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Life Insurance Exam 01 > Life Insurance Exam Textbook 01 > Flashcards

Life Insurance Exam Textbook 01 Flashcards

1
Q

A special characteristic of theinsurance contract where equalvalue is not exchanged between parties is known as

A

Aleatory

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2
Q

Life insurance contracts arethese agreements

A

Unilateral

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3
Q

What is the proper definition ofa take it or leave it contract,written by an insurer:

A

Adhesion

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4
Q

The premium paid by theinsured for an insurance policy is

A

Consideration

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5
Q

The best example of a Peril is:

A

Cause of loss

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6
Q

An admitted insurer is:

A

Approved to transact

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7
Q

An Actuary:

A

Works with statistics to establish premiums and isresponsible for the company’s financial soundness.

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8
Q

A new Life-Only licensee will need to take continuing educations courses. The requirements are:

A

24 hours during each 24-month licensing interval.

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9
Q

Which of these would be a substandard risk?

A

A person who may have less chance of surviving than the average. A person whose occupation would cause an increase in mortality hazard. A person whose hobby would cause an increase in mortality hazard. All of the Above.

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10
Q

Rob, a licensed agent, is working under the authority of a Life Only Agent licensee. He may write which type of policies?

A

Life.

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11
Q

The best type of life insurance a person can own is:

A

Term.

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12
Q

Insurance is a contract whereby the:

A

Insurer indemnifies the insured against loss.

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13
Q

Using the human value approach, the best way to figure out the amount of the death benefit is based on:

A

Proposed insured’s potential earnings.

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14
Q

An agent is meeting with a retired U.S. Army Major to sell him insurance. What should be the primary objective of the agent?

A

Meeting his financial objectives.

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15
Q

Term insurance:

A

Is only in force for a specific period of time.

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16
Q

A contingent beneficiary:

A

Receives the policy proceeds if there is no living primary beneficiary.

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17
Q

The death benefit of a life insurance policy is received by the (best answer):

A

Beneficiary.

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18
Q

An insurer pays a refund from the surplus of profits to the holder of a participating policy. What is the payment?

A

A policy dividend.

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19
Q

The Non-Forfeiture provision that would give the insured the most amount of coverage would be:

A

Extended Term Insurance.

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20
Q

If you choose the settlement option of receiving fixed monthly installments or fixed amounts, you may receive an amount that is:

A

More than the face amount.

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21
Q

An individual, who wishes to provide a retirement income for himself that will also provide a retirement income for his wife in the event he dies, should purchase which of the following:

A

A joint and survivor life annuity.

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22
Q

A pure life annuity offers protection against the risk of:

A

Outliving one’s income.

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23
Q

A(n) blank is a products used to accumulate funds and later liquidate that amount.

A

Industrial life policy.

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24
Q

The period of time during which a deferred annuity builds its value is referred to as:

A

An accumulation period.

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25
Q

A life annuity with a 10-year period contain:

A

Is guaranteed to pay for a minimum of 120 months either to the annuitant or beneficiary.

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26
Q

A Multiple Employer Trust (MET):

A

Is a legal entity formed to provide groups of small business owners with group health insurance and other types of employee benefit programs.

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27
Q

In a group insurance program, the employee receives:

A

A Certificate of Insurance.

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28
Q

Which of the following is true about a Keogh plan?

A

It is a retirement plan for self-employed individuals.

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29
Q

Which of the following are acronyms for federal legislation?

A

COBRA. TEFRA. ERISA. All of the above.

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30
Q

Eric has an insurance policy that was issued by the ABC Company. Mark, an agent for another insurance poicy, comes to Eric’s store and suggests that Eric cancel his present policy and buy one from him. Eric tells Mark that is he is quite happy with his present policy, whereupon Mark tells him that the policy is badly written and that the issuing company has a poor reputation for paying claims. Mark is guilty of:

A

Twisting.

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31
Q

Which of the following would not be considered an unfair trade practice?

A

Charging males and females different rates for life or annuity contracts according to the current mortality tables.

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32
Q

Of the following, which is a true statement about the California Insurance Code?

A

Legislature writes the insurance laws. Commissioner enforces the insurance laws. Agents are to follow the laws. All of the Above.

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33
Q

In the event that an insurer becomes insolvent, the most the insured would be relieved under the California Life and Health Gurarantee Association

A

$250,000.

