Missed
What is it called when a doctor accepts the Medicare approved amount?
Assignment
In whole life insurance, when is the policy cash value scheduled to equal the face amount?
At the insured's age 100
Which of the following is an example of a physical hazard?
Diabetes - Physical hazards are individual characteristics that increase the chances of the cause of loss and exist because of a physical condition, past medical history, or a condition at birth, such as blindness.
20-year level term policy?
Do not develop cash values, If the insured dies before the policy expired, the beneficiary will receive benefits. The policy will expire at the end of the 20-year period. The policy premiums will remain level for 20 years.
When is the annual open enrollment for state insurance exchanges?
November 1 through January 31
Among people in the same class and life expectancy, which of the following factors can be used to influence premium rates?
Occupation
What is a definition of a unilateral contract?
One-sided: only one party makes an enforceable promise —-that only one of the parties to the contract is legally bound to do anything.
Under which of the following organizations are the practicing providers compensated on a fee-for-service basis?
PPOs
The causes of loss insured against in an insurance policy are known as
Perils
Medicare Part B covers
Physician's and surgeon's services
If a health care plan has characteristics of an HMO and PPO, what type of plan is it?
Point-of-Service (POS)
All of the following are true of annually renewable term insurance EXCEPT
Proof of insurability must be provided at each renewal.
Fixed-period installments is
a settlement option, and not one of the dividend options.
The Single Life Option provides
a single beneficiary with income for the rest of his/her life.
Basic medical expense coverage offers
a wide range of limited benefits that typically result in high out-of-pocket costs. Basic medical expense coverage provides coverage for nonsurgical services a physician provides and can be used for emergency accident benefits, maternity benefits, mental and nervous disorders, hospice care, home health care, outpatient care, and nurses' expenses.
Executive bonus
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 an executive bonus.
An insured has a life insurance policy in the amount of $250,000 naming his wife as beneficiary. Upon his death, his beneficiary decides not to receive the death benefit for some time. When she finally receives the death benefit check, it's in the amount of $250,530. Is any portion of the proceeds that the beneficiary receives taxable?
Yes, proceeds in excess of face amount are taxable as interest.
Within how many days after the application was submitted must an insurer file a notice of agent appointment with the Commissioner if the insurer issues a policy written by the agent who is not specifically appointed by that insurer?
14 days
Every small employer carrier must actively offer to small employers at least how many health benefit plans?
2 plans - One plan offered by each small employer carrier must be a basic health benefit plan, and one plan must be a standard health benefit plan.
In order to qualify for conversion from a group life policy that has been terminated to an individual policy of the same coverage, a person must have been insured under the group plan for how many years?
5
What is the penalty for IRA distributions that are below the required minimum for the year?
50%
An IRA uses immediate annuities to pay out benefits; the IRA owner is nearly 75 years old when he decides to collect distributions. What kind of penalty would the IRA owner pay?
50% tax on the amount not distributed as required
How long is the grace period for an individual life insurance policy in California?
60 days
Which of the following is the required number of participants in a contributory group 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% of the family deductible for those with family coverage. Nonqualified distributions have a 20% penalty tax.
Considering the principles of liquidity, how would the policyowner use today's cash values in a life insurance policy?
Use it for emergency expenses
ADA
"A physical or mental impairment which substantially limits one or more major life activities, or a record of such impairment, or being considered as having such an impairment,"
Any insurance agent who engages in the insurance business and violates the Code with respect to insurance replacement shall on the first violation?
$1000
An employee will be taxed on the cost of group life insurance paid by the employer if the amount of coverage exceeds
$50,000
Because of the history of cancer in her family, Julie purchased a policy that specifically covers the expense of treating cancer. Her policy would be classified as what type of policy?
A Dread Disease Policy is a limited policy that is written to specifically cover cancer expense.
A hospital indemnity policy will pay
A benefit for each day the insured is in a hospital.
