Life Flashcards
(149 cards)
1
Q
What type of group rating uses the actual experience of the group as a factor in developing the rates to be charged?
a. Community rating
b. Individual rating
c. Experience rating
d. District rating
A
c. Experience rating
2
Q
In exiting a bus, Jason jumps down onto the street and breaks his ankle. Which is true?
a. The broken ankle was an intentional act
b. The broken ankle was unintended and unforeseen
c. The leap from the bus was unintended and unforeseen
d. The leap from the bus was an attempt at suicide.
A
b. The broken ankle was unintended and unforeseen
3
Q
How much of the premium is paid by employees participating in a non-contributory plan?
a. 25%
b. 50%
c. 100%
d. 0%
A
d. 0%
4
Q
What is the difference between the Medicare approved amount for a service and the actual charge?
a. Actual charge
b. Limited charge
c. Coinsurance
d. Excess charge
A
d. Excess charge
5
Q
A heath maintenance organization (HMO) plan contains costs by promoting:
a. After-hours care
b. Preventative care
c. Generic care
d. Fee for service
A
b. Preventative care
6
Q
A disability income policy social insurance supplement (SIS) benefit rider:
a. Pays benefit only if turns out the insured is eligible for benefits from social insurance
b. Pays benefit if the insured is injured on the job and qualifies for worker’s compensation benefits.
c. Provides a payment only when the insured is totally disabled, but not receiving any social insurance benefit plans
d. Provides for a bonus payment that will match social security disabled income benefits, if they are paid
A
c. Provides a payment only when the insured is totally disbled, but not receiving any social insurance benefit plans
7
Q
Renewable term insurance can be best described as:
a. A level death benefit with an increase in premium
b. A level death benefit with a decrease in premium
c. A decreasing death benefit with a level premium
d. An increasing death benefit with a level premium
A
a. A level death benefit with an increase in premium
8
Q
The basic feature of a managed care indemnity plan is that the participants:
a. Select a provider and submit claims to the insurance company
b. Select a provider at work and claims processor
c. Pre-select a physician and third-party claims administrator
d. Pre-select a clinic and submit claims to the insurance company
A
a. Select a provider and submit claims to the insurance company
9
Q
How do rights of an irrevocable beneficiary differ from those of a revocable beneficiary?
a. An irrevocable beneficiary may be changed by the policy without the beneficiary’s consent
b. An irrevocable beneficiary has a vested right that neither the policy-owner nor his/her creditors can impair without beneficiary’s consent
c. A revocable beneficiary can become the policy-owner at any time by paying the premiums
d. An irrevocable beneficiary has the right to name a contingent beneficiary for the policy
A
b. An irrevocable beneficiary has a vested right that neither the policy-owner nor his/her creditors can impair without beneficiary’s consent
10
Q
What recourse does an insurer have if a violation of a material warranty on the past of the insured is discovered?
a. A hearing by the Insurance Commissioner to determine the severity of the misrepresentation and to determine an appropriate course of action
b. None, if the policy has been in force for over 12 months
c. Rescission of the policy
d. A hearing by a court of law to determine an appropriate course of action the insurer may take
A
c. Rescission of the policy
11
Q
All of the following statements about the election of a life insurance policy’s settlement options are true, EXCEPT:
a. The election is made by the policy-owner t the time the application is submitted
b. When no settlement option is chosen, the proceeds are automatically paid to the policy-owner’s estate
c. The policy-owner may change the settlement option after it has been chosen
d. The election may be made by the beneficiary if no settlement option is in force at the time of death of the insured
A
b. When no settlement option is chosen, the proceeds are automatically paid to the policy-owner’s estate
12
Q
Which of the following describes an insurer who only has enough financial resources to provide for all its liabilities and for all reinsurance of all out standing risks?
a. Guaranteed
b. Insolvent
c. Solvent
d. Non-participating
A
b. Insolvent
13
Q
What is the purpose of “key person” insurance?
a. To provide health insurance benefits to key employees
b. To give a key employee the ability to purchase the busines
c. To give retirement benefits to key employees
d. To cover decreased business earnings due to the death of a key employee
A
d. To cover decreased business earnings due to the death of a key employee
14
Q
What would be the insurance commissioner’s most likely course of action if an applicant for an insurance license had a previous application for a professional license denied for cause by any licensing authority within five years of the date of the filing?
a. Deny the application, probably after hearing
b. As long as it was not insurance related, the application will be granted
c. Approve only after a review by a panel of insurance professionals
d. Deny the application without a hearing
A
d. Deny the application without a hearing
15
Q
An insurer bought a $150,000 non-participating whole life policy many years ago. He is 100 years old today. He has never borrowed from the policy’s cash value and h faithfully made all payments when due. The policy’s cash value is:
a. $150,000
b. $100,000
c. $0
d. $50,000
A
a. $150,000
16
Q
An intentional concealment entitles the injured party to which course of action?
a. None, due to the fact that the concealment was a mistake
b. $250 fine to be paid to the injured party
c. Possible imprisonment to the party who concealed the information
d. Rescission of the contract
A
d. Rescission of the contract
17
Q
Loss retention is an effective risk management technique when all of the following conditions exist, EXCEPT:
a. The probability of loss is unknown
b. The insured choose to assume the losses invoved
c. The losses are highly predictable
d. The worst possible loss is not serious
A
a. The probability of loss is unknown
18
Q
When are the parties to a contract required to communicate information solely based on personal judgement for matter in question?
