Practice Exam New Questions
Which of the following best describes the type of care provided by HMOs? A) Fee-for-service B) Preventative C) Elective D) Major medical
B) Preventative
The Guaranteed Insurability Rider allows the owner to purchase additional amounts of life insurance without proof of insurability at all of the following EXCEPT A) Marriage B) Purchase of a new home C) Approximately every 3 years between the ages of 25 and 40 D) Birth of a child
B) Purchase of a new home
Under the Affordable Care Act, maternity, pregnancy, and preventative care services are A) Elective B) Limited C) Optional D) Essential
D) Essential
An applicant may challenge information discovered as a result of an investigative consumer report under which of the following Acts? A) Fair Credit Reporting Act B) Privacy Protection Act C) Consumer Credit Protection Act D) HIPAA
A) Fair Credit Reporting Act
Which of the following indicates how much of the health coverage premium must go toward actual medical care? A) Minimum Value (MV) Calculator B) Modified Adjusted Gross Income (MAGI) C) Metal Tiers D) Medical Loss Ratio (MLR)
D) Medical Loss Ratio (MLR)
Any insurer who engages in the insurance business and violates the Code with respect to insurance replacement shall on the first violation a)Be fined a sum no less than $30,000 and no more than $300,000. b)Have his/her license suspended. c)Be fined a sum of $1,000. d)Be fined a sum of $10,000
d)Be fined a sum of $10,000
There is a 10% penalty on the taxable portion of a deferred annuity when it is surrendered prior to what age? A) 59 1/2 B) 55 1/2 C) 40 D) 65
A) 59 1/2
Which of the following terms is used to define the period of time during which an annuitant makes payments into an annuity? A) Accumulation period B) Premium building period C) Annuity period D) Loading period
A) Accumulation period
According to the Law of Agency, a principal is represented by a/an A) Agent B) Insurer C) Broker D) Insured
A) Agent
All of the following statements about mutual insurance companies are correct EXCEPT A) Policy dividends issued by mutual companies are guaranteed and not taxable B) Dividends allow policyholders to share in a mutual company's divisible surplus C) Dividends are a return of unused premiums D) The beneficiary is then responsible for 75% of prescription drug costs
A) Policy dividends issued by mutual companies are guaranteed and not taxable
How many tiers must be included in each treatment category of a Medicare prescription drug plan formulary? A) 1 B) 2 C) 3 D) 4
B) 2
Medical claims covered by the program known as Medi-Cal in California are paid for by A) HMOs B) The state, mostly through federal reimbursements C) Assessments on insurers offering medical insurance based on market share D) Workers compensation insurance
B) The state, mostly through federal reimbursements
Medicare is a health insurance program for all of the following individuals EXCEPT A) Those who have been on Social Security Disability for 2 years B) Those with low income and low assets C) Those 65 or older D) Those with permanent kidney failure
B) Those with low income and low assets
All of the following are true of a Multiple Employer Trust EXCEPT A) The trusts are formed by insurers, agents, brokers, or third party administrators, who are called sponsors B) The sponsor develops the plan, sets the underwriting rules, and administers it C) The employee has a right of conversion upon leaving the group coverage D) METs allow small employers an opportunity to band together and purchase insurance at a lower group rate
C) The employee has a right of conversion upon leaving the group coverage
Who is the annuity owner? A) The person on whose life the annuity is written B) The insurer C) The person who purchases the annuity D) The person who receives the benefits
C) The person who purchases the annuity
What is the maximum penalty for releasing personal nonpublic information of multiple consumers without their consent? A) $2500 B) $4800 C) $160,000 D) $500,000
D) $500,000
Which of the following is NOT normally an excluded cause of disability in an individual disability income policy? A) Injury resulting from illegal activity B) Suicide C) War D) Complications from pregnancy
D) Complications from pregnancy
In reinsurance, the insurance company that transfer its loss exposure to another insurer is the A) Reinsurer B) Primary insurer C) Secondary insurer D) Reciprocal insurer
D) Reciprocal insurer
Who does the spendthrift clause in a life insurance policy protect? A) The policyowner B) The creditors C) The beneficiary D) The insured
C) The beneficiary
A waiver of premium provision may be included with which kind of health insurance policy? a) Disability income b)Basic medical c)Hospital indemnity d)Dread disease
a) Disability income
What type of insurance would a person select as the most efficient method of paying the outstanding debt on their home in the event of death? A) Mortgage redemption B) Joint Life (First-to-die) C) Level Term D) Family Maintenance
A) Mortgage redemption
All of the following are covered by Part A of Medicare EXCEPT A) Physician's and surgeons services B) In-patient hospital services C)Post-hospital nursing care D) Home health services
A) Physician's and surgeons services
The other insurance clause A) Prohibits insurance on the same property B) Upholds the principle of indemnity C) Allows for catastrophic losses D) Allows more than one person to be insured under the policy
B) Upholds the principle of indemnity
What is the clause that describes the method of paying the death benefit in the event that the insured and beneficiary are both killed in the same accident? A) Spendthrift clause B) Settlement clause C) Nonforfeiture clause D) Common disaster clause
