Life & Health Final #2
Which of the following is incorrect regarding life insurance benefit settlements?
They must be decided at the time of application
What type of insurance is sold at the airport?
Travel Accident insurance
According to the California Insurance Code, if a company's Certificate of Authority is revoked, the Commissioner may do any of the following EXEPT
Use Guarantee Association funds to pay salaries
If an insurance company knowing allows one of its life agents or brokers to guarantee interest income to an insured on one of its policies, the Department of Insurance can do all of the following EXCEPT
Use the Insurance Guarantee Association to pay the salaries of employees
Which factor differentiates a deferred annuity from an immediate annuity?
When the annuity is paid
By government standards, retirement starts
When unreduced benefits are paid
If an employee has as term life insurance policy of $50,000 what is the maximum that can be written for his spouse?
$50,000
After the deductible is paid, the Medicare Part B enrollee pays:
.20 (highest number)
A person has a $100,000 life insurance contract. He passed away after having paid $500 in premium. How much tax will the beneficiary need to pay?
0%
Violating the Federal law that prohibits certain acts in the business of insurance is punishable by imprisonment for up to:
10 or 15 years
If the owner of an annuity makes a withdrawal from it before age 59 1/2, what will the penalty be?
10%
What is the tax rate on money received from a Modified Endowment Contract?
10% (lowest number)
How many medicare supplement (medigap) plans are there?
10, plus 2 high deductible plans
Doris, who is 30 years old, misstates her age on a life insurance application as being 25 years old so she could pay $10/$1,000 as opposed to the 30 years old rate of $12/$1,000. Several years later, when the insurer catches the misstatement of age, how will the difference in premium be adjusted for?
10/12 the value of the benefit
What percentage of employee contributions to a 401k plan are vested?
100%
By state law, how many weeks is an employee entitled to for maternity leave after giving birth?
12 weeks
How many days of unpaid leave are allowed in one year (under FMLA)?
12 weeks
If an employee elects to continue group health coverage under COBRA after a qualifying event, how long must the employer continue coverage for that employee under COBRA and what percentage of the premium can the employee be required to pay?
18 months/102%
What is a senior's age as it pertains to life and annuities?
60
Under California Sate Law, when does an insurance agent consider someone an elder?
65
If a life settlement arrangement between a policy owner and a life settlement provider, how would the policy owner typically be paid?
A LUMP SUM payment
All of the following statements apply to a producer acting as an insurance BROKER (as distinguished from an insurance AGENT), EXCEPT
A broker ACTS ON BEHALF OF THE INSURER
A "unilateral contract" is the issuance agreement that is
A contract issued by the insure and accepted by the insurer
When an agent shows life illustration to a senior, which of the following can be used in the illustration?
A disciplined current scale interest rate
Which type of beneficiary designation gives the policy owner the right to change the beneficiary designation without requiring the beneficiary's consent?
A revocable beneficiary designation
Unde the Family & Medical Leave At (FMLA), all of the following reasons would entitle an eligible employee up to 12 weeks of unpaid leave each year EXCEPT
A woman deciding to take a leave from her job so that she can travel with her husband while he's overseas on a work assignement
NAIC reporting frequency for insurer financial statements is:
Annually
If a dependent child covered by a group life plan is incapable of self support, coverage under the plan may continue up to age
Any age
The Pregnancy Discrimination Act requires:
Any health insurance provided by an employer must cover expenses for pregnancy related conditions on the same basis as costs for other medical conditions
Which of the following will be automatically deemed qualified as life settlement broker as if the person were originally licensed as a life settlement broker or provider?
Anyone licensed as a Viatical Settlement Broker as of December 31, 2009
Under ADA all of the following are classified as disabilities EXCEPT
Asthma
According to Social Security, when can an individual receive retirement benefits?
At 62
Collateral assignments on life policies are most often used for:
Bank loans
IF a life insurance producer who has not held a life license for at least one year wishes to act as a broker in arranging life settlements, what must she first do?
Complete 15 hours of required education on life settlement transactions and submit an application for a Life Settlement Broker license along with the applicable fee
A commonly used cost containment measure for emergency hospital care under a major medical expense plan is:
Deductible
What is the first step in the personal financial planning process?
Define objectives
Which government agency would possibly provide coverage if you ran out of coverage under your own health insurance?
Department of Health Care Services (DHCS)
A method of selling insurance by using mass media advertising is known as:
Direct Response
What rider doubles that face amount of the policy?
