Missed Exam Q's
A policyowner cancels his life policy but instructs the company to transfer cash value of his policy to an annuity. The nontaxable transaction is called
1035 exchange
Mortality - Interest + Expense = a)Operating expenses b)Net premium c)Gross premium d)Benefits budget
Gross premium
In life insurance policies, cash value increases
Grow tax deferred.
Characteristics of interest-sensitive whole life
Guarantee death benefit to 100, based on assumptions of risk, interest, expenses. Insurer will change premium based on these levels, guaranteed minimum rate
Which of the following life insurance policies does NOT build cash value? a)Variable life b)Whole life c)Guaranteed universal life d)Universal life
Guaranteed Universal Life
Under the affordable care act, which classification applies to health plans based on the amount of covered costs?
Guaranteed and nonguaranteed
What annnuity rider ensures that the owner will receive from an annuity at least the amount paid for the innuity?
Guaranteed lifetime withdrawl
What's ideally insurable risk?
Loss is due to chance, measurable, predictable, not catastrophic, common, and not mandatory
What is a presumptive disability?
Loss of two limbs, when you automatically qualify for disability benefits
What are the benefits of having more than 1 group health plans?
Once the primary insurer pays the fulll benefit, the secondary insurer will cover what the first company did not pay: like deductibles/coinsurance. Reimbursements
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? a) 10 days b) 14 days c) 15 days d) 30 days
14 days
Which of the following insurance options would be considered a risk-sharing arrangement? a)Stock b)Mutual c)Surplus lines d)Reciprocal
Reciprocal
A tornado that destroys property would be an example of which of the following?
A peril
What is the typical deductible for basic surgical expense insurance?a)$0 b)$100 c)$200 d)$500
0
Under affordable act care, what percentage of preventative care must be covered without cost sharing?
100%
An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy? a.) $20,000 b.) $25,000 c.) $50,000 d.) face amount determined by insurer
$50,000
o be eligible under HIPAA regulations, for how long should an individual converting to an individual health plan have been covered under the previous group plan? a)5 years b)12 months c)63 days d)18 months
18 months
How many long term care policies can be sold to an insured within a 12-month period before the number of policies is considered to be unnecessary?
2
HIPAA applies to groups of a.) at least 100 b.) more than 2, fewer than 50 c.) 2 or more d.) at least 10
2 or more
COBRA applies to employers with at least
20 employees
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? a) 10 days b) 15 days c) 21 days d) 31 days
21 days
The Patient Protection and Affordable Care Act mandates that insurers provide coverage for adult children of the insured up to the age of a)19. b)21. c)26. d)30.
26
When does the initial enrollment for Medicare part B begin?
3-months before the person's 65 birthday, and the following 3 months
What is the maximum age for qualifying for a catastrophic plan? a)26 b)30 c)45 d)62
30
An insurer has been found guilty of a Code violation regarding a replacement. The insurer then repeats the violation. What will be the minimum penalty? a)$10,000 b)$25,000 c)$30,000 d)$100,000
30,000
If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?
5 days
What is the elimination period for Social Security disability benefits? a) 5 months b) 6 months c) 12 months d) 3 months
5 months
Ray has an individual major medical policy that requires a coinsurance payment. Ray very rarely visits his physician and would prefer to pay the lowest premium possible. Which coinsurance arrangement would be best for Ray?
50/50
To attain currently insured status under Social Security, a worker must have earned at least how many credits during the last 13 quarters? a.) 4 credits b.) 6 credits c.) 10 credits d.) 40 credits
6 credits
How long is an open enrollment period for Medicare supplement policies? a) 90 days b) 6 months c) 1 year d) 30 days
6 months
What is the penalty for excessive contributions to an IRA? a. 4% b. 6% c. 10% d. 15%
6%
At what age may an individual make withdrawals from an HSA for nonhealth purposes without being penalized?
65
What is the maximum amount that can be contributed to an MSA of the high-deductible plan for individuals? a) 35% b) 50% c) 65% d) 75%
65% for individuals, for familys it raises up to 75%
How long does the initial enrollment period for Medicare Part B last? a. 1 year b. 6 months c. 7 months d. 90 days
7 months
In a contributory plan, what percentage of employees must participate in the plan?
75%
According to the Medical Loss Ratio (MLR), what is the minimum percentage of health coverage premium that must be applied to actual medical care in a large group health plan?a)50% b)75% c)80% d)85%
85%
Most policies will pay the accidental death benefits as long as the death is caused by the accident and occurs within a)30 days. b)60 days. c)90 days. d)120 days.
90 Days
All of the following would be considered insolvent insurers EXCEPT a)A company that reinsurers outstanding risks. b)A company that paid out all of its liabilities but doesn't have additional assets equal to the aggregate paid-in capital. c)A company with insufficient policy reserves to meet its financial obligations. d)A company with an impairment of minimum paid-in capital.
A company that reinsurers outstanding risks
Underwriting for disability insurance is unique due to the type of risk involved. Which of the following situations illustrates this? a. a stunt person pays a low premium and receives a superior classification of disability b. an attorney pays a higher premium and recieves a poorer classification of disability c. a secretary pays a higher premium and receives a superior classification of disability d. A construction worker pays a higher premium and receives a poorer classification of disability
A construction worker pays a higher premium and receives a poorer classification of disability
According to the entire contract provision, what document must be made part of the insurance policy?