D) Common disaster clause
"Discontinuance" is a term used to describe the termination of what type of insurance? A) Business continuation B) Index-linked C) Government D) Group
D) Group
Key person insurance can provide protection for all of the following economic losses to a business EXCEPT A) Pay the benefit to the estate of the insured B) Provide deferred compensation retirement benefit if the insured key person survives to retirement C) Fund the expense of finding a suitable replacement following the death of an employee D) Fund the cost of training a current employer to perform the duties of a deceased employee
A) Pay the benefit to the estate of the insured
Profitable distribution of exposures serves the purpose of A) Protecting the insurer against adverse selection B) Helping the insurer select only the ideally insurable risks C) Preventing the insurer from being estopped D) Helping the insurer determine payable benefits
A) Protecting the insurer against adverse selection
Which of the following is required in order for a group plan to be qualified? A) The plan must be formally written and communicated to the employees B) The plan must not be permanent C) The plan must be for the exclusive benefit of the employer D) The plan's contribution formula is allowed to discriminate in favor of officers of the company
A) The plan must be formally written and communicated to the employees
How often must every insurer doing business in California report its financial condition to the Commissioner? A) January 1 of odd-numbered years B) Each year, on or before March 1 C) March 1 of even-numbered years D) Each year on or before January 1
B) Each year, on or before March 1
An insured pays $1200 annually for her life insurance premium. The insured applies this year's $300 worth of accumulated dividends to the next year's premium, thus reducing it to $900. What option does this describe? A) Flexible premium B) Reduction of Premium C) Accumulation at Interest D) Cash Option
B) Reduction of Premium
Which of the following is the best definition of "indemnification"? A) A contract whereby on undertakes to indemnify another against loss, damage, or liability arising from a contingent or unknown event B) The act of one person who agrees to restore an injured person to the condition he/she enjoyed prior to the loss C) A legal entity which acts on behalf of itself, accepting legal and civil responsibility for the actions it performs and making contracts in its own name D) A contract whereby the two parties involved agree to what things of value will be exchanged by the parties to the contract
B) The act of one person who agrees to restore an injured person to the condition he/she enjoyed prior to the loss
Hazards are conditions or situations that A) Determine the likelihood of a loss occurring B) Guarantee that a loss will occur C) Increase the likelihood of a loss occurring D) Decrease the likelihood of a loss occurring
C) Increase the likelihood of a loss occurring
A jumping juvenile policy is unique in that the death benefit automatically A) Doubles at a predetermined age B) Pays out to the insured C) Increases at a predetermined age D) Decreases at a predetermined age
C) Increases at a predetermined age
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? A) Exposure B) Pure loss C) Insurable interest D) Indemnity
C) Insurable interest
Wagering on a sporting event is known as what type of risk? A) Simple B) Pure C) Speculative D) Calculated
C) Speculative
If an agent follows the rules and terms of his agent contract, he is exercising his A) Apparent authority B) Contractual authority C) Implied authority D) Express authority
D) Express authority
An applicant who receives a preferred risk classification qualifies for A) Dividends payable for lack of claims B) Higher premiums than a person who receives a sub-standard risk C) Higher premiums than a person who receives a standard risk D) Lower premiums than a person who receives a standard risk
D) Lower premiums than a person who receives a standard risk
Medicare Part A services do NOT include which of the following? A) Post hospital Skilled Nursing Facility Care B) Hospitalization C) Hospice Care D) Private Duty Nursing
D) Private Duty Nursing
Which of the following is NOT a personal use of life insurance? A) An individual buys insurance to fund a buy-sell agreement B) An individual buys insurance to provide future income to a surviving spouse C) An individual buys cash value insurance to fund his children's college education D) An individual buys insurance to help pay off the family pay off the mortgage in case of premature death
A) An individual buys insurance to fund a buy-sell agreement
Which of the following meets the insured's personal needs, and is provided by nonmedical personnel? A) Intermediate care B) Custodial care C) Skilled care D) Assisted living
B) Custodial care
Which of the following could reduce the amount of the death benefit? A) Making premium payments within the grace period B) Choosing a paid-up addition dividend options C) Failure to repay a policy loan D) Adding a family term rider
C) Failure to repay a policy loan
Chance of a windstorm causing a loss to ones property is A) Risk B) Uninsurable C) Hazard D) Peril
A) Risk
The requirement that agents not commingle monies with their own funds is known as A) Premium accountability B) Express authority C) Accepted accounting principal D) Fiduciary responsibility
D) Fiduciary responsibility
What specific kind of insurance is often written in conjunction with hospital expense policies and includes surgeons' and anesthesiologists' fees? A) Basic surgical expense insurance B) Basic medical insurance C) Personnel insurance D) Practitioner's insurance
A) Basic surgical expense insurance