Intermediate care
A level of care that is one step down from skilled nursing care; provided under the supervision of physicians or registered nurses. level of care for patients who require more assistance and custodial care may require nursing supervision but do not need true skilled care
What is the calmedicare site used for.
A list of local HICAPs for each county in California is provided through www.calmedicare.org, a DOI approved Medicare information website which gives accurate and unbiased information about Medicare benefits for residents of California.
According to the life insurance replacement regulations, which of the following would be an example of policy replacement?
A policy is reissued with a reduction in cash value
A deductible is
A specified dollar amount that the insured must pay first before the insurance company will pay the policy benefits.
Which of the following is NOT an allowable 1035 exchange?
A whole life insurance policy is exchanged for a term insurance policy.
What are the consequences of a failure to comply with the Commissioner's office while it is executing a seizure order?
AIt is a misdemeanor punishable by a fine of $1,000, one-year imprisonment, or both.
The underwriting unit, when considering risk factors for individual and group disability insurance, will review the "carrier history" of the group. Which factors might the underwriters consider?
AStability BLongevity CPrice Shopping ( These factors would deal with how many different carriers have been used by this group in the past. Are they loyal to the insurer and agent? Is price an issue? Typically, the shorter the time with a particular carrier, the higher the rate.)
All of the following are dividend options
Accumulated at interest c) Reduction of premium. d) Paid-up additions.
An insurer has been found guilty of a Code violation regarding replacement. The insurer then repeats the violation. What will be the minimum penalty?
Additional violations of the replacement article by an insurer will result in increased fines ($30,000 to $300,000). The Commissioner may suspend or revoke the license of any person or entity that violates this article.
ADA
Americans with Disabilities Act.
How long is an open enrollment period for Medicare supplement policies?
An open enrollment period is a 6-month period that guarantees the applicants the right to buy Medigap once they first sign up for Medicare Part B.
Which of the following is a short-term annuity that limits the amounts paid to a certain fixed period or until a certain fixed amount is liquidated?
Annuity certain
Modified Endowment Contract
Any cash value life insurance policy that develops cash value faster than a seven-pay whole life is a —— It loses the benefits of a standard life contract. All withdrawals are subject to taxation on a LIFO basis, and if withdrawals are made earlier than the age of 59½, a 10% penalty is imposed.
Which of the following is NOT true of Section 1035 Policy Exchanges?
Any exchange made under Section 1035 of the Internal Revenue Code must be completed within 30 days
Which of the following is NOT true of Section 1035 Policy Exchanges?
Any exchange made under Section 1035 of the Internal Revenue Code must be completed within 30 days.
How can a new physician be added to the PPO's approved list?
Any physician or hospital that qualifies for and agrees to follow the PPO's standards and charges the established fees can be added to the PPO's approved list at any time. The providers may withdraw their name from the list at any time, as well.
Who is eligible to purchase an IRA?
Anyone under the age of 70 1/2 who has earned income
If an insured is unhappy regarding his or her Medicare services, what may he or she do?
Appeal the decision (If Medicare does not pay for an item or service an insured has been given the insured may appeal that decision. The insured may also appeal if he/she does not receive an item or service he/she thinks should be given to him/her.
Employer contributions made to a qualified plan
Are subject to vesting requirements
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
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.
Any insurer 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 $10,000
An agent selling variable annuities must be registered with
Because variable annuities are considered to be securities, a person must be registered with the FINRA (formerly NASD) and hold a securities license in addition to a life agent's license in order to sell variable annuities.
An individual is insured under his employer's group Disability Income policy. The insured suffered an accident while on vacation that left him unable to work for 4 months. If the disability income policy pays the benefit, which of the following would be true?
Benefits that are attributable to employer contributions are fully taxable to the employee as income. (In a plan funded entirely by the employer, income benefits are included in the employee's gross income and taxed as ordinary income.)
Which statement below is INCORRECT regarding the type of term insurance that fits best with the applicant's needs? a) Applicants wishing to pay off a mortgage should they suffer a premature death might buy a decreasing term plan. b) Employers looking to provide cost effective group life insurance for their employees may choose annual renewable term. c) Applicants who may require a larger death benefit in the future should buy convertible term insurance. d) Applicants concerned with the increasing cost of living should purchase increasing term.