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34
Q

The California Code of Regulations are:

A

Established by the Commissioner’s office of the Department of Insurance.

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35
Q

Which of the following is not used in determining health insurance rates?

A

Mortality.

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36
Q

Uniform policy provisions address which of the following?

A

Grace Period. Payment Claims. Reinstatement. All of the Above.

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37
Q

Which provision in a policy allows the insured to buy more insurance, at specified intervals, with no proof of insurability?

A

Guranteed insurability rider.

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38
Q

A Waiver of Premium Rider:

A

If the insured is permanently disabled , the insurer may retroactively waive premium payments from the start of the disability

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39
Q

The entire contract provision states which of the following, in addition to the policy, reflects the entire contract?

A

The Application.

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40
Q

An individual has a hospital indemnity policy that pays $500 a day. This person is hospitalized for two days and the bills are $400 a day. How much will the company pay?

A

$1,000.

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41
Q

An amount that must be paid after the basic health policy benefits are exhausted and before the excess coverage becomes effective is:

A

Corridor deductible.

42
Q

A type of health insurance referred to as a “service plan”

A

Pays the provider directly for the cost of medical services.

43
Q

In a Health Maintenance Organization (HMO), the use of Primary Care Physician or PCP is common as part of the

A

Gatekeeper system.

44
Q

Which of the following is not a recognized HMO model?

A

Network.

45
Q

Each of the following is a principal factor in determining group premium rates, except:

A

Location of business.

46
Q

Group underwriters are concerned with what criteria that relates to the group as a whole?

A

Adverse Selection. Size of the group. Nature of the group. All of the above.

47
Q

All of the following would be qualifying events for COBRA, except:

A

Separation.

48
Q

Which of the following is an acronym for federal legislation covering the continuation of insurance coverage for terminated employees?

A

COBRA.

49
Q

Which of the following is the least restrictive definition?

A

Own occupation.

50
Q

COBRA provides for:

A

An eleven month extension of COBRA benefits for qualified disabled individuals.

51
Q

The limit of coverage for the monthly disability income payment benefit is usually:

A

50% to 70% of the recipient’s gross monthly income.

52
Q

Mike was injured in a fall 6 months ago and was left totally paralyzed. He can probably receive benefits from:

A

Social Security.

53
Q

Disability insurance proceeds are taxable:

A

If the employer pays for the disability insurance.

54
Q

Which of the following are eligible for Medicare coverage?

A

People, age 65 and older, who are eligibile for Social Security. People, age 65 and older, not eligible for Social Security, but willing to pay a monthly premium. People of any age that have been entitled to Social Security disability. All of the above.

55
Q

All of the following are benefits provided under Part A EXCEPT:

A

Inpatient surgeon’s fees.

56
Q

Medicare provides:

A

Very limited nursing benefits

57
Q

What provides counseling and comfort to terminally ill patients?

A

Hospice.

58
Q

Primary Support For Medicare Part A Comes From:

A

Social Security payroll taxes.

59
Q

Who funds Medi-Cal?

A

State and Federal Funds.

60
Q

Medicare Supplement Policies:

A

Pay some or all of Medicare’s deductibles and copayments.

61
Q

Medicare Supplement Policies may offer contracts that cover:

A

None of the above.

62
Q

When replacing a Medicare supplement policy, it is considered unnecessary if replacement is done:

A

3 times or greater in one year.

63
Q

A Medicare Supplement Policy:

A

Must either be guaranteed renewable or noncancellable.

64
Q

What is HICAP?

A

It stands for Health Insurance Counseling Advocacy Program. It provides counseling to individuals, helping them to make best health insurance choices. It advises older people regarding Medicare. It does not endorse or sell any specifc types of insurance. All of the above.

65
Q

Which of the following long term care policies would have the highest premium?

A

14-day elimination period: 5-year benefit period.

66
Q

Who would be in most need of purchasing a comprehensive long-term care policy?

A

A Person with $60,000 income and assets of $125,000.

67
Q

If Mary wished to reduce the premium on her long-term care policy, which of the following should she do?

A

Lengthen her Elimination Period.

68
Q

The term used to apply to a break given to people caring full-time for an individual in their home is:

A

Respite.

69
Q

In the insurance industry, causes of loss are called perils. Perils, in turn, are affected by hazards. Of the following which is a general category of hazard:

A

Moral hazards

70
Q

The agent has a responsibility in underwriting an insurance policy:

A

In all cases.