Conrad receives $50,000 from a $100,000 Accidental Death and Dismemberment policy as a result of the loss of his left arm in an accident. Conrad has received the A) Capital Amount B) Contributory Amount C) Primary Amount D) Principal Amount
A) Capital Amount
Benefits for a Disability Income policy are based on which of the following? A) Typical wage for similar profession B) Earnings of the insured C) Average US Wages D) Minimum wages
B) Earnings of the insured
Medicare Part B covers all of the following EXCEPT A) Outpatient hospital services B) Long-term care services C) Doctor's services D) Home health visits
B) Long-term care services
Insurance contracts are unilateral in nature. What does this mean? A) All parties to the contract exchange something of value B) A promise is made only at the time of policy application C) Only one party makes a promise D) The insured must make a promise to pay the premium
C) Only one party makes a promise
J's retirement plan meets all federal requirements and entitles him to certain tax benefits as the owner of the plan. What term best describes J's retirement plan? A) Variable B) Deferred C) Qualified D) Unqualified
C) Qualified
What type of insurer uses a formal sharing agreement? A) Mutual insurers B) Fraternal Benefit Societies C) Reciprocal Insurers D) Stock Insurers
C) Reciprocal Insurers
Under what circumstances will the contingent beneficiary receive the death benefit? A) If the tertiary beneficiary dies before the insured B) If designated by the primary beneficiary C) If designated by the insured D) If the primary beneficiary dies before the insured
D) If the primary beneficiary dies before the insured
All of the following are features of a health insurance plan purchased on the health insurance marketplace EXCEPT A) Dollar limits on essential benefits B) Guaranteed renewability C) Coverage for emergency services D) Coverage for pre-existing conditions
A) Dollar limits on essential benefits
A person has a history of DUIs. To his insurer, this presents what type of hazard? A) Legal B) Physical C) Moral D) Morale
D) Morale
If the annuitant dies before the annuity start date, which of the following is true? A) The interest will not be tax deferred B) The interest is tax free if the beneficiary is a spouse C) The interest is nontaxable D) The interest is taxable
D) The interest is taxable
An individual receives a lump-sum inheritance. He'd like to use the money to create a lifetime income since he'll be retiring soon. He purchases an annuity and wishes to receive payments beginning in 2 months A) Single Premium Immediate Annuity B) Flexible Premium Deferred Annuity C) Flexible Premium Immediate Annuity D) Single Premium Deferred Annuity
A) Single Premium Immediate Annuity
A property and casualty agent has been licensed for 7 years. How many continuing education hours must the agent complete this licensing period? A) 30 B) 24 C) 15 D) 0
B) 24
An applicant completes an application for a disability policy and pays the initial premium. The producer gives the applicant a conditional receipt. Insurance coverage for the applicant will become effective when A) The insurance company requests a medical examination B) The applicant signs the conditional receipt C) The producer delivers the policy D) The insurance company accepts the risk
D) The insurance company accepts the risk
According to the California Insurance Code, all of the following are general powers and duties of the Commissioner of insurance EXCEPT a) To establish a program to investigate consumer complaints against insurers .b) To make public service announcements to inform consumers of toll free access to make inquiries. c) To prepare a written report detailing consumer complaints regarding insurers. d) To delegate the power to approve a settlement.
d) To delegate the power to approve a settlement.
Restoring an insured after a claim is known as A) Indemnity B) Adhesion C) Restoration D) Reasonable expectations
A) Indemnity
Which of the following types of care would be provided at a community center? A) Skilled care B) Adult day care C) Respite care D) Intermediate care
B) Adult day care
All of the following could qualify as a group for the purpose of purchasing group health insurance EXCEPT A) Single employer with 13 employees B) An association of 35 people C) Labor union D) Multiple employer trust
B) An association of 35 people
Which of the following elements of an insurance contract requires paying premium and providing a statement of good health? A) Offer and acceptance B) Consideration C) Legal purpose D) Competente parties
B) Consideration
An agent has how many days in which to receive an appointment after the issuance of an insurance contract? A) 30 days B) 10 days C) 14 days D) 21 days
C) 14 days
A Medicare supplement policy must have a free-look period of at least A) 10 days B) 15 days C) 30 days D) 45 days
C) 30 days
Each of the following involves pure risk EXCEPT A) Bodily injury B) Drought C) Loss in the stock market D) Flood
C) Loss in the stock market
An illustration used in the sale of a life insurance policy must include a label stating A) "Guaranteed items" B) "Subject to change" C) "Representation of Insurance" D) "Life insurance illustration"
D) "Life insurance illustration"
Which of the following is NOT a typical type of coverage of Long-term coverage? A) Skilled nursing care B) Residential care C) Home health care D) Child day care
D) Child day care
A core Medicare supplement policy (Plan A) will cover all of the following expenses EXCEPT a) Part A deductible b) The first 3 pints of blood c) 20% if Part B coinsurance amounts for Medicare-approved services d) Part A coinsurance
a) Part A deductible
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.
c)Signed waiver of premium.
