Teacher Reviewer Flashcards
(358 cards)
1
Q
• Under Part A of Medicare it is the provider
A
who submits the claim.
2
Q
• Adult day care coverage in a Long Term Care policy will
A
cover part time care in a facility for a person who lives at home.
3
Q
• A group contract is between
A
the insurer and the employer.
4
Q
• A Keogh plan is
A
a retirement plan for those who are self employed.
5
Q
• An “Illustration” is
A
a presentation or depiction that includes nonguaranteed elements of a policy of life insurance over a period of years.
6
Q
• In a life insurance policy illustration “non-guaranteed elements” means
A
the premiums, benefits, values, credits or charges under a policy of life insurance that are not guaranteed or not determined at issue.
7
Q
• A stock redemption buy/sell agreement
A
facilitates the purchase of a deceased shareholder’s shares from the shareholder’s heirs by a corporation.
8
Q
• A widow or widower without children would be eligible for
A
Social Security survivors benefits at age 60.
9
Q
• If a senior has purchased an annuity which is invested in a mutual fund and they cancel during the free look
A
the CIC requires they be refunded the value of the account.
10
Q
• Medicare will send out a Medicare Summary Notice (previously known as the Explanation of Medicare Benefits)
A
each quarter which details the services which were provided under Part A and B, if they were covered, and how much they were covered for. The Medicare Summary Notice is not a bill. Money due will be billed directly by the provider who performed the services.
11
Q
Every Qualified Long Term Care policy sold in California must state the following on the first page of the policy:
A
“This contract for long-term care insurance is intended to be a federally qualified long- term care insurance contract and may qualify you for federal and state tax benefits.”
12
Q
• The free look notice for seniors must be printed
A
in no less than 10-point uppercase type, on the cover page of the policy or certificate and the outline of coverage.
13
Q
• An agent, broker, or other person who contacts a consumer as a result of receiving information generated by a cold lead device, shall
A
immediately disclose that fact to the consumer.
14
Q
If a policy loan is outstanding when the insured dies and the beneficiary selects the fixed period settlement option
A
the outstanding loan will effect the amount of the payments received, NOT the length they are received for
15
Q
An equity indexed annuity
A
has a fixed minimum interest rate, and the chance to get a higher rate of return like that of the stock market.
16
Q
A Modified Endowment Contract
A
has a 10% IRS early withdrawal penalty.
17
Q
The agent’s commission comes from
A
the insurer expenses portion of the premium charged.
18
Q
Life Insurance policy illustration regulations were NOT created to
A
eliminate disclosure.
19
Q
The CIC defines Insurance as
A
a contract whereby one undertakes to indemnify another against loss, damage, or liability arising from a contingent or unknown event.
20
Q
An outline of coverage shall be
A
delivered to a prospective applicant for long-term care insurance at the time of initial solicitation.
21
Q
A joint life policy covers
A
multiple lives and pays out when the first insured dies.
22
Q
In addition to completing the pre-licensing requirement Life Agent, Fire & Casualty broker-agents and Personal Lines agents must also
A
complete a 12-hour Ethics and Code course.
23
Q
In a non-contributory group disability income policy any policy benefits paid would be
A
included in the employee’s gross income (be taxable).
24
Q
If an insurance agent hires a website designer to create a website
A
it is the insurance agent who is responsible for the content of the website.
25
The "exclusion ratio" is the formula used to
determine the amount of annuity distribution which is taxable.
26
The insured can change the beneficiary
anytime if they are revocable.
27
A collateral assignment
can be utilized to obtain a loan.
28
Coordination of benefits
is a provision which would prevent a family from collecting for the same loss twice in a group plan.
29
A representation may be
altered or withdrawn before the insurance is effected, but not afterwards.
30
With regard to long-term care insurance, all insurers, brokers, agents, and others engaged in the business of insurance owe a policyholder or a prospective policyholder.
a duty of honesty, and a duty of good faith and fair dealing
31
• If the premium for a group disability income policy is fully paid by the employee
benefits would be excluded from the employee's gross income (not taxable).
32
• In life insurance insurable interest must exist
when a policy is first issued.
33
• In life insurance, the measure of liability is
the sum or sums payable as provided in the policy to the person entitled thereto.
34
• The premium is
the amount the insured pays the insurer for the coverage provided.
35
• The Insurance Commissioner shall be elected by
the people in the same time, place and manner as the Governor.
36
• Under the CIC all advertisements, policies and certificates of term life insurance sold to those age 55 and older must include
a term life insurance monetary value index, which is similar to the Life Insurance Surrender Cost Index. In developing a term life insurance monetary value index, the commissioner shall consider actual premiums and policy and certificate benefits and the manner in which they are affected with the passage of time. Any term life insurance monetary value index developed pursuant to this section shall assume an insured's desire to retain coverage for at least 10 years.