Double Indemnity Rider
Not being able to do any of the following activities would be considered a disability, EXCEPT
Driving
Under the consolidated Omnibus Budget Reconcilation Act (COBRA), how many months of coverage is available?
Eighteen months
What type of annuity has a minimum fixed interest rate and can also achieve stock market like gains?
Equity Indexed annuity
In a group insurance policy, acts of war and aviation are considered examples of:
Exclusions
The 'Vision Care' plan coverage includes all of the following:
Eye Surgery
A Washington State resident who is licensed insurance agent in Washington wants to sell insurance in California. How is he able to sell insurance in California?
File for an out of state (non resident) insurance license in California
Specified disease insurance covers all of the following EXCEPT
Food
The Department of Insurance has jurisdiction over all of the following EXCEPT
HMOs
When applying for health insurance which of the following on the application is NOT an acceptable question to answer?
How do you think your health is there days?
Which of the following is true regarding an aleatory contract?
If there were a loss, the insurer would pay out considerably more compared to the insured's premium
The period of time medical benefit payments can be received by a disabled worker is:
Indefinitely
How to most disability plans categorize their benefits?
Initially own occupation, then any occupation
Medicare Part A will send a statement to which of the following?
Insured
As it pertains to life settlement transactions, all of the following are acceptable reasons of the insured's identity and personal financial and medical information to be disclosed, EXCEPT
It is necessary for the issuer of the policy to be settled to determine if they will allow the life policy to be assigned from the owner to the provider
Which of the following is NOT a cost of insurance?
Legal requirements
According to the California Insurance Code, a binder is a valid insurance policy for the purpose of providing the insured has insurance coverage specified in the binder for all of the following classes of insurances EXCEPT
Life
All of the following are benefit time periods for benefits with social security except?
Lifetime
How does a Medicare claim get started?
MEDICAL PROVIDER contacts MEDICARE
Hospital Indemnity Insurance provides money for all of the following EXCEPT
Medical expenses
Disability insurance benefits are usually paid:
Monthly
What uses the law of averages to determine life rates?
Mortality table
What would be the least confusing from for naming your beneficiary?
My son Arthur and my daughter Elena
The insurance term used for an insurer who has not compiled with the requirements to obtain a certificate of authority from the California Insurance Commissioner is:
Nonadmitted
As long as they are representing only the owner and are not being paid directly or indirectly by the Provider, what must attorneys, CPAs and financial planners do to be properly licensed to negotiate life settlement contracts on behalf of owners?
Nothing needs to be done as these professionals are allowed by the insurance code to negotiate life settlement contracts on behalf of owners without having to obtain a license as a broker
If a life insurance producer who has been licensed as a life agent (or a licensed non resident producer) in California for one year or longer and wishes to act as life settlement broker, he must do what?
Notify the Commissioner within 10 days of first operating as a Life Settlement Broker and submit the applicable fee to the Department of Insurance
When an insured report a loss, the agent becomes obligated by the California Code of Regulations to:
Notify the insurer immediately
Under the ADA, which of the following would not be considered a disability?
Obesity
Which of the following would not be considered a disability under the Americans with Disabilities Act?
Obesity
If the insured intentionally submits a fraudulent claim, what could the insure be charged with?
Perjury
As used in the California Insurance Code, the work "may" means which of the following?
Permissive
The CLHIGA covers all of the following types of insurance EXCEPT
Plate glass
Life insurance must included all of the following in the Financial Statement EXCEPT:
Policy Summary Description
Under the California Code of Regulations, all of the following would be considered proof of claim EXCEPT:
Public Adjuster's letter of representation
A distribution made from which of the following plans would be a non taxable distribution?
Roth IRA
As it pertains to insurance, which of the following is included in the definition of execution of a policy
Signing a binder
After more than 6 months since an insured received disability benefits under his disability income policy, he makes a claim for the same disability again. This will:
Start another elimination period
How much continuing education is an agent who holds the life only and/or accident & health license AND property and/or casualty broker agent license required to complete?
TWENTY FOUR hours per license term for EITHER license
Insurance negatively affects society in all of the following ways EXCEPT
Takes away capital that could be used for other things
Which of the following would not be considered a qualifying event under Cal-COBRA
Termination (regardless of conduct)
Under cal-COBRA all of the following would be considered qualifying events EXCEPT
Termination, regardless of conduct
An agent's appointment to sell insurance for an insurer is subject to cancellation if:
The agent fails to renew his license
What happens to an employee's group health benefits while he is on leave from work under FMLA?