HMOs are known as what type of plans? A) Health savings B) Consumer driven C) Reimbursement D) Service
D) Service
Which of the following riders pay a beneficiary a death benefit that is double or triple the face amount if the insured's death was caused by an accident as defined in this policy? A) A Guaranteed Insurability Rider B) A Covered Peril Rider C) An Accidental Death Rider D) A Double Indemnity Rider
C) An Accidental Death Rider
Life settlement contracts are put into effect by which of the following? A) A collateral assignment B) A nonforfeiture option C) An absolute assignment D) The settlement options listed in the policy
C) An absolute assignment
A specified disease policy would cover which of the following? A)Illness caused by exposure to chemicals B) Infection due to liposuction C) Cancer D) Broken leg
C) Cancer
Which of the following is an example of a producer being involved in an unfair trade practice of rebating? A) Inducing the insured to drop a policy in favor of another one when it is not in the insured's best interest B) Charging a client a higher premium for the same policy as another client in the same insuring class C) Making deceptive statements about a competitor D) Telling a client that his first premium will be waived if he purchases the insurance policy today
D) Telling a client that his first premium will be waived if he purchases the insurance policy today
Under HIPAA portability, which of the following is NOT protected under requirements? A) Mentally ill B) Groups of one or more C) Self-employed D) Pregnant women
B) Groups of one or more
Under the Family Medical Leave Act, what happens to an employee's insurance benefits while he/she is on leave A) The benefits earned remain in effect for the duration of the employee's leave B) The benefits are cut in half during the employee's leave C) The benefits are suspended until the employee returns to work D) The benefits are cancelled
A) The benefits earned remain in effect for the duration of the employee's leave
Your client wants to provide retirement income for his elderly parents in case something happens to him. He wants to make sure that both beneficiaries are guaranteed an income for life. Which settlement option should this policyowner select? A) Life income B) Joint and Survivor C) Fixed-amount installments D) Fixed-period installments
B) Joint and Survivor
A qualifying retiree has access to all parts of the Social Security Medicare program. Which of these parts requires a monthly payment from the insured? A) Part A B) Part B C) Medicaid D) Medi-Cal
B) Part B
What is the only difference between blanket insurance and group health insurance? A) Blanket insurance is not provided to schools B) Membership is not allowed to change in blanket insurance, except on a yearly basis C) The insured members are not named D) Group health insurance is provided on an employee-only basis
C) The insured members are not named
Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary? A) Joint and survivor B) Single life C) Fixed-amount D) Life income with period certain
D) Life income with period certain
An insured was seriously injured in a skiing accident that required him to be hospitalized 5 weeks. His medical expense policy covered all of the following EXCEPT A) Necessary medicine and medical supplies B) Surgical expense C) Hospital room and board D) Loss of income while hospitalized
D) Loss of income while hospitalized
An insured was seriously injured in a skiing accident that required him to be hospitalized for 5 weeks. His medical expense policy covered all of the following EXCEPT A) Necessary medicine and medical supplies B) Surgical expenses C) Hospital room and board D) Loss of income while hospitalized
D) Loss of income while hospitalized
After cancellation or expiration of a policy, insurance agents are required to keep detailed bank and financial records about the transaction for a minimum of A) 5 years B) 1 year C) 2 years D) 3 years
A) 5 years
Which of the following is NOT a personal use of life insurance? A) An individual buys insurance to fund a buy-sell agreement B) An individual buys insurance to provide future income to a surviving spouse C) An individual buys cash value insurance to fund his children's college education D) An individual buys insurance to help the family pay off the mortgage in case of premature death
A) An individual buys insurance to fund a buy-sell agreement
HMO members pay a small fee when they see their primary care physician. This fee is called a A) Copay B) Coinsurance C) Deductible D) Stop-loss
A) Copay
The owner of a whole life policy with an accidental death rider intentionally kills himself after having the policy for 18 months. What is the insurance company's course of action? A) Deny any payment of death benefit B) Deny only payment of the face amount but pay the rider since suicide is an accident C) Pay the face amount only because suicide is not an accident D) Pay twice the face amount
A) Deny any payment of death benefit
A husband and wife both incur expenses that are attributed to a single major medical insurance deductible. Which type of deductible do they have in their policy? A) Family B) Flat C) Annual D) Per occurrence
A) Family
Which of the following is NOT a component of an insurance premium? A) Investment return B) Number of beneficiaries C) Mortality Cost D) Insurer expenses
A) Investment return (Dividends)
All of the following statements about mutual insurance companies are correct EXCEPT A) Policy dividends issued by mutual companies are guaranteed and not taxable B) Dividends allow policyholders to share in a mutual company's divisible surplus C) Dividends are a return of unused premiums D) Mutual companies issue policies referred to as participating