a. Only when asked
b. Only when relevant
c. Only when the policy terms require it
d. Never
A
c. Only when the policy terms require it
19
Q
A disability policy describe as “guaranteed renewable” is one where the insurance company:
a. Surrenders the right to change the premiums
b. Reserves the right to change any of its terms
c. Reserves the right to change the premiums, but may not change any of its terms
d. May not renew the policy if the insured censes to comply with certain conditions, such a continued employment
A
c. Reserves the right to change the premiums, but may not change any of its terms
20
Q
Which statement is true regarding Medicare supplement insurance plans?
a. Insurers may offer only broad coverage plans that contain both core benefits and additional benefits
b. Insurers may freely offer whatever supplement coverage they prefer to market
c. Insurers may offer police that contain only the core benefits
d. Insurers may create insurance policies for approval by the CA Department of Insurance
A
c. Insurers my offer police that contain only the core benefits
21
Q
Which type of insurance guarantees the right to renew the policy each year, regardless of health, but at an increased premium:
a. Convertible term
b. Level term
c. Decreasing term
d. Renewable term
A
d. Renewable term
22
Q
The guaranteed insurability option provides the ability to:
a. Waive premium payments in the event of disability
b. Access a portion of the death benefit in the event of serious illness
c. Double the amount of the death benefit in the event of accidental death
d. Purchase additional insurance regardless of insurability
A
d. Purchase additional insurance regardless of insurability
23
Q
The passage of workers’ compensation legislation meant that:
a. Employers no longer had any legal means of obtaining reimbursement for work injuries
b. Employers would have to sue their employees to obtain reimbursement for work injuries
c. Employers would be held responsible for the cost of their employees work injuries, regardless of fault
d. Employers were no longer responsible for work injuries to employees
A
c. Employers would be held responsible for the cost of their employees work injuries, regardless of fault
24
Q
JM and Associates is an agency that represents BLG Insurance Corporation. RW and Associates may leave the name BLG Insurance Corporation in its advertisements by clearly stating the relationship between the two business in any of the following ways, EXCEPT:
a. JM and Associates who represent BLG Insurance Corporation
b. JM and Associates underwriting for BLG Insurance Corporation
c. JM and Associates placing business through BLG Insurance Corporation
d. JM and Associates using the services of BLG Insurance Corporation
A
b. JM and Associates underwriting for BLG Insurance Corporation
25
The probationary period in a group health policy is intended for people:
a. Who joined the group after the policy effective date
b. Without health coverage after a qualifying event
c. Who declined to join the group at the time of eligibility
d. With a preexisting condition when they joined the group
a. Who joined the group after the policy effective date
26
Which provision will pay a portion of the death benefit prior to the insured's death due to a serious illness?
a. Waiver of premium
b. Cost of living
c. Accelerated death benefit
d. Disability income
c. Accelerated death benefit
27
An example of a third-party administrator is:
a. An agent's supervisor who takes part of his/her commission
b. An employee who handles self-insurance claims
c. An employee who is responsible for evaluating for relative quality of competing group health and welfare benefits offered to his/her employer by insurers
d. An outside organization that processes claims for an employer's self-funded plans
d. An outside organization that processes claims for an employer's self-funded plans
28
An individual with a low income and high insurance needs should buy:
a. Whole life insurance
b. Endowment insurance
c. Universal life insurance
d. Term insurance
d. Term insurance
29
A form of rest or relief offered to family members caring for a person who requires continual care is:
a. Hospice care
b. Hospital care
c. Respite care
d. Intermediate care
c. Respite care
30
All of the following statements about contingent beneficiaries are true: EXCEPT:
a. They receive remaining payments to be made under a settlement agreement upon the primary beneficiary's death
b. The Contingent beneficiary shares death proceeds equally with the primary beneficiary
c. They receive the death proceeds if the primary beneficiary is deceased at the time of the insured's death
d. More than one contingent beneficiary may be named
b. The Contingent beneficiary shares death proceeds equally with the primary beneficiary
31
The payor rider on a juvenile life policy provides that if the payor dies or becomes disabled before the insured juvenile reaches the age specified on the policy:
a. The insurer will make the payments until the insured juvenile reaches the specified age
b. The insurer will lend money to keep the policy in force
c. The insured's estate will make the premium payments
d. The insurer will make all of the policy payments
a. The insurer will make the payments until the insured juvenile reaches the specified age
32
The insured is totally and permanently disabled. The insured's policy continues in force without the payment of a premium because the policy contains a:
a. Grace period provision
b. Reinstatement provision
c. Guaranteed insurability provision
d. Waiver of premium provision
d. Waiver of premium provision
33
All of the following statements about survivorship life insurance are true, EXCEPT:
a. The policy face amounts are usually more than $1,000,000
b. The policy face amount is paid out only upon death of the first insured to die
c. It offers premiums that are quite low compared to what is charged on separate policies
d. It is particularly well suited to meet the needs of estate taxes
b. The policy face amount is paid out only upon death of the first insured to die
34
If an insurer is not able to meet financial obligations when due, the insurer would be considered:
a. Insolvent
b. Unauthorized
c. Impaired
d. Nonadmitted
a. Insolvent
35
What does the Insurance Commissioner have the right to do if an agent lacks authority from an insurer named on a binder for coverage?