71
Q

All of the following are examples of avoiding a risk, except:

A

An insured realizes his driving skills are diminishing, so he decides to purchase more liability insurance on his auto policy.

72
Q

Don frequently drives faster than the speed limit. Don was injured in an auto accident. What was the hazard?

A

Driving too fast.

73
Q

All are methods for handling a risk, except:

A

Identify and increase the hazards.

74
Q

Joe takes out a policy and did not mention that he just has taken up the hobby of skydiving. Not disclosing this information is an act of:

A

Concealment.

75
Q

If there is a material concealment in a disability policy, how does the insurer determine the materiality?

A

Solely by the proabable and reasonable influence of the facts upon the party to whom the communication is due, in forming his estimate of the disadvantages of the proposed contract.

76
Q

A new agent is attempting to sell an insurance policy but makes several presentation statements that prove to be untrue. The agent is guilty of a:

A

Misrepresentation.

77
Q

Which of these statements is true in regard to misrepresentation?

A

Insurance misrepresentations always lead to punitive damages.

78
Q

An agent is attempting to sell a senior a life insurance policy. If the senior purchases the policy, he has blank days from policy to cancel the policy and receive a premium refund.

A

30 days.

79
Q

In California, insurance usually comes under the authority of the California Department of Insurance. However certain types may be under the authority of:

A

Another California agency.

80
Q

The Commissioner has rules regarding uses of names. Brad Johnson is a licensed life agent who has earned the designation of CLU. Which of these names can Brad use without prior approval of the Commissioner?

A

Brad Johnson and CLU Insurance.

81
Q

Transact as applied to insurance activities, does not include:

A

Underwriting.

82
Q

A Life agent’s appointment by an appointing insurer:

A

Is effective when given to an insurer with an application but proper notice must be filed with the California Department of Insurance within 14 days thereof.

83
Q

A life analyst, in the written disclosure to the client, must include all of the following except:

A

A list of services he will provide with no fee.

84
Q

The California Life and Health Guarantee Association protects:

A

Insureds from insures that become unable to meet their financial obligations.

85
Q

A mutual company (best answer):

A

Pays dividends to its policyholders

86
Q

An insurance company organized in Great Britain is:

A

Alien.

87
Q

A foreign insurer is:

A

An insurer organized under the law of any jurisdiction outside the State of California (but within the United States), whether or not admitted.

88
Q

The California insurance code defines a domestic insurer as an insurer organized under the law of :

A

The State of California, whether or not it is an insurer.

89
Q

All of the following statements are true of HIPAA except:

A

Does not provide any protections for those with pre-existing conditions.

90
Q

The Insurance Commissioner’s office must do the following except for:

A

Set premiums.

91
Q

The Insurance Commissioner may, without a hearing deny a license application if the applicant has:

A

Committed a felony, as shown by a final judgment of conviction. Committed a misdemeanor, specifically denounced by the insurance code. A previous license application denied for cause within the past five years. All of the above.

92
Q

The Insurance Commissioner may suspend or revoke a license, without a hearing, when:

A

The licensee had an insurance license suspended or revoked for cause within the previous five years.

93
Q

The Insurance Code:

A

Is law passed by the legislature.

94
Q

Agent Smith has presented an insurance plan for Mr. and Mrs. Johnson. The Johnson’s are really pleased with the concept of having all of their insurance with one agent. Now, the most important thing that agent Smith should do is:

A

Always put the Johnson’s best interest first.

95
Q

If an agent requests a prepaid commission, the agent will receive:

A

Commissions before they are earned. A charge back if the policy is declined. An annualized commission. All of the above.

96
Q

When testing for HIV/AIDS, a consent form must be signed by the proposed insured for:

A

Life insurance. Disability insurance. Health insurance. All of the above

97
Q

The best way to describe a pre-text interview is:

A

Someone pretending to be someone they are not. Misrepresenting the purpose of the interview. Refusing to identify themselves. All of the above.

98
Q

Seniors often are taken advantage of by insurance agents because some agents are:

A

Aware that seniors often buy out of fear.

99
Q

Robert Hanson works for a small business that has just offered the employees a group health insurance plan. However, 75% of the eligible employees must sign up for the coverage. Which statement is true?

A

This is a contributory plan.

100
Q
A

Life Insurance Exam 01 (2 decks)

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