A) Policy dividends issued by mutual companies are guaranteed and not taxable
What is the purpose of the rehabilitation benefit in disability insurance? A) To cover the expenses of retraining the insured to return to work B) To compensate the insured for the lost income C) To refund the insured's premium paid during the disability D) To help the insured recover from a disability
A) To cover the expenses of retraining the insured to return to work
Because of an injury, an insured has been unable to work for 7 months. He wasn't able to pay his life insurance policy premium, yet the policy remained in force. The policy includes A) Waiver of premium rider B) Guaranteed insurability benefits C) Facility of payment clause D) Nonforfeiture options
A) Waiver of premium rider
An applicant is denied insurance because of information found on a consumer report. Which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company? A) Disclosure rule B) Fair Credit Reporting Act C) Consumer Privacy Act D) Conditional receipt
B) Fair Credit Reporting Act
According to the metal level classification of health plans, what percentage of health care costs will be covered under a gold plan? A) 50% B) 60% C) 80% D) 100%
C) 80%
Which of the following is true regarding the spendthrift clause in life insurance policies? A) It is only used when the beneficiary is a minor B) It is the same as irrevocable settlement clause C) It can protect the policy proceeds from creditors of the beneficiary D) It allows the beneficiary to select a different settlement option
C) It can protect the policy proceeds from creditors of the beneficiary
In order for an alumni association to be eligible to purchase group health insurance for its members, all of these statements must be true EXCEPT when the association A) Has a constitution, by-laws, and must hold annual meetings B) Is organized for reasons other than buying insurance C) Has at least 100 members D) Has been active for five years minimum
D) Has been active for five years minimum
Which of the following statements is NOT true regarding HICAP? A) It is overseen by The State Department of Aging B) It provides consumer counseling C) It works in conjunction with local area on aging D) It exists to assist seniors who are not qualified to receive Social Security of Medicare
D) It exists to assist seniors who are not qualified to receive Social Security of Medicare
If a business wants to make sure it will be able to cover losses due to the disability of its top employee, the business should get which type of insurance? A) Group health insurance policy B) Health Savings Account (HSA) C) Business overhead expense D) Key person disability income
D) Key person disability income
Which of the following is called a "second-to-die" policy? A) Family income B) Juvenile life C) Joint life D) Survivorship life
D) Survivorship life
When filling out an application for insurance, the applicant makes a mistake. If a fresh application were not available, what could the applicant do to properly correct the mistake? A) Cross out the incorrect answer, write the correct one beside it, and initial the answer B) Either white out the answer or cross it out and write the new answer beside it C) Nothing, A fresh application must be obtained D) White out the incorrect answer and write the new one over it
A) Cross out the incorrect answer, write the correct one beside it, and initial the answer
A limited health insurance policy that will pay a lump sum to an insured diagnosed with a heart attack, stroke, or renal failure is known as A) Dread disease insurance B) Critical illness insurance C) Accidental death and dismemberment D) Hospital confinement indemnity
B) Critical illness insurance
Which of the following losses would likely be covered under the Accidental Death rider? A) Death resulting from a long-term disability B) Death caused by a head-on collision C) Suicide D) Mountain-climbing accident
B) Death caused by a head-on collision
In some cases, in order for an insurer to legally disclose privileged information to appropriate sources, the insured must sign an authorization form. What is the maximum amount of time that can legally pass between the completion of the form and the disclosure of information? A) 1 month B) 6 months C) 1 year D) 2 year
C) 1 year
A life insurance policy that provides coverage to every family member in a single policy with permanent insurance and convertible term on other family members is called A) A family income policy B) A family blanket policy C) A family policy D) A family member's endowment
C) A family policy
Which of the following is provided by skilled care personnel to those who need occasional medical assistance and rehabilitative care? A) Home health care B) Skilled care C) Intermediate care D) Custodial care
C) Intermediate care
What is the purpose of a benefit schedule? A) To provide the dates for the payment of benefits B) To list the insured's copayments and deductibles C) To state what and how much is covered in the plan D) To include the average charges for procedures
C) To state what and how much is covered in the plan
An individual has a $200,000 convertible term life insurance policy. If he chooses, he can A) Convert to another term policy with a lower face amount without proof of insurability B) Purchase an individual annuity for any face amount using the 1035 exchange privilege C) Purchase another term policy and increase his death benefit without proof of insurability D) Convert a whole life policy for the same amount without proof of insurability
D) Convert a whole life policy for the same amount without proof of insurability