C - Convertible term converts to a cash value policy with the same death benefit but at a higher premium.
Which of the following statements is CORRECT concerning the relationship between Medicare and HMOs?
HMOs may pay for services not covered by Medicare.
An insured receives an annual life insurance dividend check. What term best describes this arrangement?
Cash option
When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following?
Consideration is something of value that each party gives to the other. The consideration on the part of the insured is the payment of premium and the representations made in the application.
A whole life policy is surrendered for a reduced-paid up policy. The cash value in the new policy will
Continue to increase.
Which of the following is NOT allowed in credit life insurance?
Creditor requiring that a debtor buys insurance from a certain insurer
The following health insurance disability benefits ARE income tax free
Employee-paid group disability Key-person disability benefits. Personally-owned individual disability insurance.
The following health insurance disability benefits are NOT income tax free
Employer-paid group disability.
The provision which states that both the policy and a copy of the application form the contract between the policyowner and the insurer is called the
Entire contract. (limits the use of evidence other than the contract and the attached application in a test of the contract's validity. This is a mandatory provision in life insurance.
What is the difference between the Medicare approved amount for a service or supply and the actual charge?
Excess charge
Factual statements about the insured or the risk in an insurance policy are considered
Express warranty.
An applicant may challenge information discovered as a result of an investigative consumer report under which of the following Acts?
Fair Credit Reporting Act
An insured has a Modified Endowment Contract. He wants to withdraw some money in order to pay medical bills. Which of the following is true?
He will have to pay a penalty if he is younger than 59½.All withdrawals are subject to taxation on a LIFO basis, and if withdrawals are made earlier than the age of 59½, a 10% penalty is imposed.
Medical Savings Accounts (MSAs) are available to small business employees and self-employed individuals who have
High deductible health insurance. Participants in a medical savings account cannot have Medicare or any other health coverage that is not a high deductible health plan.
All of the following are covered by Part A of Medicare
Home health services. In-patient hospital services. Post-hospital nursing care.
The key factor of representation that allows the injured party to rescind the contract is
If a representation is false in a material point the injured party is entitled to rescind the contract from the time the representation becomes false.
After a cease and desist order is final, if the Commissioner finds that the person has continued to willfully violate the insurance code, what penalty may be applicable in addition to initial penalties?
If the Commissioner has reason to believe that a person has violated a cease and desist order after the order has become final, the Commissioner may, after a hearing at which it is determined that the violation was committed, order that person to pay a sum not to exceed $5,000 which may be recovered in a civil action. If the violation is found to be willful, the amount of the penalty may be a sum not to exceed $55,000.
What type of insurance would be used for a Return of Premium rider?
Increasing Term
What type of insurance would be used for a Return of Premium rider?
Increasing Term is achieved by using increasing term insurance. When added to a whole life policy it provides that at death prior to a given age, not only is the original face amount payable, but also all premiums previously paid are payable to the beneficiary.
Which insurance principle states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost?
Indemnity
To purchase insurance, the policyowner must face the possibility of losing money or something of value in the event of loss. What is this concept called?
Insurable interest
Which of the following is provided by skilled medical personnel to those who need occasional medical assistance or rehabilitative care?
Intermediate care
If a deferred annuity is surrendered prematurely, a surrender charge is imposed. How is the surrender charge determined?
It is a percentage of the cash value and decreases over time.
Under the Affordable Care Act, when would pregnancy be considered a pre-existing condition?
Never
The annual open enrollment period for state insurance exchanges runs from November through
January 31
In a group health policy, a probationary period is intended for people who
Join the group after the effective date ( the waiting period new employees must satisfy before becoming eligible for benefits.)
LIFO
Last In, First Out
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.
Variable Whole Life insurance is based on what type of premium?
Level fixed
The classification Small Employer means any person actively engaged in a business that on at least 50% of its working days during the preceding year employed ?