A copy of the original application for insurance
Which of the following statements is NOT true concerning insurable interest as it applies to life insurance? a)A husband or wife has an insurable interest in their spouse. b)An individual has an insurable interest in his or her own life. c)A debtor has an insurable interest in the life of a lender. d)Business partners have an insurable interest in each other.
A debtor has an insurable interest in the life of a lender.
Which of the following is NOT a "person" for legal purposes? a)A family's living trust b)An incorporated, closely-held company c)A business partnership d)A family
A family
What are characteristics of variable life and universal life?
A flexible premium, that can be increased of decreased on policyowner's wishes
What type of hospital policy pays a fixed amount each day that the insured is in the hospital?
A hospital indemnity policy
A long stretch of national economic hardship causes a 7% rate of inflation. A policyowner notices that the face value of her life insurance policy has been raised 7% as a result. Which policy rider caused this change? a)Inflation Rider b)Cost of Living Rider c)Value Adjustment Rider d)Return of Premium Rider
Cost of living rider
The patient protection/affordable act includes what provisions?
Coverage for preventative benefits, right to appeal, no lifetime dollar limits. it does NOT include individual tax deduction for premiums paid!
What does long-term care coverage cover?
Custodial care, respite care, home health care, and adult day care
Which of the following annuity riders ensures investors will receive a set amount of income annually? A. Guaranteed Minimum Income Benefit B. Guaranteed Minimum Accumulation Benefit C. Guaranteed Lifetime Earnings D. Guaranteed Lifetime Withdrawal
Guaranteed minimum income benefit
What are the 2 types of Flexible Spending Accounts? a) Health Care Accounts and Health Reimbursement Accounts b) Medical Savings Accounts and Dependent Care Accounts c) Medical Savings Accounts and Health Reimbursement Accounts d) Health Care Accounts and Dependent Care Accounts
Health care accounts and dependent care accounts
In a situation when a medicare insured uses the services of a non-participating provider, which of the following is not true?
Medicare pays its share of the bill directly to the provider. In this instance the insured may have to pay some or all of the bill.
What happens if a medicare insured uses non-participating medicare physician, and signs a private contract?
Medicare will not pay for services, the insured pays all charges, you can not submit a claim, the insurer opted out of medicare program
What does disability income pay?
Minimum is 50-100, maximum is 10,000 but the benefits do not exceed 50-70% of income
Which of the following is true about the requirements regarding HIV exams?
The applicant must give prior informed written consent
Which is NOT true about beneficiary designations? a) The beneficiary must have insurable interest in the insured. b) The beneficiary may be a natural person. c) The policy does not have to have a beneficiary named in order to be valid. d) Trusts can be valid beneficiaries.
The beneficiary must have insurable interest in the insured
In a life insurance policy develops cash value faster than a seven-pay whole life contract, it becomes
a modified endowment contract, and loses the benefits of the standard life contractt
An individual has been diagnosed with alzheimer's disease. He is injured under a life insurance policy with the accelerated benefits rider. What is true regarding taxation of the accelerated benefits? a.) a portion of the benefit up to a limit is tax free; the rest is taxable income b.) principal is tax free, but interest is taxed c.) the entire benefit will be received tax free d.) the entire living benefit is considered taxable income
a portion of the benefit up to a limit is tax free; the rest is taxable income
Insurance policy is a. a statement of insurable interest b. a verbal or written agreement between two parties to transfer risk c. any method used to transfer or avoid catastrophic risk d. a written instrument in which a contract of insurance is set forth
a written instrument in which a contract of insurance is set forth
Level term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will be
adjusted to the insurers age at the time of renewal
The death protection component of Universal Life Insurance is always
annually renewable term
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 a)Rebating. b)Cold lead advertising. c)High pressure tactics. d)Twisting.
cold lead advertising
Which of the following is NOT a characteristic or a service of an HMO plan? a. encouraging early treatment b. providing care on an outpatient basis c. contracting with insurance companies d. providing free-annual checkups
contracting with insurance companies
What happens when a policy is surrendered for it's cash value? a.) the policy can be reinstated by paying back all policy loans and premiums b.) the policy can be reinstated at any time c.) the policy can be converted to term coverage d.) coverage ends, and the policy can't be reinstated
coverage ends, and the policy can't be reinstated
Discontinuance is a term used to describe the termination of what type of insurance? a. business continuation b. index-linked c. government d. group
group
An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated?
Consideration
Which of the following terms most precisely fits the definition of "the incidence or probability of sickness or accidents within a given group of people?"
Morbidity
In a noncontributory insurance plan, what percentage of eligible employees must participate?
100%
What is the elimination period for Social Security disability benefits? a)12 months b)3 months c)5 months d)6 months
5 months
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? a)No penalties, since the owner is older than 59 ½ b)10% for early withdrawal c)15% for early withdrawal d)50% tax on the amount not distributed as required
50% tax on the amount NOT distributed as required
Which of the following best describes the waiting period? a)A period of time that needs to lapse before coverage for specified conditions goes into effect. b)A period of time the insured has to wait before payments of benefits begin after a disability. c)A period of time the insurer has to wait for a claim to be submitted. d)A period of time during which a policy can be returned to the insurer for a complete refund of the premium.