The benefits will CONTINUE while the employee is on leave
Any time a long term care policy replaced, the sales commission paid to the agent by the insurer shall be calculated based on:
The difference between the annual premium of the replacement coverage and that of the original coverage
When a credit is requested by the insurer, the report is sent directly to:
The insurer
What happens to an agent's license after all notice of appointments have been terminated?
The license is considered to be inactive
Determination of a worker's insured satis for Social Security uses:
The number of quarters worked
A life settlement broker earns a commission and/or fee for the work he/she does on whose behalf?
The owner
Which statement best describes how the Return of Premium (ROP) rider works on a term life policy?
The policy owner will receive all or a portion of the premiums paid in over the life of the policy if the insured is still living at the end of the policy's term
When an employee has group term life insurance provided by his employers, how will the policy proceeds paid to the employee's beneficiary be taxed?
The policy proceeds will GENERALLY BE TAX FREE TO THE BENEFICIARY
When an eligible worker dies, all of the following may be entitled to survivors benefits through social security EXCEPT
The worker's 41 year old widow
What is the main purpose of HICAP?
To provide free counseling to help the elderly and their families understand their Medicare rights and benefits, Medicare supplement insurance and long term care insurance
A life agent must maintain all of the following EXCEPT
Trust account bank statements, if any
In group health insurance underwriting, which factory ells determine an employer's stability and persistency rate?
Type of Industry involved
A life settlement between a policy owner and a provider mud closely reusables which of the following?
Viatical settlement
Under the Americans with Disabilities Act, all of the following would be considered a disability, EXCEPT
Wearing glasses
The correct statement regarding the federal income tax consequences of an insured corporate buy sell agreement is:
When stock is purchased from a deceased stockholder under a cross purchase plan, there will be an increase in the purchasing shareholder's basis in their stock in the corporation
In financial planning, what is the Needs Approach concept based on?
Family's needs
If an agent has several different licenses, which would be required on all printed material?
Only one license number
All of the following health providers are physicians EXCEPT
Optometrists
What is the most liberal definition of disability?
Own occupation
What is a typical disability provision for group disability policies?
Own occupation for a short period, then ANY occupation
What is the PCIP?
PPACA created program to assist people who did not qualify for private insurance because of a pre-existing condition
Which plan is most likely to pay benefits of 90% for in-network providers and 70% for out of network providers?
PPO
For the following classes of services all are under the jurisdiction of the DO EXCEPT
Acupuncture
The tendency of a person who has greater than average exposure to loss to seek out insurance is called:
Adverse selection
Which of the following actions would not fall under the definition of execution of a policy?
Advertising
Who must submit a signed statement saying that an illustration is used?
Agent and Applicant
How does an individual become eligible for MRMIP coverage?
All of the above are ways to be eligible for MRMIP
What is the amount of money hat an insurance company needs to have on file to be a valid/solvent business?
$1,000,000
An inured has a disability income policy that pays $1500/month with a 30 day elimination period. He is disabled for 120 days. His policy has paid benefits totaling:
$4500
What maximum amount of employer provided group term life insurance is tax free (excluded from an employee's income)?
$50,000
What are the tax consequences for the Roth IRA
(Non-deductible, tax free)
The free lock period for life insurance is
10 - 30 days
In a qualified benefit pan with a 5 year vesting schedule, employer contributions are vested at what percentage at 5 years?
100%
If a policy has a 90 days elimination period when will a check be cut
121 day
The initial enrollment period of Medicare Plan B ends how many months after the 65th birthday month?
3 months
An annuitant dies after being paid monthly income for 5 years from an annuity where the settlement option is life income with a 10 year period certain. How many payments are left to the beneficiary?
60 payments
In a 5 year vesting schedule, what percentage is vested after 4 years?
80%
The following qualify for the Access for Infants and Mothers (AIM) public coverage program EXCEPT
A pregnant woman who has an insurance deductible of $500
A married couple has a handicapped child that depends on them for caretaking. If one of the parents dies it will not put a significant financial strain on the family. If both parents die, there will be a significant financial program. Of the following, which is the best insurance produce to deal with this situation.
A survivor policy (second to die)
Upon notification of a claim, a claimant ma yahve access to the California Fair Claims Settlement Practices Regulations through all of the following means EXCEPT
An interview appointment with the agent of record
Which is an example of a third party administrator?
An outside company hired by the company to review claims
How often MUST life insurance surplus be distributed to policy owners?
Annually
Which contract provides of the systematic liquidation of a fund?
Annuity
The premium loan rider on a life insurance policy kicks in:
At the end of a grace period
If an individual qualifies for MRMIP but is put on a waiting list, what priority will be used as the basis for which individuals are chosen to become enrolled?