a. Fine the insurance company for non-compliance
b. Suspend or revoke the license of the agent
c. Authorize the agent with a certificate of convenience
d. Request a certificate of authority be issued immediately
b. Suspend or revoke the license of the agent
36
Which definition of disability is the most difficult or an injured worker to satisfy?
a. The own-occupation definition used by the Social Security Administraton
b. The typical definition of partial disability used by disability income policies
c. The total disability definition used by the Social Security Administration
d. The typical definition of temporary disability used by disability income policies
c. The total disability definition used by the Social Security Administration
37
In the event of an accidental death, the principal sum in a disability policy will be paid:
a. Over the course of a set period
b. In one lump sum
c. On a sliding schedule
d. As a monthly indemnity
b. In one lump sum
38
People commonly purchase an annuity to protect against the risk of:
a. Dying before their home mortgage is paid off
b. Outliving their financial resources
c. Becoming uninsrable
d. Dying too soon
b. Outliving their financial resources
39
Which of the following statements about the HICAP program is false?
a. Stands for Health Insurance Counseling Advocacy Program
b. Serves people needing information about Medicare
c. Does not sell or endorse any specific type of insurance
d. Provides assistance for a fee, based upon ability to pay
d. Provides assistance for a fee, based upon ability to pay
40
The insured, aged 65, owns a $100,000 non- participating whole life policy. The policy is paid-up as of today. When would the cash value reach $100,000?
a. Today
b. Age 85
c. Never
d. Age 100
d. Age 100
41
Why is having a large number of similar exposure units important to insurers?
a. The greater the number insured, the more premium is collected to offset fixed costs
b. The insurer increases its market share with every insured
c. The greater the number insured, the greater the amount of premiums collected to help cover losses
d. The greater the number insured, the more accurately the insurer can protect losses and set appropriate premiums
d. The greater the number insured, the more accurately the insurer can protect losses and set appropriate premiums
42
A measure for rating an individual's need for LTC benefits is called:
a. Case management
b. The gatekeeper mechanism
c. Activities of daily living
d. Co-Insurance
c. Activities of daily living
43
In order to receive the principal sum benefit for death from a disability policy, the death must occur:
a. Within a specified number of days after injury
b. Any time during a rehabilitation period
c. Any time during a total dismemberment period
d. Within the policy period from any cause
a. Within a specified number of days after injury
44
A health insurance deductible is:
a. The insured's payment for health care that is not considered a covered expense
b. The cost of a covered expense, minus the office co-payment
c. The portion of insurance premium paid coverage by the insured
d. The amount of coverage expense the insured pays before the insurer pays
d. The amount of coverage expense the insured pays before the insurer pays
45
Which of the following re commonly covered by medical expense policies?
a. Elective cosmetic surgeries
b. Expenses covered by a workers' compensation policy
c. Pre-existing conditions
d. Accidental injuries
d. Accidental injuries
46
According to the CA Insurance Code, an insured's policy must specify all of the following. EXCEPT:
a. The risks insured agains
b. The property or life being insured
c. The financial rating of the insurer
d. The policy period
c. The financial rating of the insurer
47
Which of the following expenses is never covered by an LTC insurance policy?
a. Home health care
b. Hospital acute care unit
c. Adult day care
d. Alzheimer's disease
b. Hospital acute care unit
48
Which of the following is a hazard?
a. A large number of similar exposure units
b. A peril
c. A condition that might increase the likelihood of a loss occuring
d. A speculative risk
c. A condition that might increase the likelihood of a loss occuring
49
When a licensed agent submits a renewal application with application fee on or before the expiration date:
a. The agent will be able to operate if a receipt for payment is returned prior to the license expiration date
b. The agent will be able to operate for up to 60 days after the specified expiration date
c. The agent will be able to operate if the agent goes in person to the insurance department to receive a temporary extension of the licensed
d. The agent will be able to continue to operate after a 30-day extension to operate without receipt if requested and approved
b. The agent will be able to operate for up to 60 days after the specified expiration date
50
A hospital confinement indemnity insurance policy pays:
a. An Indemnity to the insured for all expenses incurred when the insured is confined to a hospital
b. The daily benefit coverage amount stated in the policy for each day the insured is confined in the hospital
c. 100% of the covered medical expenses, les the deductible and co-insurance percentage
d. The amount of the actual hospital expenses
b. The daily benefit coverage amount stated in the policy for each day the insured is confined in the hospital
51
A provision stating that health insured and their insurers will share covered losses in an agreed proportion is called:
a. The stop-loss provision
b. Percentage insuring
c. Comprehensive insurance
d. Co-Insurance
d. Co-Insurance
52
Common life insurance policy riders include all of the following, EXCEPT:
a. Extended Term
b. Guaranteed insurability
c. Accidental death
d. Waiver of premium
a. Extended Term
53
A $50,000 whole life policy with a cash value of $10,000 has been in force for 11 years. The policy owner is unable to continue the premium payments. Which of the following describes the reduced paid-up non-forfeiture option:
a. The policy-owner begins to receive $200 monthly payments from the insurer that will continue for life
b. The policy is surrendered and the policy-owner is paid $10,000 by the insurer
c. The cash value is used to purchase a $50,000 term policy that is paid-up for 10 years
d. The cash value is used to purchase a $20,000 paid-up policy
d. The cash value is used to purchase a $20,000 paid-up policy
54
Term insurance is typically characterized by:
a. Low premiums and high cash value
b. High premiums and high cash value
c. High premiums and no cash value
d. Low premiums and no cash value
d. Low premiums and no cash value
55
What would we call a representation that fails to correspond to its stipulations or assertions?