No more than 100 employees
The limits of a health reimbursement account are set by
Limits may be set by employer, and rollover at the end of the year based on employer discretion.
What does an annuity protect the annuitant against?
Living longer than expected. Annuities are contracts designed to liquidate an estate and to protect a person against outliving his or her money.
MSA
Medical Savings Account
Medical savings accounts are only available to groups of how many employees?
Medical savings accounts are only available to groups of 50 or fewer employees or a self-employed person
Which of the following statements is NOT correct regarding Medicare?
Medicare Advantage must be provided through HMOs
Which of the following statements is NOT correct regarding Medicare?
Medicare Advantage must be provided through HMOs. I can be provide both hmo and ppo
Long term care medical
Medicare and Medigap policies do not provide coverage for long-term custodial or nursing home care. Medicare will cover nursing home care if it is part of the treatment for a covered injury or illness. Medicare and Medicare supplements pay for skilled nursing care, but the coverage is limited. Medicaid does pay for nursing home care, but it provides coverage only for those that qualify with low income and low assets.
Which of the following statements is INCORRECT?
Medicare and Medigap policies provide coverage for long-term custodial or nursing home care.
Any cash value life insurance policy that develops cash value faster than a seven-pay whole life contract is called a
Modified Endowment Contract
If a life insurance policy develops cash value faster than a seven-pay whole life contract, it becomes a/an
Modified endowment contract
According to California Insurance Code, which of the following can be classified as an insurable event?
Pure risks
Insurers may change which of the following on a guaranteed renewable health insurance policy?
Rates by class (the insurer may increase premiums on a class basis only and not on an individual policy.)
An insured purchased a health insurance policy with a renewability clause that states the policy is "Guaranteed Renewable." This means that as long as the required premiums are paid, the policy will continue until the insured
Reaches age 65. (when most insured become eligible for Medicare). The insurer may adjust the premium rate by class during the time the policy is in force.
A statement made by an applicant for insurance that must be true in every respect is considered to be a
Representation.
If a basic medical insurance plan's benefits are exhausted, what type of plan will then begin covering those losses?
Supplementary major medical
Which of the following is NOT covered under Basic Hospital Expense Coverage?
Surgeons' fees
COBRA
The Consolidated Omnibus Budget Reconciliation Act of 1985 ( requires any employer with 20 or more employees to extend group health coverage to terminated employees and their families after a qualifying event.)
ERISA
The Employee Retirement Income Security Act of 1974 (ERISA)
ERISA
The Employee Retirement Income Security Act of 1974 (ERISA) was designed to establish fiduciary standards that would protect plan participants and their beneficiaries.
All of the following are fraud prevention systems and agencies
The Fraud Division within the Department enforces fraud reporting provisions; the Arson Information Reporting System helps prevent auto insurance related fraud, and the Insurance Claims Analysis Bureau collects data to help prevent claims fraud.
Medical Information Bureau (MIB)
The MIB is a membership corporation owned by member insurance companies that share adverse medical information on insureds.
If an agent currently has an inactive license, this means
The agent can still transact any insurance as authorized by that license. (
The limits of a health reimbursement account are set by
The employer (Health Reimbursement Accounts have no statutory limit. Limits may be set by employer, and rollover at the end of the year based on employer discretion.)
What method is used to determine the taxable portion of each annuity payment?
The exclusion ratio
J is receiving fixed amount benefit payments from his late wife's insurance policy. He was told that if he dies before all of the benefits are paid, the remaining amount will go to the contingent beneficiary. Which settlement option did J choose?
The fixed-amount option pays a fixed, specified amount in installments until the proceeds (principal and interest) are exhausted. The recipient selects a specified fixed dollar amount to be paid until it is gone. If the beneficiary dies before the proceeds are exhausted, installments will continue to be paid to a contingent beneficiary until all proceeds have been paid out.
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. (Former employees, including retirees, can have continued access to unused HRAs, but this is at the employer's discretion.)