Based on date of completed application
Who runs PCIP?
California is one of the states that runs PCIP
An insured has a disability insurance policy and he changes to an occupation with less risks than the previous one. His insurer will:
Change the premium to a lesser amount
Under the ADA, which of the following is an activity of daily living?
Eating
What is an ESOP?
Employee Stock Ownership Plan
What is PPACA?
FEDERAL statute (Patient Protection & Affordable Care Act)
All of the following are under the jurisdiction of the Department of Insurance EXCEPT
HMOs
If a licensee needs to renew his license on his last day of renewal:
He can apply and pay the renewal fee online and get a receipt so that he can continue operating as an agent
Which provision best protects an insurer from adverse selection?
Illness waiver
In financial planning, what is the Human Life Value concept based on?
Income
Which of the following provisions can protect an insurance company from a lawsuit before they have time to investigate a claim?
Incontestability
In health insurance, the result of a rise in morbidity rates is:
Increased premiums
Which organization designs standard insurance policy forms?
Insurance Services Office (ISO)
Creditors have rights to insurance policy proceeds of the beneficiary is:
Insured's estate
How is Medical Loss Ratio used?
It lets consumers know how much money an insurer is paying out in claims and how much it uses to cover its administrative costs and profits
The following classes of service are all under the jurisdiction of the DO EXCEPT
Lasik
How are MRMIP services delivered?
Licensed health service
When notifying the insured of a policy information change, the California Insurance Code rules that notification must be sent by:
What does MRMIP stand for?
Major Risk Medical Insurance Program
The monthly premium for MRMIP is based on all of the following factors for the individual EXCEPT:
Marital Status
In a life insurance policy issued after 1988, failure to pass the 8 pay test results in:
Modified endowment contract
Is a person with Medicare A & B eligible for MRMIP?
No
What is the cost of service from the Health Insurance Counseling and Advocacy Program (HICAP)
No charge
Is a person who is eligible for Medicare A & B eligible for MRMIP?
No, unless that individual as END STAGE RENAL DISEASE
What government regulation prevents retirement plans from favoring highly compensated employee?
Non-discrimination
What document informs the insurance applicant bout their rights to information privacy?
Notice of Information Practices
What is an Eleatory contract?
Performance of one or both parties to the contract based upon the occurrence of a particular event
Direct Response marketing uses all of the following EXCEPT
Phone calls from agents
If an insurer must have its rates accepted by the Department of Insurance prior to using them, then the insurer would be under which jurisdiction?
Prior approval
All of the following are included in mortality tables, EXCEPT
Probability of living at the end of year
The purpose of the state insurance laws include everything EXCEPT
Rate determination
What is ERISA about for group health insurance?
Reporting and disclosure
What is the performance of an Equity index annuity based on?
S & P 500
What is MRMIP
STATE program that PROVIDES HEALTH INSURANCE to individuals with PRE-EXISTING conditions
Vision insurance usually limits in all of the following ways EXCEPT for
Specified dollar amount for examination
PPACA created the Health Benefit Exchange:
That created entities such as the American Health Benefit Exchange for the benefit of small companies, employers and individuals who are unable to obtain health insurance in the insurance market
If an applicant completes the PCIP/MRMIP application and qualifies for both the PCIP and MRMIP programs, but does not indicate a preferred program on the application, which course of action will be taken?
The applicant will AUTOMATICALLY be enrolled into the PCIP program
How does the cost recovery apply to a whole life policy that is surrendered for cash value?
The cost of the cash value is exempted from tax
The California Insurance Code dictates good faith communication in insurance contracts and claims. The parties to the contract include all of the following EXCEPT:
The state
Life insurance policies are:
There are no standard life insurance policies
Are low income families eligible to participate in the California Health Benefit Exchange program?
YES, USING TAX CREDITS and if the LOW INCOME FAMILY/INDIVIDUAL'S INCOME is between 133-140% of the federal poverty level
Can an annual premium for an MRMIP policy go up?
Yes
Does the MRMIP allow participants to include coverage for their dependents?
Yes
Does MRMIP have a cap on annual and lifetime benefits?
Yes, $75,000 annual, and $750,000 lifetime (highest choice)
The PCIP has a pre set end date:
Yes, December 31, 2013 (31, 13)!, when national health reforms go into effect
An individual wants to submit an application to the MRMIP, be he is not currently eligible. Can he enroll?
Yes, if his employer is in the process of going out of business and he will be eligible after the company becomes insolvent and his employer provided health coverage ends