37
• Term life insurance directed to individuals 55 years of age or older must prominently disclose any change
in premium resulting from the aging of the insured, policy duration, or any other factor. If the insurer retains any right to modify premiums in the future, that fact shall also be disclosed.
38
• The Social Security Blackout period is
a period of time when surviving family members are NOT eligible for Social Security survivors benefits (survivors benefits stop during this period).
39
• The Social Security Blackout period begins when
the youngest child reaches age 16.
40
• The Social Security Blackout period ends when the surviving spouse
reaches age 60.
41
• Social Security full retirement age is based upon
the year in which you were born.
42
• Retirement benefits under Social Security are only available to workers who
are fully insured.
43
• An Employee Stock Ownership Program (ESOP) is
a qualified, defined contribution, employee benefit plan designed to invest primarily in the stock of the sponsoring employer.
44
• A profit sharing plan is
a plan that gives employees a share in the profits of the company. Each employee receives a percentage of those profits based on the company's earnings.
45
• A speculative risk is
a risk situation that includes a chance of loss and a potential for gain. Speculative risks are not insurable.
46
• The Law of Large Numbers states
the more similar risks the insurance company combines together the better they can guess approximately how many losses they will have in a given time period.
47
• The Doctrine of Utmost Good Faith
allows each party to rely on the representations made by the other party.
48
• Life insurance companies are required to give the policyholder
(free look)
a minimum 10 day free look, unless the policyholder is age 60 or older in which case they are considered a senior citizen and must receive a 30 day minimum free look.
49
• In order to transact insurance (sell insurance) agents must hold at least
one insurer appointment.
50
• A Tax Sheltered Annuity (TSA or 403-B) is
a qualified plan created for public school employees and non-profits.
51
• Roth IRAs have
non-deductible contributions.
52
• Annuity death benefits are NOT
tax deductible or tax free. Life insurance death benefits are tax free however annuities are not life insurance. The beneficiary of an annuity death benefit would have to pay ordinary income tax on any amount they receive over and above the cost basis (amount invested) of the annuity owner.
53
• Divorce is a qualifying event under COBRA which will
allow the employee to apply to continue their coverage under the group plan.
54
• The Consolidated Omnibus Reconciliation Act (COBRA) requires employers with 20 or more employees offer health insurance continuation to employees and employees dependents who
become ineligible for coverage due to a qualifying event. If the employee elects continuation they are responsible for paying the full premium for coverage and can only continue their coverage under the group plan for a limited period of time.
55
• If a daughter needs a break from caring for her father
her father may have coverage in his Long Term Care policy that would pay for a caregiver to come in to give her a break. This coverage is called respite care.
56
• An individual who needs terminal ill care would find this coverage provided in
their Long Term Care policy as hospice care.
57
• Long Term Care policies are underwritten on
the applicant's ability to care for themselves (Activities of Daily Living), such as eating, bathing and transferring (moving around).
58
• There are three types of ordinary life insurance
that you can remember using the acronym W-E-T (Whole Life, Endowment, Term). Group insurance is not a type of ordinary life insurance.
59
• The insurance applicant is
the individual who is applying to purchase insurance.
60
• Each authorized insurer is required to establish a division within the insurer to investigate
fraudulent claims.
61
• The waiting period included in disability income policies is also known as
the elimination period.
62
• An insurance company based in Utah that is selling in California is
a Foreign insurer in California.
63
• The period of time (30 days, 60 days, 90 days or 180 days) the insured is not eligible for benefits once they become disabled is known as
the waiting period.
64
• Bob works for Alpha insurance company and does things necessary to transact insurance that are not specified in his contract. This is referred to as
implied authority.
65
• When an annuitant enters the payout period and annuitizes the contract the insurance company will
spread their cost basis (amount invested) over their lifespan. For example, if an annuitant had invested $50,000 into the annuity (their cost basis) and the annuity account balance was now $100,000 then the annuitant annuitized and was to receive payments of $4,000 per year they would NOT have to pay tax on the first $2,000 they receive each year.
How is this figured? First, divide the total amount ($100,000) by $4,000 (the annual payments the annuitant will receive) to find out the annuitants projected lifespan (25 years). Then divide their cost basis ($50,000) by 25 years ($2,000). The first $2,000 of payments the annuitant receives each year for the first 25 years is a return of their cost basis and is not taxable. Any amount over the $2,000 they receive each year is taxable as ordinary income. What happens if they live longer than 25 years? The $4,000 per year will continue to be paid but will now be fully taxable since all of their cost basis has been returned to them.
66
• If you no longer hold any insurer appointments your license is considered to be
inactive.
67
• The Employees Retirement Income Security Act (ERISA) states
that fiduciary pension plans were created for the benefit of plan participants and beneficiaries.
68
• If an employer holds your license and wants to cancel it they are required to
send written notice to the commissioner.