a. Fatal
b. Fraud
c. Frivolous
d. False
d. False
56
In the state of California:
a. Twisting is an approved practice
b. Providing free insurance coverage in connection with the sale of services as an inducement for completing the transaction is not legal
c. Life and health rating may not be related to the age of the insured
d. A life solicitor's license has the same licensing requirements as a life agent's license
b. Providing free insurance coverage in connection with the sale of services as an inducement for completing the transaction is not legal
57
The adjustments as insurer makes to a cash value account in a universal life policy each time a payment is made includes all the following, EXCEPT:
a. Subtract from mortality and general expense charges
b. Add the current interest
c. Subtract the policy surrender charges
d. Add the current premium paid
c. Subtract the policy surrender charges
58
The Employee Retirement Income Security Act of 1974 (ERISA) mandates requiring the plan sponsor to provide participants with:
a. Plan descriptions and benefit statement
b. Trust and solvency reports
c. Reports of tax qualification fulfillment
d. Annual financial statements
d. Annual financial statements
59
Which of the following requires a reporting company to respond to a consumer's compliant that his/her file contains inaccurate information about them:
a. Unfair Practices Act
b. COBRA
c. Credit Reporting Act
d. Medical Information Act
c. Credit Reporting Act
60
Under an Individual health guaranteed renewal contract, the insurer has the right to:
a. Discontinue coverage on the basis of employment
b. Cancel the policy for health rasons
c. Make unilateral benefit changes
d. Change premiums for the same class insured
d. Change premiums for the same class insured
61
Under COBRA, a qualifying event ensures that an employee who loses coverage can:
a. Transfer coverage to another group
b. Elect to continue coverage
c. Convert to an individual policy
d. Request a waiver of premium
b. Elect to continue coverage
62
All of the following statements about social security disability benefits are true, EXCEPT:
a. Benefits are based on the level of worker's earnings up to the time of the disability
b. Benefits will continue only while the worker cannot work at all
c. Benefits are designed to replace the entire amount of a worker's earnings
d. Workers must be totally and permanently disabled for at least five months to be eligible for benefits
c. Benefits are designed to replace the entire amount of a worker's earnings
63
Under Social Security, the definition of disability is the inability to engage in:
a. An approved occupaton
b. Any substantial gainful activity
c. An activity with a given level compensation
d. The person's chosen career
b. Any substantial gainful activity
64
Which of the following statements about LTC is correct?
a. In 1990, the average annual cost for a nursing care home was approximately $10,000 per year
b. The need for LTC coverage can arise only after age 50
c. Medi-Cal is one of the most commonly sold LTC policies designed to protect the assets of middle-class Californians
d. The very poor and the very rich probably do not need LTC coverage
d. The very poor and the very rich probably do not need LTC coverage
65
Which of the following is a true statement regarding the Social Security OASDHI program?
a. The program provides only a minimum floor of income, and individuals are expected to supplement this with their own personal programs
b. The actuarial value of each person's contributions is closely related to the actuarial value of each person's benefits
c. With only a few exceptions, this is a voluntary program
d. The program is fully funded
a. The program provides only a minimum floor of income, and individuals are expected to supplement this with their own personal programs
66
The insured's policy has a deductible that is applied between the exhaustion of basic plan limits and the commencement of excess coverage. This is called a:
a. Family Deductible
b. Per cause deductible
c. Corridor deductible
d. Stop-loss limit
c. Corridor deductible
67
What makes up the entire contract in a life insurance policy?
a. The policy, and when attached, the application
b. The policy, and any sales literature presented by the agent of the policy holder
c. The policy, the application and any verbal understanding
d. The policy by itself, but never the application
a. The policy, and when attached, the application
68
Each of the following terms is an important characteristic of a major medical policy, EXCEPT:
a. Deductible
b. Co-insurance
c. Maximum amounts
d. Capitation
d. Capitation
69
In California, the minimum participation requirement for a contributory large group health insurance plan is:
a. 50% of eligible employees
b. 75% of eligible employees
c. 25% of eligible employees
d. 40% of eligible employees
b. 75% of eligible employees
70
Which of the following is a correct statement about life insurance policy types?