A period of time the insured has to wait before payments of benefits begin after a disability.
Which of the following would automatically qualify for Medi-Cal benefits? a)A low-income person under the age of 65 b)An individual receiving Social Security payments c)A person receiving Supplementary Security Income assistance d)A child under the age of 21
A person receiving supplementary security income assistance
All of the following are essential benefits required to be included in all health plans purchased in the Marketplace EXCEPT a)Hospitalization. b)Maternity care. c)Pediatric vision care. d)Adult dental care.
Adult dental care
What happens during the review period for a policy with a face value less than $10,000?
Agreement will be void from beginning, premiums and policy fees will be returned
In which Medicare supplemental policies are the core benefits found? a)All plans b)Plans A and B only c)Plan A only d)Plans A-D only
All plans
Under HIPAA, which of the following is INCORRECT regarding eligibility requirements for conversion to an individual policy? a) An individual who doesn't qualify for Medicare may be eligible. b) The gap of coverage for eligibility is a period of 63 or less days. c) An individual who was previously covered by group health insurance for 6 months is eligible. d) An individual who has used up COBRA continuation coverage is eligible.
An individual who was previously covered by group health insurance for 6 months is eligible
The process of "post-selection" refers to?
An insurer investigating the client's risk profile
Which of the following would qualify as an implied warranty in an insurance contract? a) Statements in the policy b) An oral representation by the applicant c) The applicant's signature d) Contract's legal purpose
An oral representation by the applicant
What is another term for the general enrollment period for Medicare Part B? a)Initial enrollment period b)Eligible enrollment period c)Special enrollment period d)Annual enrollment period
Annual enrollment period
What is considered a person in insurance?
Any business, corporation, individual, trust, association, partnership
Partners in a business enter into a buy-sell agreement to purchase life insurance, which states that should one of them die prematurely, the other would be financially able to buy the interest of the deceased partner. What type of insurance policy may be used to fund this agreement? a) Term insurance only b) Permanent insurance only c) Universal life insurance only d) Any form of life insurance
Any form of life insurance
In terms of Social Security, what is the interval spanning between the day when the youngest child of a family turns 16 and before the surviving spouse turns age 60 called? a) Accumulation Period b) Blackout Period c) Nonpayment Interval d) Latent Interval
Blackout Period, no benefits are paid during this time
What is bluecross/blue shield?
Blue cross/Blue shield organizations are voluntary not-for-profit service organizations
Who must sign the notice regarding replacement? a)Applicant only b)Agent only c)Both the applicant and agent d)Both the agent and the insurer
Both the applicant and agent
In comparison to a policy that uses the accidental means definition, a policy that uses the accidental bodily injury definition would provide a coverage that is a) More limited in duration. b) Broader in duration. c) Broader in general. d) More limited in general.
Broader in general
An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated a) Representation b) Adhesion c) Consideration d) Good faith
Consideration
Which of the following elements in an Indexed Universal Life policy is tied to an index? a)Death benefit b)Face amount c)Premiums d)Cash values
Cash values
What is the feature of a modified life insurance policy?
Charges a lower premium for first few years, then increases to a higher premium for the rest of the policy life. For those with lower income but expected to increase income later in life
The type of policy that can be changed from one that does not accumulate cash value to the one that does, is a
Convertible term policy
Creditable coverage includes a) Workers compensation. b) Credit-only insurance c) Coverage only for accident or disability income insurance. d) Coverage under a state health benefits risk pool.
Coverage under a state health benefits risk pool
What does the human life value approach take into consideration for calculating an individuals life?
Current/Future earnings of insured, inflation, amount of time left until retirement, and time value of money.
Which of the following are NOT fundable by annuities? a) Death benefits b) Cash accumulation for any reason c) A person's retirement d) Estate liquidation
Death benefits
What is the seven-pay test?
Determines if an insurance policy is over funded, or if it is a modified endowment contract. The cumulative premiums paid during the first seven years of a policy must not exceed the total of net level premiums required for costs and interests
The types of policies that are covered under the terms of the Association include a)Contracts involving reinsurance. b)An annuity issued by a charitable organization. c)Direct, nongroup life, health, annuity and supplemental policies. d)Employer self-funded contracts.
Direct, nongroup life, health, annuity and supplemental policies.
A policy which covers medical costs related to a specific condition is called a a) Dread Disease Policy. b) Condition-Specific Policy. c) Specific Condition Policy. d) Limited Coverage Policy.
Dread disease policy
Other than a qualified life event, when can a change be made in benefits for a flexible spending account?
During the open enrollment
The insurance policy, together with the policy application and added riders is known as
Entire Contract
A policy which pays monthly income upon the death of the breadwinner for a predetermined number of years after death, plus a lump sum at death, and combines level term and whole life is known as which policy?
Family maintenance
What are the deductibles found in medical insurance policies?
Family, per cause, common accident
What is provided by an HMO?
Financing and patient care
What's a health care account?