69
• If a retirement plan includes a 7 year vesting schedule
each employee must be vested 100% by the end of the 7thyear. Vesting means ownership of employer contributions.
70
Vesting means
ownership of employer contributions.
71
• If an annuitant selects the 10 year period certain annuity payout option it guarantees if they die within the first 120 payments, the remaining payments will be
made to the beneficiary. However, the annuitant will be paid as long as they live. Which could be substantially longer than 10 years.
72
• An individual that has contributed to Social Security 6 of the last 13 quarters who becomes disabled is
currently insured under the system.
73
• Claims forms are required to include the following statement related to fraudulent claims:
"Any person who knowingly presents a false or fraudulent claim for the payment of a loss is guilty of a crime and may be subject to fines and confinement in state prison".
74
• An insurance company that has enough reserves to pay for all its liabilities is referred to as
a solvent .
75
The state insurance guarantee fund provides
protection to policyholders whose insurer becomes insolvent (financially impaired). This fund only covers member insurers (licensed insurance companies).
76
If an applicant has had a professional license revoked in the past 5 years the insurance commissioner can
deny their licensing application without a prior hearing.
77
The insurance company that purchases reinsurance is referred to as
the primary insurer (a.k.a. ceding insurer).
78
The waiver of premium rider will waive
the insured's premium if the insured becomes disabled.
79
A disability income rider that is added to a life insurance policy will pay a replacement of the insured's lost income if
they become disabled.
80
The Accidental Death Benefit rider will pay double the face amount if the insured dies in an accident, and is also known as
double indemnity.
81
An insured would name a contingent beneficiary to ensure where the policy proceeds will go if
the primary beneficiary dies prior to the insured.
82
Extended term is a
non-forfeiture option that provides a new term life insurance policy with the same face amount of coverage as the original policy. Extended term is not a settlement option.
83
A Settlement Options can be pre-determined by
the owner of the policy prior to their death, but is usually selected by the beneficiary upon the insured's death.
84
Policies issued by Mutual insurers pay dividends to
policyholders. The dividend option is selected by the policyholder on the insurance application.
85
A non-participating policy owner will not
receive dividends. Non-participating policies are issued by stock insurers. Stock insurers pay dividends to stockholders, not policyholders.
86
Dividends are declared by
the board of directors and cannot be guaranteed.
87
The conversion feature allows an employee to go from group coverage to
an individual policy.
88
A family policy provides life insurance for
an entire family and allows the children to convert from term to whole life coverage without a physical exam.
89
A Hospital confinement policy will pay a set amount per day if the insured is
confined in the hospital. A corridor deductible applies in a major medical policy between the basic and excess coverage.
90
Major Medical policies include
a deductible, coinsurance and a stop loss. First dollar coverage is NOT a feature of Major Medical.
91
A capitation fee is
a per head (capitation) fee that is paid to doctors that treat subscribers of HMO's. A capitation fee is NOT a feature of Major Medical.
92
A stop loss is
the maximum the insured would have to pay of the coinsurance.
93
Coinsurance is a feature of major medical insurance and is defined as
a sharing of the loss after the deductible has been satisfied. Coinsurance is usually expressed as a percentage sharing of the loss between the insurer and the insured, with the insurer paying the larger percentage, such as 90/10.
94
Co-payments are included in HMO and PPO plans and are
a fixed amount the subscriber must pay when they go to the doctor.
95
A gatekeeper (Primary Care Physician) cannot
be a specialist, they must be a general practice doctor.
96
If an employee wants to enroll without any restrictions they would enroll during
the eligibility period (open enrollment period).
97
A group contract where the employer pays 100% of the premium is referred to as
a non-contributory group plan.
98
A Multiple Employer Trust is a
a trust that small employers join to purchase health insurance.
99
If an individual increases their insurance policy limits, they are
NOT eliminating their risk, they are transferring more of their risk.
100
Social Security has the hardest
definition of total disability to meet.
101
Medicare Part C does NOT cover prescription drugs.
Medicare Part D covers prescription drugs.
102
Medicare Part A provides coverage for
hospital services and is free to those eligible once they reach age 65.
103
Medicare Part B is optional and if an eligible individual enrolls they must
pay a monthly premium for the coverage. Part B of Medicare provides coverage for doctors services.
104
Medicare supplement companies can offer whatever plans they wish as long as
they offer at least Plan A. They are not required to offer all 12 plans (A-L).
105
A specified disease policy is a policy that covers
only certain dread diseases such as cancer insurance.
106
Preferred risks receive the lowest
premium charges as they pose the lowest risk to the insurer.
107
An insurance binder always creates immediate
coverage which is the main difference between a binder and a conditional receipt.
108
The incontestability clause states that after a life insurance policy has been in effect for
2 years it becomes totally incontestable. This is very restrictive for the insurer and prevents them from contesting a claim for any reason after 2 years.