a. Group Life insurance is offered only to employees who provide evidence of insurability
b. The initial premium for term insurance is lower than the initial premium for whole life insurance
c. Limited payment whole life policies stay in effect only for as long as the premium is paid
d. Universal life policies have a structured premium payment schedule that must be followed during the entire contract period
b. The initial premium for term insurance is lower than the initial premium for whole life insurance
71
During the disability elimination period:
a. Residual benefits are payable
b. No benefits are payable
c. Occupational claims re payable
d. All claim are payable
b. No benefits are payable
72
A provision stating the insured and the insurer will share covered losses in an agreed proportion is called:
a. Percentage sharing
b. Co-insurance
c. Stop-loss provision
d. Comprehensive insurance
b. Co-insurance
73
Medicare Part A provides coverage for all of the following, EXCEPT:
a. Home health care
b. Hospice
c. Hospitalization
d. Physician services
d. Physician services
74
While an insurer is paying the premium for a life insurance policy under the waiver of premium rider:
a. The insurer is named as the primary beneficiary
b. The cash value does not increase
c. The dividend payment cease
d. The policy remains in full force in every respect
d. The policy remains in full force in every respect
75
According to the CA Insurance Code, all insurers must maintain a department to investigate:
a. Possible abuses of rating laws
b. Possible arson
c. Possible fraudulent claims from insureds
d. Possible abuses of fiduciary responsibilities
c. Possible fraudulent claims from insureds
76
Under the Consolidated Omnibus Budget Reconsolidation Act (COBRA), which of the following is a qualifying event?
a. Promotion
b. Marriage
c. Divorce
d. Relocation
c. Divorce
77
Along with having enough assets to provide for its liabilities and for reinsurance for all outstanding risks, in order to remain sovent, the insurer must also meet minimum requirements equal to what amount required by the California Code?
a. Paid-in capital
b. 25% of policy holders' deposits
c. $1,000,000
d. There are no minimum requirements
a. Paid-in capital
78
All of the following would be considered unfair trade practices, EXCEPT:
a. Making a statement to the public about a person in the insurance business that is untrue or misleading
b. Committing an act of discrimination, whether it be fair or unfair
c. Filing with any public official a false statement of financial condition concerning an insurer
d. making any statement misrepresenting terms of any policy
b. Committing an act of discrimination, whether it be fair or unfair
79
All of the following would be considered unfair claim practices, EXCEPT:
a. Failing to acknowledge communications regarding claims arising from an insurance policy
b. Misrepresenting to a claimant policy provisions relating to a claim
c. Directly advising a claimant to obtain the services of an attorney
d. Failure to affirm or deny coverage of claims within a reasonable time after proof of loss requirements have been met and submitted by the insured
c. Directly advising a claimant to obtain the services of an attorney
80
A distinct feature of the alternative funding method known as self-funding is:
A. It only applies to large companies
B. It is designed for entrepreneurs
C. No evidence of insurability is required
D. The benefits are tailored to the needs of the participants
A. It only applies to large companies
81
A variable annuity applicant requests that the premium be immediately in a stock portfolio. The policy is returned to the insurer within the cancellation period. What is the applicant entitled to receive?
A. The policy amount value on the date the policy was received by the insurer
B. A refund of the premium minus the surrender charge
C. A refund of the entire premium
D. The policy amount value on the date the policy was delivered to the insured
A. The policy amount value on the date the policy was received by the insurer
82
If a person gives an erroneous statement on an application unintentionally, this is:
a. Fraud
b. Frivolous
c. False
d. Fair
c. False
83
To an employer, the sudden death of an employee is considered to be a:
a. Body less
b. Personnel loss
c. Personal loss
d. Human Loss
c. Personal loss
84
Regarding an organizational license, what happens when a corporation is dissolved?
a. The license is continued if an original partner remain with the new corporation
b. The license is terminated
c. The license is passed on to the beneficiary
d. The license is renewed provided that fees are paid
a. The license is continued if an original partner remain with the new corporation
85
Senior citizens re given a 30-day right to return a policy:
a. At age 65
b. At age 60 or older
c. Under individual or group plans
d. All of the above
c. Under individual or group plans
86
Which of the following would be considered a moral risk?
a. Misstatement by an applicant
b. The insured drives too fast
c. The insured is blind
d. The insured is colorblind
b. The insured drives too fast
87
Subject to the restrictions of the CA Insurance Code, any person capable of making a contract may be considered:
a. An Insurer
b. An agent
c. A broker
d. A solicitor
a. An Insurer
88
In which of the following plans are claim forms typically completed and submitted by the participant?
a. Indemnity
b. Point of Service
c. Preferred Provider Organizations
d. Health Maintenance Organizations
a. Indemnity
89
Medicare Part A begins automatically at age:
a. 55
b. 62
c. 65
d. 60
c. 65
90
The purpose of the California Life and Health Guarantee Association is:
a. To help small insurers with less capital compete with larger insurers
b. To protect life policy holders and/or insureds when any insurer becomes insolvent
c. To guarantee that any promises made by any insurer's sales or marketing units are fulfilled
d. (Subject to certain limitations) to protect life and health policy holders and/or insureds when member insurers become insolvent
d. (Subject to certain limitations) to protect life and health policy holders and/or insureds when member insurers become insolvent
91
If an insurance agent or broker receives a commission for arranging a premium finance agreement, they must do which of the following:
a. Disclose to the client the amount of all commissions received
b. Disclose to the client the amount of commission received for arranging the financing agreement
c. Share the commission with the client
d. None of the above
b. Disclose to the client the amount of commission received for arranging the financing agreement
92
Certain health care providers are called "service type providers". This means:
a. They are more service-oriented than the average provider
b. Payment for services are made directly to the insured
c. They provide broader services to their insureds
d. Payments for services are made directly to the provider
d. Payments for services are made directly to the provider
93
Which of the following is not ordinary life insurance?