Flexible spending account, for out of pocket health care expenses
Whats a dependent care account?
Flexible spending account, for paying dependent care excpenses to make it possible to work
Al tells a client that she is guaranteed to be approved for LTC insurance if she pays the full year's premium at the time of application. The client applies for LTC insurance and writes a check for the annual premium to Al's agency. Al issues a Binder of Insurance but does not send the application to the insurer, and intentionally uses the premium for personal expenses instead. Al is guilty of a) Fraud. b) Negligence. c) Misrepresentation. d) Twisting.
Fraud
An insured is involved in accident that renders him permanently deaf, although he does not sustain any other major injuries, he is still able to preform his job, what will his presumptive disability benefits be?
Full benefits
Which is TRUE about the cash surrender nonforfeiture option? a)The policy remains active for some time after the policyholder opts for cash surrender. b)The policyholder receives the original cash value of the policy. c)Funds exceeding the premium paid are taxable as ordinary income. d)After the cash surrender, the insured is covered for a grace period of 1 month.
Funds exceeding the premium paid are taxable as ordinary income.
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
All of the following would fall under the definition of durable medical equipment except a.) wheel chairs b.) hospital bed c.) hospital blankets d.) oxygen equipment
Hospital blankets
What are the three basic coverages for medical expense insurance?
Hospital, Surgical, and Medical
The key factor of representation that allows the injured party to rescind the contract is
If the representation is false in material point
Which of the following best describes the "first-dollar coverage" principle in basic medical insurance? a)The insured must first pay a deductible. b)The insurer covers the first claim on the policy. c)Deductibles and coinsurance are taxed first. d)The insured is not required to pay a deductible.
Insured is not required to pay a deductible
What is adhesion?
Insurer draws up the contract, and insured's job is only to accept or deny. There is no negotiation
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
An insured purchased a Life Insurance policy. The agent told him that depending upon the company's investments and expense factors, the cash values could change from those shown in the policy at issue time. The policy is a/an a)Credit Life. b)Annual Renewable Term. c)Adjustable Life. d)Interest-sensitive Whole Life.
Interest-Sensitive whole life
What is the main purpose of the Seven-pay Test? a) It requires level premium payments for 7 years. b) It ensures that the policy benefits are paid out in 7 years. c) It guarantees the minimum interest. d) It determines if the insurance policy is a MEC.
It determines if the insurance policy is a MEC
Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option? a) Payments can be made in installments and as a single cash refund. b) It does not guarantee that the entire principal amount will be paid out. c) It is a life contingency option. d) The beneficiary receives the remainder of the principal amount upon the annuitant's death.
It does not guarantee that the entire principal amount will be paid out.
If a deferred annuity is surrendered prematurely, a surrender charge is imposed. How is the surrender charge determined? a) It is a percentage of the cash value and decreases over time. b) It is always 7% of the cash value. c) It is a flat fee determined by the annuity owner when the annuity is purchased. d) It will increase as the accumulation period increases.
It is a percentage of the cash value and decreases over time
Which of the following is TRUE regarding the accumulation period of an annuity? a)It is limited to 10 years. b)It is a period during which the payments into the annuity grow tax deferred. c)It is also referred to as the annuity period. d)It is a period of time during which the beneficiary receives income
It is a period during which the payments into the annuity grow tax deferred
Concerning Medicare Part B, which statement is INCORRECT? a)It provides partial coverage for medical expenses not fully covered by Part A. b)It is fully funded by Social Security taxes (FICA). c)It is known as medical insurance. d)It offers limited prescription drug coverage.
It is fully funded by Social Security taxes (FICA)
Concerning Medicare Part B, which statement is INCORRECT? a) It is fully funded by Social Security taxes (FICA). b) It is known as medical insurance. c) It offers limited prescription drug coverage. d) It provides partial coverage for medical expenses not fully covered by Part A.
It is fully funded by the social security taxes FICA
Which of the following is TRUE regarding the annuity period? a)It is also referred to as the accumulation period. b)It is the period of time during which the annuitant makes premium payments into the annuity. c)It may last for the lifetime of the annuitant. d)During this period of time the annuity payments grow interest tax deferred.
It may last for a lifetime of the annuitant
Which of the following is true of a PPO? a)Claim forms are completed by members on each claim. b)No copayment fees are involved. c)Its goal is to channel patients to providers that discount services. d)The most common type of PPO is the staff model.
It's goal is to channel patients to providers that discount services
A set of legal or regulatory conditions that affect an insurers ability to collect premiums commensurate with the level of risk incurred would be considered
Legal Hazard
Variable Whole life insurance is based on what type of premium?
Level Fixed
Variable whole life insurance is based on what type of premium?
Level fixed
In franchise insurance, premiums are usually a)Lower than individual policies or group policies. b)Higher than individual policies or than group policies. c)Higher than individual policies, but lower than group policies. d)Lower than individual policies, but higher than group policies.
Lower than individual policies, but higher than group policies
All of the following are true regarding the Medical Information Bureau (MIB) EXCEPT a)MIB reports are based upon information supplied by doctors and hospitals. b)MIB information is reported to underwriters in coded form. c)MIB reports contain previous insurance information. d)Insurers may not refuse to accept an application solely due to information in an MIB report.
