at age 65 to qualify for Medicare?

nothing

Which of the following is the most common time for errors and omissions to occur on the part of an insurer?

policy delivery

All of the following are examples of risk retention EXCEPT

premiums

How can insurers obtain information on an applicant's avocations and the way they will affect a risk?

through the use of a questionnaire

Which is NOT true regarding an insured who is considered to be a standard risk?

The insured may have to pay slightly higher premiums.