Which of the following statements is NOT true regarding HICAP? A) It is overseen by The State Department of Aging B) It provides consumer counseling C) It works in conjunction with local area agencies on aging D) It exists to assist seniors who are not qualified to receive Social Security or Medicare
D) It exists to assist seniors who are not qualified to receive Social Security or Medicare
Any intentional fraudulent omission on the part of the insured entitles the insurer to A) Charge a higher premium on the anniversary date B) Apply for reconsideration C) Re-underwrite the policy D) Rescind the policy
D) Rescind the policy
When acting as a field underwriter, a producer is A) Visiting a prospective policyholder in the client's home rather than in the producers office B) Obligated to turn over all premiums to the insurer in a timely fashion C) Obtaining all necessary signatures on the application D) Seeking credible information about an applicant for health insurance
D) Seeking credible information about an applicant for health insurance
If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select? a) Fixed period b)Life with period c)Fixed amount d)Interest only
a) Fixed period
Which portion of a nonqualified annuity payment is taxable? A) Both principal and interest B) The entire payment C) Interest earned on principal D) Actual payment amount
C) Interest earned on principal
What happens to the copy of the application for health insurance once the policy is issued? A) It becomes part of the entire contract B) It is filed with the Department of insurance C) It is discarded D) It is returned to the insured
A) It becomes part of the entire contract
An insured committed suicide one year after his life insurance policy was issued. The insurer will A) Refund the premiums paid B) Pay the policy's cash value C) Pay the full death benefit to the beneficiary D) Pay nothing
A) Refund the premiums paid
A college student will graduate next year. HIs studies have limited his ability to work, so he has borrowed funds to pay for his education. He would like to start a permanent life insurance program that would cover his debt and still be affordable during the period he is establishing his earning potential. An appropriate policy would be A) Current Assumption Whole Life B) Level Term to age 65 C) Single Premium Whole Life D) Modified Whole Life
D) Modified Whole Life
Which of the following time periods is the general enrollment for Medicare Part B? A) January 1 through March 31 each year B) March 1 through May 31 each year C) January 1 through January 31 each year D) March 1 through March 31 each year
A) January 1 through March 31 each year
What is the main difference between a franchise and group insurance? A) Franchise insurance charges smaller premiums than group insurance B) In franchise insurance participants do not need to submit their applications C) In franchise insurance underwriting is done for each person D) Franchise insurance provides coverage for large groups
C) In franchise insurance underwriting is done for each person
What does Basic Medical Expense cover? A) All office visits, under any circumstances B) Surgery C) Nonsurgical services a physician provides D) X-ray charge
C) Nonsurgical services a physician provides
All of the following are characteristics of group health insurance EXCEPT A) The parties that hold a group health insurance contract are the employees and the employer B) The cost of insuring is less than what would be charged for comparable benefits under an individual plan C) Employers may require the employees to contribute the premium payments D) The benefits under a group plan are more extensive than those under individual plans
A) The parties that hold a group health insurance contract are the employees and the employer
According to the life insurance replacement regulations, which of the following would be an example of policy replacement? A) Term insurance is changed to a Whole Life policy B) A lapsed policy is reinstated within a specific timeframe C) A policy is reissued with a reduction in cash value D) A term policy expires, and the insured buys another term life policy
C) A policy is reissued with a reduction in cash value
An insured's disability income policy includes an additional monthly benefit rider. For how many years can the insured expect to receive payment from the insurer before Social Security benefits begin? a) 5 b) 3 c) 2 d) 1
d) 1
An individual is approaching retirement age and is concerned about having proper coverage would he have to be placd in Long-Term Care (LTC) facility. His agent told him that LTC policies would provide necessary coverage at all of the following levels EXCEPT A) Intermediate B) Skilled C) Acute D) Custodial
C) Acute
The deductible does each of the following EXCEPT A) Reduce loss costs B) Lower premium costs C) Indemnify the insured D) Excludes payments for small claims
C) Indemnify the insured
If a retirement plan or annuity is "qualified", this means A) It has unlimited uses B) Dividends will be paid until payments are distributed C) It is not permitted by the IRS D) It satisfies IRS requirements for favorable tax treatment
D) It satisfies IRS requirements for favorable tax treatment
In group insurance, the primary purpose of the Coordination of Benefits provision is to A) Prevent overinsurance B) Prevent lawsuits between insurance companies involved in the claim C) Ensure the payment of claims by all policies that are in effect at the time of the claim D) Encourage hospitals to keep their charges reasonable
A) Prevent overinsurance
Which of the following best describes a pure life annuity? A) It continues to the beneficiary when the annuitant dies B) It is also known as refund life annuity C) It guarantees to pay out all the proceeds D) It provides the highest monthly benefits
D) It provides the highest monthly benefits