MIB reports are based upon information supplied by doctors and hospitals
In health underwriting, it would be inappropriate to decline a risk using any of the following factors EXCEPT a) Blindness. b) Mental illness. c) Genetic characteristics. d) Marital status.
Mental Illness
Under the Affordable Care Act, which classification applies to health plans based on the amount of covered costs? Risk classification Metal level classification Guaranteed and nonguaranteed Grandfathered and nongrandfathered
Metal level classification
Qualified medical expenses paid for participants in a medical savings account (MSA) are a. taxable if they exceed the amount of the deductible b. taxable for up to 50% of benefits paid c. fully taxable d. not taxable
NOT TAXABLE
A licensed insurance agent overhears a conversation that leads him to believe a person is committing fraud. If the agent makes a written report to a law enforcement agency and the person is investigated, but it turns out that it was an erroneous accusation, what charge will the agent face? a) A misrepresentation b) Slander c) No charges; the Insurance Code gives the agent legal immunity. d) Libel, a written untruth
No charges, the insurance code gives the agent legal immunity
Under a non-contributory group health plan, which of the following is FALSE? a) 100% of the premium is paid by the employer. b) Eligibility is usually determined by hours worked per week, length of time with the company and age of the employee. c) No less than 50% of the eligible employees must elect to participate in the plan. d) 100% of all eligible employees must be covered under the plan.
No less than 50% of the eligible employees must elect to participate in the plan
Applicants for insurance who are blind may be rated substandard for life insurance a)Only if their blindness resulted from an injury. b)Always, because they cannot avoid the risk of injury or death. c)Only on the basis of information unrelated to their blindness. d)Only if they have been blind from birth.
Only on the basis of information unrelated to their blindness
What is the definition of unilateral?
Only one person in the contract is legally obligated to do anything
Which renewability provision allows an insurer to terminate a policy for any reason, and to increase the premiums for any class of insureds? a)Guaranteed renewable b)Optionally renewable c)Conditionally renewable d)Cancellable
Optionally renewable
Medicare Part A services do NOT include which of the following? a) Outpatient Hospital Treatment b) Post hospital Skilled Nursing Facility Care c) Hospitalization d) Hospice Care
Outpatient hospital treatment
An insured pays her major medical insurance premium annually on March 1. Last March she forgot to pay her premium to the company. On March 19, she had an accident and broke her leg. The insurance company would
Pay the claim because the accident happened during the grace period
Which renewability provision are you most likely to see on a travel accident policy? a) Period of time b) Noncancellable c) Optionally renewable d) Conditionally renewable
Period of time
Which of the following levels of care in long-term care policies specifically includes assistance with activities of daily living?
Personal care
Which of the following is the most common time for errors and omissions to occur on the part of the insurer?
Policy delivery & sales interview
What is an indeterminate premium whole life policy?
Policy premium rate varies year to year, usually lower the first 2-3 years and then gradually increases to a guaranteed maximum rate
Which of the following is not allowed in a no loss-no gain provision
Pre-existing condition exclusion
An HMO is regarded as an organized system of health care that provides a comprehensive array of medical services on a a)Closed-panel basis. b)Per person basis. c)Limited basis. d)Prepaid basis.
Prepaid Basis
An underwriter may reject an application for health insurance if the rejection is based upon which of the following? A. Genetic characteristics (such as sickle cell) B. Prescription usage C. Sexual preference D. Blindness
Prescription Usage
Under the Accidental Death and Dismemberment (AD&D) coverage, what type of benefit will be paid to the beneficiary in the event of the insured's accidental death? a)Refund of premiums b)Principal sum c)Capital sum d)Double the amount of the death benefit
Principal Sum
Which of the following can an insured submit to the insurer that would provide evidence and illustration of how severe the loss was?
Proof of claim
Profitable distribution of exposures serves the purpose of a) Preventing the insurer from being estopped. b) Helping the insurer determine payable benefits. c) Protecting the insurer against adverse selection. d) Helping the insurer select only the ideally insurable risks.
Protecting the insurer against adverse selection
What is the characteristics of annually renewable term insurance?
Purest form of life insurance, level term, death benefit is level, can be renewable without proof of insurability, premium increases annually
What nonforfeiture option provides coverage for the longest period of time?
Reduced-paid up. Provides protection until insured reaches 100, but face amount is reduced
All of the following are actual deductibles found in medical insurance policies EXCEPT a) Per cause b) Replacement c) Common accident d) Family
Replacement
As it pertains to group health insurance, COBRA
Requires employee with 20 or more employees to continue group medical insurance for terminated workers/dependents for up to 18 months-36 months.
Under the fair credit and reporting act, if the consumer challenges the accuracy of information contained in his or her report, the reporting agency must a.) defend the report if the agency feels it is accurate b.) change the report c.) send an actual certified copy of the entire report to the customer d.) respond to the consumer's complain
Respond to the consumer's complaint
In case of a loss, the indemnity provision in insurance policies a)Pays the insured as much as 95% of the loss. b)Restores an insured person to the same financial state as before the loss. c)Allows the insured to collect 20% more than the actual loss. d)Pays the insured a percentage of the loss above and beyond the loss.