a. A life paid up to 65 policy
b. A group of life insurance policy
c. A 30-year decreasing term policy
d. A 20-year endowment policy
c. A 30-year decreasing term policy
94
Failure to communicate information which a party to an insurance contract knows and should communicate is called an act of?
a. Concealment
b. Warranty
c. Intimidation
d. Coercion
a. Concealment
95
When a family policy covers childrens, all of the following are true, EXCEPT:
a. The coverage is term insurance for a fixed amount
b. Evidence of insurability is required if coverage for children is permanent insurance
c. There is no additional charge for covering new addition to the family
d. All children living with the family are covered even if born or adopted after the policy is issued
b. Evidence of insurability is required if coverage for children is permanent insurance
96
Which of the following is not one of the common personal uses of life insurance?
a. Funding a buy/sell agreement
b. Helping to fund a person's retirement
c. creating emergency funds to avoid the need to liquidate assets
d. Creation of an immediate estate
a. Funding a buy/sell agreement
97
Deductibles, coinsurance and co-payments in a health insurance policy re cost-effective choices that have the effect of:
a. Cost sharing
b. Cost containment
c. Cost avoidance
d. Cost evasion
a. Cost sharing
98
Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), a qualifying event insures that an employee who is covered can:
a. Elect to continue coverage
b. Convert to an interim policy
c. Request a waiver of premium
d. Transfer coverage to another group
a. Elect to continue coverage
99
An individual license is considered terminated:
a. When transferred to another person
b. On the death of the license
c. When transferred to another licensee
d. When transferred to a beneficiary
b. On the death of the license
100
A movie company concerned about injury to their actors would protect them by:
a. Surety
b. Miscellaneous insurance
c. Workers' compensation
d. Group health insurance
b. Miscellaneous insurance
101
Supplemental insurance used to pay for hospital confinement to treat a cancer is also known as:
a. Specified medical
b. Dread disease
c. Urgent stay
d. Temporary major
b. Dread disease
102
What must an insurer who accepts an application (and then issues a policy) from an agent who is not specifically appointed by that insurer do?
a. The agent must become an employee of that company within 30 days or re-submit the application
b. Add the agent's name on the company's list of approved agents
c. Send the agent an employment approval notice within 30 days of policy issuance
d. Forward to the Insurance Commissioner a Notice of appointment within 14 days of receipt of the application
d. Forward to the Insurance Commissioner a Notice of appointment within 14 days of receipt of the application
103
Which of the following is considered ordinary life insurance?
a. Mortgage insurance
b. Group insurance
c. Continuous premium whole life
d. 30-year decreasing term insurance
c. Continuous premium whole life
104
Which of the following is a true statement regarding the Social Security OASDHI program?
a. The program is fully funded
b. Except for a few exemptions, it is a voluntary program
c. The program provides a minimum floor of income, and is meant to supplement a retiree's own personal program
d. The actuarial value of each person's contribution is equal to the actual value of each person's benefit
c. The program provides a minimum floor of income, and is meant to supplement a retiree's own personal program
105
A person who spends $10,000 in a single premium annuity, and another $10,000 in a Certificate of Deposit (CD). Both pay 10% interest annually. The person is in a 31% income tax bracket. For 40 years , this person does not touch his/her annuity, and reinvests all income from the CD at 10%. Which of the following statements is true?
a. The CD would be worth several hundred thousand more because there is no commission paid on a CD
b. The annuity would be worth several hundred thousand more because of the tax deferral of the earnings
c. The CD would be worth several hundred thousand more because of tax deferral
d. They would be worth approximately the same amount after the payment of deferred income taxes
b. The annuity would be worth several hundred thousand more because of the tax deferral of the earnings
106
Which party has rights in a life insurance policy only after the death of the insured?
a. The policy-owner
b. The applicant
c. The beneficiary
d. The insured
c. The beneficiary
107
Listed below are descriptions of four types of policies. Which is the term policy?