If the annuitant dies before the annuity start date, which of the following is true?
The interest is taxable.
What is the period of coverage for events such as death or divorce under COBRA?
The maximum period of coverage under COBRA is 36 months, in the event of the covered employee's death or divorce.
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 is true regarding a market value adjusted annuity?
The owner is guaranteed a fixed interest rate for a specific period of time. ( also know as modified guaranteed) annuity, the insurer guarantees a competitive interest rate for a specific period (the longer the period, the better the guaranteed rate). At the end of the period, the owner has the option of taking the accumulated value or reinvesting the values at a new interest rate.)
Who is the annuity owner?
The person who purchases the annuity
Which of the following best describes the insurer's liability for losses arising from military service?
The provision on war, military and aviation risk allows the insurer to reduce or exclude liability for losses resulting from war, military or naval service, and aviation.
The exclusion ratio
The ratio of the total investment in that contract to the expected return is developed to determine the portion of the annuity payment that will be taxable and nontaxable.
For the purpose of insurance, risk is defined as
The uncertainty or chance of loss.
The amount of Social Security disability benefits is based upon the worker's Primary Insurance Amount (PIA), which is calculated from their Average Indexed Monthly Earnings over which years?
Their highest 35; lowest 5
Which of the following statements regarding deferred compensation funds is INCORRECT?
They are usually qualified plans.
A physical or mental impairment which substantially limits one or more major life activities, or a record of such impairment, or being considered as having such an impairment," is the definition of a disability according to
This is the definition of the Americans with Disabilities Act.
All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT?
This option pays for a specific amount of time only, and there are no life contingencies.
COBRA applies to employers with at least
Under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), any employer with 20 or more employees must extend group health coverage to terminated employees and their families.
What is the benefit of choosing extended term as a nonforfeiture option?
Under this option the insurer uses the policy cash value to convert to term insurance for the same face amount as the former permanent policy. The duration of the new term coverage lasts for as long a period as the amount of cash value will purchase.
Section 1035 Policy Exchanges
a) It requires an absolute assignment of the existing policy to the replacing company who surrenders the contract and issues a replacement policy. b) It is an IRS Code which permits like kind exchanges of property. c) It is typically used when exchanging or replacing a less competitive life policy with a more competitive life policy.
Simplified Employee Pension Plan is
an employer funded retirement plan for employees
Deferred Compensation Funding refers to
any employer retirement, savings, or other deferred compensation plan that is not a qualified retirement plan. Funding involves a contractual commitment between the employer and employee to pay compensation in future years. These plans are typically made with selected employees to provide additional retirement benefits.
Medical savings accounts
are only available to groups of 50 or fewer employees.
An insured becomes disabled at age 22 and can no longer work. She meets the definition of total disability under Social Security. What other requirement must the insured have met to receive Social Security disability benefits?
ave accumulated 6 work credits in the past 3 years
Group blanket health insurance policies are meant to
cover members of a group or association without evidence of insurability. Coverage is usually limited to loss from specific causes.
Basic Hospital Expense Coverage
hospital room and board, and miscellaneous hospital expenses, such as lab and x-ray charges, medicines, use of operating room and supplies, while the insured is confined in a hospital.
Definitions of an EPO.
is a type of PPO, in which the members do not choose health care providers. Instead, they use specific providers who are paid on a fee-for-service basis. Number of providers is very limited; however, they offer deeper discounts on their rates.
Inactive License
is a valid license. However, the agent does not have a current appointment on file with the Commissioner. The agent does not have an insurer that they are authorized to work for or represent and thus cannot transact any insurance business until they do get an appointment from an insurer.
A Return of Premium term life policy is written as what type of term coverage?
is an increasing term insurance policy that pays an additional death benefit to the beneficiary equal to the amount of the premiums paid.
The Waiver of Cost of Insurance rider is found in what type of insurance?
is found in Universal Life policies. If the insured becomes disabled, the rider allows the cost of insurance to be waived, with the exception of premium costs required to accumulate cash value.