Restores an insured person to the same financial state as before the loss
Which of the following is NOT covered under Part B of a Medicare policy? a)Lab services b)Physician expenses c)Routine dental care d)Home health care
Routine dental care
A formal arrangement of providing health care benefits without providing any financial protection to the principal is referred to as what type of plan? a)Risk sharing b)Captive insurance plan c)Self-insurance d)Risk pooling
Self-Insurance
Every long-term care insurer in California must submit to the Commissioner a list of all agents or other insurer representatives authorized to solicit individual consumers for the sale of long-term care insurance. These submitted agent lists must be updated at least a)Quarterly b)Annually c)Semiannually d)Monthly
Semi-annually
Who does HICAP serve? a)Seniors receiving Social Security b)Disabled workers c)Uninsurable individuals d)Low-income families
Seniors receiving social security
Blue Cross and Blue Shield organizations are a)Health Maintenance Organizations (HMOs). b)Liability organizations. c)Preferred Provider Organizations (PPOs). d)Service organizations.
Service Organizations
Upon policy delivery, the producer may be required to obtain any of the following EXCEPT a) Payment of premium. b) Delivery receipt. c) Signed waiver of premium. d) Statement of good health.
Signed waiver of premium
What is considered dependents in group life insurance?
Spouse, unmarried children 25, disabled children 26
When an employee covered under a health reimbursement account changes employers, the HRA a)Returns to the insurer. b)Is split between the employee and employer. c)Stays with the employer. d)Follows the employee.
Stays with the employer
Which of the following groups would most likely be covered under a blanket accident policy? a) Students at a public school b) Office workers for a retail business c) Factory workers at the automobile assembly plant d) Independent contractors who work for a general contractor
Students at a public school
Restoration of Benefits is most beneficial to the insured when they a) Become uninsurable during the policy period. b) Fail to pay their premium. c) Forget to file a claim before the statute of limitations expires. d) Suffer a large loss.
Suffered a loss
Which of the following would basic medical expense coverage NOT cover? a)Surgeon's services b)Mental illness c)Maternity d)Hospice
Surgeon's services
Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean? a)The beneficiary will receive the lump sum, plus interest. b)The primary beneficiary will receive the death benefit and the secondary beneficiaries will share the interest payments. c)The beneficiary will only receive payments of the interest earned on the death benefit. d)The beneficiary must pay interest to the insurer.
The beneficiary will only receive payments of the interest earned on the death benefit
A husband and wife are insured under group health insurance plans at their own places of employment, and as dependents under their spouse's coverage. If one of them incurs hospital expenses, how will those expenses likely be paid? a)Neither plan would pay. b)Each plan will pay in equal shares. c)The insured will have to select a plan from which to collect benefits. d)The benefits will be coordinated.
The benefits will be coordinated
If a life insurance policy has an irrevocable beneficiary designation, a) The beneficiary can only be changed with written permission of the beneficiary. b) The beneficiary cannot be changed for at least 2 years. c) The owner can always change the beneficiary at will. d) The beneficiary cannot be changed.
The beneificary can only be changed with written permission of the beneficiary
Which of the following describes the client which will benefit from Extension of Benefits? a) The client who was disabled prior to a policy discontinuance and has recovered completely. b) The client who was disabled and terminated from his job prior to policy discontinuance. c) The client who was disabled within one month after policy discontinuance. d) The client who was disabled prior to a policy discontinuance and remains disabled.
The client who was disabled prior to a policy discontinuance and remains disabled
In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports? a)The customer has no knowledge of this action. b)The customer's associates, friends, and neighbors provide the report's data. c)They provide additional information from an outside source about a particular risk. d)They provide information about a customer's character and reputation.
The customer's associates, friends, nieghbors provide the report's data
What are the characteristics of a decreasing term policy?
The death benefit s $0 at end of policy, contract only pays for death with no cash value, face amount steadily declines throughout duration of contract
How are contributions to a tax-sheltered annuity treated with regards to taxation? a. they are taxed as income for the employee b. they are taxed as income for the employee, but are tax free upon withdrawal c. They are not included as income for the employee, but are taxable upon distribution d. They are never taxed
They are not included as income for the employee, but are taxable upon distribution
How do employer contributions to a Health Savings Account affect the insured's taxes? a) The employer contributions are not included in the individual insured's taxable income. b) The employer contributions are taxed at the same rate as the Social Security tax rate. c) The employer contributions are taxed to the individual insured as earned income. d) The employer contributions are deducted from the individual insured's tax calculations.
The employer contributions are not included in the individual insured's taxable income
A man works for Company A and his wife works for Company B. The spouses are covered by health plans through their respective companies that also cover the other spouse. If the husband files a claim, a) Both plans will pay the full amount of the claim. b) The insurance through his company is primary. c) The insurance through his wife's company is primary. d) The insurance plans will split the coverage evenly.
The insurance through his company is primary
An employee is insured under her employer's group life plan. If she terminates her group coverage, which of the following statements is INCORRECT? a)The insured would not need to prove insurability for a conversion policy. b)The insured may convert coverage to an individual policy within 31 days. c)The premium for individual coverage will be based upon the insured's attained age. d)The insured may choose to convert to term or permanent individual coverage.