a. The policy premium increases after three years and then it remains the same until the policy is paid up at age 55
b. The policy has a face amount of $100,000. The policy holder pays premiums annually. At the end of 10 years the cash value is $25,000
c. The policy premiums must be paid for 20 years. Afterward, the policy continues with no additional premiums paid. The policy has non-forfeiture values
d. The policy has a face amount of $100,000. Every five years, the premium paid increases. After 10 years, the policyholder stops paying premiums and the coverage stops. The policy has no cash value
d. The policy has a face amount of $100,000. Every five years, the premium paid increases. After 10 years, the policyholder stops paying premiums and the coverage stops. The policy has no cash value
108
The main master policy-owner of a group health insurance contract is the:
a. Employer
b. Plan administrator
c. Employee members
d. Agent
a. Employer
109
If one were to receive the principal sum benefit of death in a disability policy, the death must occur:
a. Within a specified number of days after injury occurs
b. Any time during rehabilitation period
c. Any time that total dismemberment falls in the period
d. Within the policy period for any cause
a. Within a specified number of days after injury occurs
110
All of the following are true statements concerning the treatment of federal income tax on life insurance, EXCEPT:
a. Premiums paid for individual life insurance policies are not tax deductible
b. Employers can deduct as a business expense the cost of insurance premiums paid to benefit employees
c. Annuity death benefit proceeds are exempt from all taxation
d. Death benefits are generally exempt from federal income taxation
c. Annuity death benefit proceeds are exempt from all taxation
111
An insured bought a $150,000 non-participating whole life policy many years ago. She is 100 years old today. She has never borrowed from the policy, and has made all premium payments when due. The policy cash value is:
a. $0
b. $75,000
c. $100,000
d. $150,000
d. $150,000
112
A policyowner, age 50, has been paying premiums on his whole life policy for 15 years. He needs the equivalent of one third of the cash value of his policy over the next two years. He wants to continue to have the policy protection and can afford to pay the premiums. Which of the following would appear to be his best course of action?
a. Look elsewhere. The insurer is not obligated to make the cash value available to the policy-owner unless the policy matures. If they did, most policies would lapse
b. Look elsewhere. Whole life policies do not develop a cash value
c. Surrender the policy and take the cash value. He can then take the other two-thirds and purchase another policy
d. Use the policy loan provision to borrow money from the policy, but keep paying the policy premiums to keep the policy in force
d. Use the policy loan provision to borrow money from the policy, but keep paying the policy premiums to keep the policy in force
113
In insurance terms, a representation can be considered:
a. An absolute fact
b. An implied warranty
c. An express warranty
d. None of the above
b. An implied warranty
114
In life insurance, the loss of a key family member is considered a:
a. Body loss
b. Personnel loss
c. Personal loss
d. Human loss
c. Personal loss
115
Under the 10-day right to return, the policy will pay proceeds:
a. If the premium is not paid
b. If the policy is not returned but the premium is paid
c. If the policy is returned but the premium is paid
d. None of the above
b. If the policy is not returned but the premium is paid
116
Hospice care is for:
a. Persons needing acute care
b. Persons needing custodial care
c. Family caregivers
d. Terminally ill persons
d. Terminally ill persons
117
Identify the penalty for each violation for a person who engages in any unfair method of competition:
a. No more than $5,000 per agent
b. No more than $10,000 total, no matter how many violations or type of violation
c. No more than $5,000 for each act, or no more than $10,000 for each act if the act is judged to be willful
d. $5,000 for each violation, up to a total of $10,000
c. No more than $5,000 for each act, or no more than $10,000 for each act if the act is judged to be willful
118
In the absence of a coordination of benefits clause, all of the following circumstances might result in the recovery of some or all health care expenses, EXCEPT:
a. Both spouses are employed and eligible for group medical payments
b. Worker's medical plan
c. Person working for an employer with self-insurance
d. Guarantee association laws
d. Guarantee association laws
119
Regarding life insurance coverage for a company, the one responsible for obtaining the coverage, maintaining the policy, and paying the premium is:
a. The master policyholder
b. The individuals who make up the group
c. The insurer that provided the group coverage
d. The agent who obtained the group coverage
a. The master policyholder
120
Unless it is merely a statement of an expectation or a belief, a representation as to the future is considered which of the following?
a. Promise
b. Provision
c. Liability
d. Description
a. Promise
121
The purchase of an insurance policy may not provide one of the following for the insured. Select the most complete answer:
a. The replacements of a large possible loss for a small certain loss
b. A reduction of uncertainty
c. Reduction in the worry/greater peace of mind
d. Elimination of the risk
d. Elimination of the risk
122
Which of the following may be offered by insurers providing Medicare supplement policies?
a. The core benefit plan without any additional benefits
b. Broad plans that exclude the core benefits
c. Plans that duplicate the benefits offered by Medicare
d. Plans without a right to return period
a. The core benefit plan without any additional benefits
123
Which type of life insurance policy gives the policy owner the right to share in the insurer's surplus?
a. Participating
b. Non-participating
c. Level term
d. Decreasing term
a. Participating
124
Which of the following regarding participation in a group health plan is true?
a. Minimum participation of 15 years is required for a contributory group health plan
b. A non-contributory group health plan must involved all members
c. A contributory group health plan must involve all members
d. A minimum of 79% of all members is required for a non-contributory group health plan
b. A non-contributory group health plan must involved all members
125
Terminally ill persons would qualify for which of the following?
a. Skilled nursing care
b. Intermediate care
c. Hospice care
d. Acute care
c. Hospice care
126
The department responsible for the evaluation, selection and distribution of risks is:
a. The marketing and sales department
b. The claims department
c. The underwriting department
d. The actuarial department
c. The underwriting department
127
joe receives a large bonus at work and decides to purchase an annuity with it. His monthly income payments from the annuity will begin the following month. Which of the following has Joe purchased?