A policyholder returns the policy to the insurer a week after it is delivered. How much of the premium will be returned to the applicant? A) 50% B) None C) 100% D) 80%
C) 100%
Which of the following is an example of a physical hazard? A) Lying B) Bankruptcy C) Diabetes D) Carelessness
C) Diabetes
When an agent submits a license renewal with the required renewal fee on or before the expiration date, which of the following statements is true? A) The Agent may only transact all normal business for up to 60 days after the specified expiration date B) The agent may only transact after the expiration date if the agent has received payment receipt from the Department C) The agent may transact only if he or she appears in person to the Department and requests a temporary extension of the license D) If the agent has not received the new license by the day after the current license expires, the agent may not transact until the new license is received
A) The Agent may only transact all normal business for up to 60 days after the specified expiration date
Life income joint and survivor settlement option guarantees A) Payout of the entire benefit B) Equal payments to all recipients C) Income for 2 or more recipients until they die D) Payments of interest on death proceeds
C) Income for 2 or more recipients until they die
Which of the following is true regarding pure life annuity settlement option A) It guarantees income for a specified period of time B) It provides the highest monthly benefit C) It guarantees that all the proceeds will be paid out D) The beneficiary will receive a refund of the principal
B) It provides the highest monthly benefit
Guaranteeing future dividends is considered to be an unfair or deceptive act known as A) Misrepresentation B) Churning C) False financial statements D) Rebating
A) Misrepresentation
What is described as the termination of a plan of insurance between the insurer and the entire group of employees? A) Termination B) Cancellation C) Nonrenewal D) Discontinuance
D) Discontinuance
Core benefits are included in all Medicare supplemental policies. What percentage of Part B coinsurance is required? A) 20% B) 35% C) 10% D) 15%
A) 20%
Which of the following is true regarding pure life annuity settlement option? A) It guarantees income for a specified period of time B) It provides the highest monthly benefit C) It guarantees that all the proceeds will be paid out D) The beneficiary will receive a refund of the principal
B) It provides the highest monthly benefit
All of the following are true about key person insurance EXCEPT A) The business is the beneficiary B) The death benefit is taxable to the business C) The business is the applicant and owner D) The employee must give written consent by signing the application
B) The death benefit is taxable to the business
In life insurance, which of the following is NOT required to have an insurable interest in the insured? A) The policyowner B) The insured C) The applicant D) The beneficiary
D) The beneficiary
Which of the following depicts the law of large numbers? A) Larger groups produce healthier applicants B) Large groups offer less opportunity for loss C) The larger the group is, the more likely it will be to get a good choice D) The larger the pool of risks under study, the more accurate the predictions will be
D) The larger the pool of risks under study, the more accurate the predictions will be
Which of the following used to be called Medicare + Choice Plans? A) Medicare Supplement Plans B) Original Medicare Plans C) Medicare Advantage Plans D) Medical Insurance
C) Medicare Advantage Plans
Considering the California Insurance Code's definition of an insurable event, which of the following statements is true? A) The more unpredictable a loss, the more insurable it is B) The more unpredictable a loss, the higher level of protection is needed C) The more predictable a loss, the less insurable it is D) The more predictable a loss, the more insurable it is
D) The more predictable a loss, the more insurable it is
The paid-up addition option uses the dividend A) To purchase a one-year term insurance in the amount of the cash value B) To reduce next year's premium C) To accumulate additional savings for retirement D) To purchase a smaller amount of the same type of insurance as the original policy
D) To purchase a smaller amount of the same type of insurance as the original policy
A retail shop owner is insured under a business overhead policy that pays a monthly benefit of $2500. His actual monthly expenses are $3000. If the owner becomes disabled, the monthly benefit payable under his policy will be A) 2500 B) 3000 C) 2000 D) 2100
A) 2500
Underwriters use all of these methods to protect the insurer against adverse selection EXCEPT A) Only accepting a small percentage of applicants B) Accepting certain risks only at a higher rate C) Restricting coverage D) Refusing to accept a risk
A) Only accepting a small percentage of applicants
The entire contract includes all of the following EXCEPT A) Any riders or amendments B) A buyer's guide C) The life insurance policy D) A copy of the application
B) A buyer's guide
Which of the following elements of an insurance contract requires paying premium and providing a statement of good heath? A) Offer and acceptance B) Consideration C) Legal purpose D) Competent parties
B) Consideration
What are the continuing education requirements for life-only agents in California? A) 30 hours every 4 years B) 24 hours every 2 years C) 25 hours every year D) 20 hours annually for the first 4 years
B) 24 hours every 2 years
The presumptive disability provision that assumes that the insured is totally disabled upon loss of all of the following EXCEPT A) Two limbs B) Feeling C) Sight D) Hearing
B) Feeling