The insured may choose to convert to term or permanent individual coverage.
Which of the following is not a feature of a guaranteed renewable provision? a. coverage is not available past 65 b. the insured's benefits can not be reduced c. The insurer can increase the premium on an individual basis d. the insured has a unilateral right to renew the policy for the life of the contract
The insurer can increase the premium on an individual basis
An employee quits his job on May 15 and doesn't convert his Group Life policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen? a)The insurer will pay a reduced death benefit to the beneficiary. b)The insurer will pay the death benefit minus one month's premium. c)The insurer will pay nothing because the employee has terminated his group insurance and hasn't started the individual one. d)The insurer will pay the full death benefit from the group policy to the beneficiary.
The insurer will pay the full death benefit from the group policy to the beneficiary
Which of the following is NOT a characteristic of pure risk? a)The loss must be catastrophic. b)The loss must be due to chance. c)The loss must be measurable in dollars. d)The loss exposure must be large.
The loss must be catastrophic
The importance of misrepresentation is determined by a. whether or not the policy was issued b. the materiality of given concealment c. the amount of money potentially loss d. the cost of investigation
The materiality of given concealment
What's a characteristic of limited-pay life policy?
They are paid by age 65, and endowed at age 100
Which of the following best describes what the annuity period is? A. The period of time during which accumulated money is converted into income payments B. The period of time from the accumulation period to the annuitization period C. The period of time during which money is accumulated in an annuity D. The period of time from the effective date of the contract to the date of its termination
The period of time, during which the money is accumulated in an annuity
Which of the following is true regarding health insurance underwriting for a person with HIV? a)A person may be declined for HIV but not AIDS. b)The person may be declined. c)The person may only be declined if he/she has symptoms. d)The person may not be declined for medical coverage solely based on HIV status.
The person may not be declined for medical coverage solely based on HIV status.
Who is responsible that all of the application has been filled out correctly?
The producer
What does the fair credit reporting act protect consumers against?
They are allowed to know what's in the report, who the reporting agency is and their address, the identity of who has seen their report, and they can challenge the report for review
How are contributions to a tax-sheltered annuity treated with regards to taxation? a)They are taxed as income for the employee, but are tax free upon withdrawal. b)They are not included as income for the employee, but are taxable upon distribution. c)They are never taxed.
They are not included as income for the employee, but are taxable upon distribution
Which of the following statements regarding deferred compensation funds is INCORRECT? a)They can be made with cash deposits to an annuity. b)They generally provide additional retirement benefits. c)They are usually qualified plans. d)They can be established by employers.
They are usually qualified plans
The purpose of having an elimination period in a policy is to accomplish which of the following?
To allow the client some flexibility in determining their own premium
What is the purpose of coinsurance provisions? a) To share liability among different insurance companies b) To help the insurance company to prevent overutilization of the policy c) To have the insured pay premiums to more than one company. d) To ensure payment to the doctors and hospitals
To help the insurance company to prevent over-utilization of the policy
Which of the following is NOT a goal of risk retention? a)To minimize the insured's level of liability in the event of loss b)To reduce expenses and improve cash flow c)To increase control of claim reserving and claims settlements d)To fund losses that cannot be insured
To minimize the insured's level of liability in the event of a loss
The paid-up addition option uses the dividend a)To accumulate additional savings for retirement. b)To purchase a smaller amount of the same type of insurance as the original policy. c)To purchase a one-year term insurance in the amount of the cash value. d)To reduce the next year's premium.
To purchase a smaller amount of the same type of insurance as the original policy
HICAP counselors are primarily a.) Trained and registered volunteers b.) licensed life agents c.) licensed life & disability analysts d.) HICAP counselors are all the above
Trained and registered volunteers.
How long will the beneficiary receive payments under the single life settlement option?
Until beneficiaries death.
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 a) Reasonable expectations. b) A warranty. c) Implied warranty. d) Utmost good faith.
Utmost good faith
When does acceptance occur?
When the insurer's underwriter approves coverage
To which of the following products does the Replacement Regulation apply? a)Converting an existing policy with the same insurer b)Whole life insurance c)Group annuities d)Credit life insurance
Whole Life Insurance
To which of the following products does the Replacement Regulation apply? a)Converting an existing policy with the same insurer b)Whole life insurance c)Group annuities d)Credit life insurance
Whole life insurance
An insurance agent who diverts premiums held in a trust capacity for his or her own use a)Will be considered guilty of theft and be punished to the extent of the law. b)Must report the premium as additional income to the insurer. c)Will be fined $250 and required to attend a 3-hour ethics review course. d)Must enter the transaction on a separate ledger and report such transactions.
Will be considered guilty of theft, and be punished to the extent of the law
Which of the following is true regarding the gender of the applicants in disability income insurance? a) Men, as they age, present a higher health risk and are more prone to disability. b) Gender is not a rating factor in disability income insurance. c) Aging men and women are both prone to disability and therefore are not insurable. d) Women, as they age, present a higher health risk and are more prone to disability.
Women, as they age, present a higher health risk and are more prone to disability
Can an individual who belongs to a POS plan use an out-of-network physician?