a. A single premium deferred annuity
b. A tax sheltered annuity
c. An individual retirement annuity
d. A single premium immediate annuity
d. A single premium immediate annuity
128
The policy provision that comes into effect when the insured and primary beneficiary die in a simultaneous accident with no evidence as to who died first is:
a. Common disaster provision
b. Joint life provision
c. Simultaneous death provision
d. Joint and second to die provision
a. Common disaster provision
129
In group insurance, the Certificates of Insurance are issued to:
a. The group sponsor
b. The employe
c. The group members
d. The plan administrator
c. The group members
130
A person has a disability policy with the following definition of disability: "The inability to perform any occupation for which the insured is suited through education, training, experience or prior economic status." This is an:
a. Own occupation definition and is very restrictive
b. Any occupation definition and is less restrictive
c. Own occupation definition and is less restrictive
d. Any occupation definition and is very restrictive
d. Any occupation definition and is very restrictive
131
Renewable term insurance can best be described as:
a. A level death benefit with a raising premium
b. A decreasing death benefit with a level premium
c. A level death benefit with a decreasing premium
d. An increasing death benefit and a level premium
a. A level death benefit with a raising premium
132
How much continuing education is an agent of less than 4 years required to complete if he/she is licensed for both life and property and casualty?
a. 25 hours per year for each license
b. 25 hours per year for the first 4 years
c. 15 hours per year for either license
d. 15 hours per year for each license
b. 25 hours per year for the first 4 years
133
The Common Disaster provision is designed to protect the interests of which of the following?
a. The primary beneficiary
b. The contingent or secondary beneficiary
c. The insurer and insured
d. None of the above
b. The contingent or secondary beneficiary
134
In order to deal with the financial consequences of the death of a senior sales manager, a corporation could purchase:
a. Group life insurance
b. Business overhead expense insurance
c. Key person insurance
d. Ordinary life insurance
c. Key person insurance
135
If a person refused to submit books and records to the Commisioner, what would he/she be guilty of?
a. Misrepresentation
b. Contempt of court
c. Felony
d. Misdemeanor
d. Misdemeanor
136
Which of the following requires a reporting company to respond to a consumer's complaint that his/her file contains inaccurate information?
a. Unfair Practices Act
b. COBRA
c. Medical Information Act
d. Fair Credit Reporting Act
d. Fair Credit Reporting Act
137
Which of the following statements about policy dividends is true?
a. Dividends can be guaranteed
b. The insured usually selects the dividend option at the time of policy purchase
c. Dividends are only issued with non-participating policies
d. All dividends are taxable
b. The insured usually selects the dividend option at the time of policy purchase
138
In accidental death and dismemberment insurance, which of the following would not be considered accidental?
a. Employee loses sight in one eye from falling object in the shop
b. Employee severs hand while installing sheet rock at a building site
c. Employee requires abdominal surgery after food poisoning in the launch room
d. Employee dies while falling from a ceiling hoist
c. Employee requires abdominal surgery after food poisoning in the launch room
139
A health insurance co-payment is:
a. A percentage of the probable costs of services provided to the insured
b. A portion of the deductible that the insured pays for the service
c. A payment paid by the insured to the provider for the service
d. A percentage of the cost of service shared between the insured and the insurer
c. A payment paid by the insured to the provider for the service
140
An insurance company pays claims after a self-insured, specified limit has been reached. This is:
a. Stop-loss coverage
b. Multiple employer welfare arrangement
c. A coverage delay provision
d. Gap Insurance
a. Stop-loss coverage
141
Insurers make an adjustment to the cash value of an account of a universal life policy each time a payment is made. They add the premium paid and:
a. Current Interest
b. A general expense charge
c. Current interest, adjusted for mortality and a general expense charge
d. Mortality and general expense charges
c. Current interest, adjusted for mortality and a general expense charge
142
Regarding health insurance, morbidity includes all of the following EXCEPT:
a. Intelligence
b. Income
c. Sex
d. Age
a. Intelligence
143
To be classified as accidental under a disability income insurance policy, which of the following criteria must be used:
a. Only the cause need be accidental
b. The cause may be intentional, but the result must be accidental
c. Both the cause and the result must be accidental
d. Only the result need be accidental
d. Only the result need be accidental
144
After a life insurance policy has been in effect for two years, what keeps it from being rescinded by the insurer?
a. The grace period provision
b. The incontestability clause
c. The right to return provision
d. The reinstatement clause
b. The incontestability clause
145
A single deductible amount for all members of the same family and a right to single family member deductibles is know as:
a. Corridor deductible
b. Flat deductible
c. Family deductible
d. Stop-loss revenue
c. Family deductible
146
The type of health care provider that provides both health care services and health care coverage is called:
a. EPO
b. Health insurance organization
c. Major medical organization
d. Preferred provider organization
b. Health insurance organization
147
The insurer and the insured share covered losses. This is called:
a. Coinsurance
b. Sharing
c. Stop-loss provision
d. Co-payment
a. Coinsurance
148
Each of the following terms is an important characteristic of a major medical policy, EXCEPT:
a. Deductible
b. Capitation
c. Setting maximum amounts
d. Coinsurance
b. Capitation
149
In managed care, the members choice of providers is most restrictive in which of the following type of plan?
a. Indemnity
b. HMO
c. Point of service
d. PPO
b. HMO