Blanket Insurance Contract
is issued on those groups that have members that are constantly changing
What does Basic Medical Expense cover?
is often referred to as Basic Physicians Nonsurgical Expense Coverage because it provides coverage for nonsurgical services a physician provides. The benefits, however, are usually limited to visits to patients confined in the hospital. Some policies will also pay for office visits. There is no deductible with benefits, but coverage is usually limited to a number of visits per day, limits per visit, or limits per hospital stay.
An insurance policy has 6 requirements
it identifies the parties to the contract; the life or property of the insured; insurable interest; the risks insured against; the period during which the insurance is to continue; and the amount of premium. The insurer's financial rating is not required to be specified in the insurance policy.
Which type of care is NOT covered by Medicare?
long term care
The advantages of an HMO or PPO for a Medicare recipient
may be that there are no claims forms required, almost any medical problem is covered for a set fee so health care costs can be budgeted, and the HMO or PPO may pay for services not usually covered by Medicare or Medicare supplement policies, such as prescriptions, eye exams, hearing aids, or dental care.
Any agent violating the misrepresentation provisions is guilty of a
misdemeanor and punishable by a fine not to exceed $25,000 (for losses less than $10,000), and/or by imprisonment not to exceed 1 year. In addition, the Commissioner may suspend the license of the agent for a maximum period of 3 years.
When immediate annuities are used to pay IRA benefits, distributions must begin?
no later than age 70½ in order for the annuitant to avoid penalties. The penalty is 50% of the shortfall from the required annual amount.
Annuity certain
option allows the annuitant to select the time period or the amount of the benefits to be paid out. Under the installments for a fixed period, distribution begins on a specific date and stops on a specific date.
An insured who has an Accidental Death and Dismemberment policy loses her left arm in an accident. What type of benefit will she most likely receive from this policy?
policies pay a capital amount (a percentage of the principal amount) for the loss of one limb or loss of sight in one eye. The principal amount is paid for death or often for the loss of 2 limbs or loss of sight in both eyes. Benefits are paid in a lump sum.
Beneficiary designations determine the order in which benefits will be paid:
primary or contingent, which includes secondary and tertiary.
First Dollar Coverage refers to a type of insurance which.
provided with no deductible. The insurer pays the full amount of the loss, up to the policy limit.
Conditionally renewable
provision is very similar to the optionally renewable provision. The primary difference is that conditionally renewable policies may be canceled for specific conditions contained in the policy, but optionally renewable policies do not specify a condition or reason for cancellation.
HR-10 is designed for
self-employed individuals
The two major causes of loss (or perils) covered under a health insurance policy
sickness and accident
The Additional Monthly Benefit rider stipulates
that the insurer will pay benefits comparable to what Social Security would pay. After a year's time, the insurer ends the benefit and assumes that Social Security will then begin benefit payment.
market value adjusted (modified guaranteed) annuity,
the insurer guarantees a competitive interest rate for a specific period (the longer the period, the better the guaranteed rate). At the end of the period, the owner has the option of taking the accumulated value or reinvesting the values at a new interest rate.
In order to be characterized as pure risk?
the loss must be due to chance, definite, measurable, and predictable, but not catastrophic.
During the free-look period, the premium for a variable annuity may be invested in all of the following EXCEPT
the premium for a variable annuity may only be invested in fixed-income investments and money-market funds, unless the investor specifically requests that the premiums be invested in the mutual funds.
403(b) is a special tax-favored retirement plan available
to employees of certain specified nonprofit organizations
The purpose of a deductible is
to have the insured absorb the smaller claims, while the coverage provided under the policy will absorb the larger claims. The higher the deductible, the lower the premium.
Retention usually results from three basic desires of the insured:
to reduce expenses and improve cash flow, to increase control of claim reserving and claims settlements, and to fund losses that cannot be insured.
catastrophic plans
usually have lower monthly premiums and high deductibles.
Which of the following sources would provide a list of HICAPs in each county in California?
www.calmedicare.org