Yes they can visit in or out of network physicians at their own discretion
A universal life policy has two types of interest rates called
guaranteed and current
Which of the following is not one of the services that hicap offers to consuers a. consumer education b. consumer advocacy c. legal assistance d. insurance sales
insurance sales
Which of the following best describes annually renewable term insurance? a. neither the premium or the death benefit is affected by the insureds age b. it provides an annually increasing death benefit c. it is level term insurance d.it requires proof of insurability at each renewal
it is a level term insurance
How is the amount of Social Security disability benefits calculated?a)It is based on age, number of quarters worked in the last 25 years (minimum of 80) and the number of health claims made during that period of time. b)It is based on age, number of quarters worked in the last 20 years (minimum of 60) and the number of health claims made during that period of time. c)It is based upon the worker's Primary Insurance Amount (PIA), which is calculated from their Average Indexed Monthly Earnings over their highest 35 years. d)It is based upon the worker's Primary Insurance Amount (PIA), which is calculated from their Average Indexed Monthly Earnings over their highest 30 years.
it is based upon the worker's primary insurance amount (PIA), which is calculated from their Average Indexed Monthly Earnings over their highest 35 years
Which of the following statements best describes the effect the accelerated benefit provision would have on the benefits paid to beneficiary? a.) it will decrease the benefits paid to the beneficiary b.) it will not affect the benefits paid to the beneficiary c.) it will reduce benefits by 70% d.) it will increase the benefits paid to the beneficiary
it will decrease the benefits paid to the beneficiary
Which of the following will be covered by a non-occupational policy a. john gets hurt in an accident on his way to visit a client b. john gets injured at work c. john gets hurt in a car accident on his lunch break d. all of the above
john gets hurt in a car accident on his lunch break
Can a group that is formed for the sole purpose of obtaining group insurance qualify for group coverage? a. no, a group must be represented by an association or trust b. Yes any group can apply for coverage c. yes, but only ifthe group is over 35 people d. no, the group must be formed for a purpose other than obtaining group insurance
no, the group must be formed for a purpose other than obtaining group insurance
the dividend option in which the policyowner uses dividends to purchase a term policy for one year, is referred to as the a. one year term option b. paid-up option c. accelerated endowment d. paid-up additions
one year term option
What is indemnity?
payment for damages, but not for profit of insured
All of the following are examples of risk retention except: a.) premiums b.) deductibles c.) copayments d.) self-insurance
premiums
What describes a situation where poor risks are balanced with preferred risk, and average risks are in the middle a. ideally insurable risk b. profitable distribution of exposures c. adverse selection d. equitable spread of risk
profitable distribution of exposures
Which of the following is an example of peril covered in an accident and health policy? a. sickness b. alcoholism c. smoking d. death
sickness
when a life insurance policy stipulates that the beneficiary will receive payments in specified installments or for a specified number of years, what provision prevents the beneficiary from changing or borrowing from the planned installments? a. settlement option b. accelerated benefit provision c. loan provision d. spendthrift provision
spendthrift provision
What is the share of cost? a.) The amount paid by Medi-cal for covered bills b.) Annual copayment by the insured for the covered medical services c.) the amount an individual has to pay for medical expenses before Medi-cal will cover the rest d.) monthly payment to medi-cal by the insured
the amount an individual has to pay for medical expenses before medical will cover the rest
Which answer is true about extension of benefits in group disability policies? a. extension of benefits may not be terminated when the employee is no longer totally disabled, or until a succeeding carrier provides replacement coverage b. the benefits are extended if a disabled person's coverage terminates as a result of a discontinued group plan c. under a group health plan, benefits can be extended for 30 days after discontinuance of employment d. extension of benefits helps prevent a disabled person from acquiring coverage after there has been a change in health or insurability
the benefits are extended if a disabled person's coverage terminates as a result of a discontinued group plan
Which statement accurately describes group disability income insurance? a.) in long-term plans, monthly benefits are limited to 75% of the insureds income b.) there are no participation requirements for employees c.) short-term plans provide benefits up to 1 year d.) the extent of benefits is determined by the insured's income
the extent of benefits is determined by the insured's income
How can insurers obtain information on an applicant's avocations and the way they will affect a risk? a)Through consumer reports. b)Through the use of a questionnaire. c)Through personal interviews. d)Through Medical Information Bureau.
through the use of a questionnaire
The paid-up addition option uses the dividend a.) accumulate additional savings for retirement b.)to purchase a smaller amount of the same type of insurance as the original policy c.) to purchase a one-year term insurance in the amount of the cash value d.) to reduce the next year's premium
to purchase a smaller amount of the same type of policy insurance as the original policy
A medical expense policy that establishes the amount of benefit paid based upon the prevailing charges which fall within the standard range of fees normally charged for a specific procedure by a doctor of similar training and experience in that geographic area is known as a)Gatekeepers. b)Usual, customary and reasonable. c)Relative-value schedule. d)Benefit schedule.
usual, customary, and reasonable
When can earned surplus be returned to the policyholder? a.) whenever it exists and is not needed for other expenses b.) whenever the funds are unassigned c.) whenever requested by the policy holder d.) whenever it occurs
whenever it exists and is not needed for other expenses