A person who does not lock the doors or does not repaid leaks shows an indifferent attitude. This person presents what type of hazard A) Physical B) Morale C) Moral D) Legal
B) Morale
Gross premium for a life insurance policy is determined by adding which two components? A) Interest and expenses B) Net premium and expenses C) Mortality and interest D) Net premium and interest
B) Net premium and expenses
Health insurance rates may be based on all of the following EXCEPT A) Medical history B) Religion C) Gender D) Age
B) Religion
Which of the following is a daily nursing and rehabilitative care that can only be provided by medical personnel, under the direction of a physician? A) Assisted living B) Skilled care C) Intermediate care D) Custodial care
B) Skilled care
To qualify for disability income benefits under Social Security, an individual's disability must be expected to result in death or last for at least A) 5 months B) 6 months C) 12 months D) 2 years
C) 12 months
Elaine's Basic Hospital Expense Policy has a $500 per day limit for room and board in a hospital for a maximum of 5 days. Elaine got sick and had to spend 3 days in the hospital at $650 a day. How much will Elaine have to pay to cover the rest of her room and board charges? A) 150 B) 350 C) 450 D) 0
C) 450
Which of the following statements is INCORRECT concerning Modified Endowment Contracts (MECs)? A) A primary purpose of the regulations governing MEC's was to reduce incentives for the use of life insurance as a short-term investment vehicle B) A distribution from an MEC may be subject to a 10% penalty if withdrawn prior to 59 1/2 C) An MEC must always pass the 7-pay test D) A life insurance policy failing the 7-pay test is classified as an MEC
C) An MEC must always pass the 7-pay test
Which of the following policies would NOT offer a policy loan option? A) Universal life B) Variable universal life C) Term life D) Whole life
C) Term life
Once the initial benefit limit in Medicare Part D is reached, how is the beneficiary affected? A) The beneficiary is no longer responsible for prescription drug costs B) Medicare Part A will cover all costs C) The beneficiary is then responsible for a portion of prescription drug costs D) The beneficiary is responsible for 75% of prescription drug costs
C) The beneficiary is then responsible for a portion of prescription drug costs
All of the following are characteristics of group insurance plans EXCEPT A) The parties hold a group health insurance contract are the employees and the employer B) The cost of insuring an individual is less than what would be charged for comparable benefits under an individual plan C) Employers may require the employees to contribute to the premium payments D) The benefits under a group plan are more extensive than those under individual plans
A) The parties hold a group health insurance contract are the employees and the employer
Which of the following types of insurance is investment based, has a level fixed premium, and a nonguaranteed cash value? A) Universal life B) Credit life C) Variable whole life D) Interest-based life
C) Variable whole life
Which of the following is NOT a component of an insurance policy premium? A) Investment return B) Number of beneficiaries C) Mortality cost D) Insurer expenses
B) Number of beneficiaries
A subscriber has been treated for a medical condition by his primary care physician for 3 months with experimental remedies without a significant health improvement before being referred to a specialist. Which of the following does the subscriber have? A) A fully-paid indemnity plan that covers his option at a specified provider B) Major medical insurance with a low deductible and low coinsurance C) A gatekeeper HMO plan to control costs D) A limited benefit plan
C) A gatekeeper HMO plan to control costs
If a basic medical insurance plan's benefits are exhausted, what type of plan will then begin covering those losses? A) Social security B) Supplementary major medical C) Supplementary basic medical D) None. Once benefits are exhausted for a given benefit period, the insurer is responsible for covering the remainder of the expenses
B) Supplementary major medical
Which of the following would be TRUE of both the fixed-period and fixed-amount settlement options? A) The amount of payments is based on the recipient's life expectancy B) The size of installments decreases after certain period of time C) Both guarantee payments for the life of the beneficiary D) Both guarantee that the principal and interest will be fully paid out
D) Both guarantee that the principal and interest will be fully paid out
Items stipulated in the contract that the insurer will not provide coverage for are found in the A) Benefit payments clause B) Consideration clause C) Exclusions clause D) Insuring clause
C) Exclusions clause
An insured is anxious to get treatment for a health condition, and is convinced that a specialist is needed to cure the condition. If the insured has a PPO plan, which of the following is true? A) The insured will have to pay all costs for the specialist out-of-pocket if a primary care physician referral is not obtained B) The insured can select any specialist, but non-network specialists have higher out-of-pocket costs C) The insured must visit a primary care physician who will provide a referral to a specialist if the condition requires one D) The insured can visit a specialist in-network without consulting a primary care physician, but out-of-pocket cost will be greater without the primary care physician's referral
B) The insured can select any specialist, but non-network specialists have higher out-of-pocket costs
What is it called when a doctor accepts the Medicare approved amount? A) Consent B) Verification C) Acceptance D) Assignment
D) Assignment