109
Replacement is when
you replace your customer's current policy with a new one and is NOT illegal. However, you would NOT replace your customer's policy if the new policy is worse and the premium is higher. This would be considered twisting and is illegal.
110
• A captive insurer is
an insurer created by a corporation to insure its own risks.
111
• If a company decides to self insure this decision would not
have any impact on claims severity.
112
• An occupational disability income policy provides
coverage on and off the job.
113
• Workers Compensation laws require the employer to
be responsible for employee injury on the job regardless of fault.
114
• The entire contract clause states
the application is part of the contract if attached when issued.
115
• Under Social Security in order to receive total disability benefits the disability must be expected to last
at least 12 months or end in death.
116
• Under Coordination of Benefits the coverage you have where you work is considered
to be primary.
117
• HMO's stress
preventative medicine.
118
• Some health insurance policies include deductibles. Deductibles are
paid by the insured. The higher the deductible the lower the premium.
119
• A guaranteed renewable health insurance policy would have the highest
premium.
120
• Guaranteed renewable health insurance policies cannot
be changed except by class.
121
• If an insured wants to sell their life insurance policy to an investor (viatical/life settlement) they can do so by
requesting an absolute assignment.
122
• An absolute assignment is
a permanent transfer of ownership rights.
123
• In California Life only, Health only, Property only and/or Casualty only insurance licensees must complete
24 hours of continuing education each license renewal period (2 years). The 24 hour per licensing period requirement is the same regardless of the number of licenses held.
124
• Agents who sell Long Term Care are required to complete
Long Term Care specific continuing education within the core requirement, not in addition.
125
• Agents who sell Long Term Care are NOT required to
take an exam on the topic every 10 years.
126
• An insurance company that is based in Canada and doing business in California is
a alien insurer.
127
• The doctrine of utmost good faith states that
all parties to the contract can rely upon the statement of the other party.
128
• Concealment is when
a party fails to communicate that which a party knows, and ought to communicate, so that the other party may make a sound decision.
129
• Employees that are covered under a group policy receive
certificates of insurance as their proof of coverage.
130
Purchasing life insurance to fund a buy/sell agreement is a business use of
life insurance NOT a personal use.
131
Key person life insurance is used by
a business to protect themselves in case a valued employee dies. The death benefit would be paid to the company to hire and train a replacement.
132
In a contributory group policy the premium is shared between
the employer and employee. The employee contributes toward the premium.
133
The disability income coverage under Social Security was created to
provide a minimum floor of income in case of total disability. It was NOT created to provide a full replacement of lost income.
134
Most workers contribute to Social Security through
taxes levied on their earnings. Benefits are based on contributions, but are NOT equal to contributions.
135
The underwriting division within the insurance company selects
which risks the insurer will take on.
136
Decreasing term life insurance (aka — mortgage redemption insurance) is often used to
pay off an outstanding mortgage upon death of the borrower.
137
If a payor benefit rider is added to a juvenile life policy it will
waive the premium for the policy until the child reaches a certain age (often 21) if the parent dies.
138
Variable insurance products are regulated by
the state department of insurance and the Securities and Exchange Commission (SEC) since they are considered to meet the definition of a securities product.
139
If a rider is added to a cash value life insurance policy the
extra premium paid for the rider will NOT apply toward the cash value.
140
If an insured purchases a cost of living rider
this rider will automatically increase their policy limits tied to the consumer price index. However, if the policy limit increases, so will the underlying premium.
141
The misstatement of age clause allows the insurance company to
adjust the face amount at the time of death to what the premium the insured paid would have purchased them had they told the truth about their age when they purchased the policy.
142
In California senior citizens are those age 60 and older. Senior citizens who buy life insurance are required to receive
(Free look)
a 30 day minimum free look. People under age 60 who buy life insurance are required to receive a minimum 10 day free look.
143
The common disaster clause applies when
both the insured and primary beneficiary die as a result of the same accident. It states that the primary beneficiary always dies first and protects the interest of the contingent beneficiary.
144
The reduced paid-up non-forfeiture option will provide a
new whole life policy with a reduced face amount of protection.
145
• A subscriber of an HMO could receive emergency medical attention without
prior authorization of their primary care physician (gatekeeper).
146
• Health Maintenance Organizations are NOT required to provide coverage for
prescriptions drugs.
147
• A morbidity table contains statistical data relating to
the probability of a sickness or disability occurring.
148
A mortality table contains statistical data relating to
the probability of death.
149
• A period of time that excludes coverage for prior medical conditions that begins when a health insurance policy is brand new is known as
a probationary period or pre-existing condition exclusion.
150
• Disability insurers have to eliminate applications that seem likely to have
losses much more frequently or much more severely than what the insurer's rates anticipate. This is the underwriter's responsibility.
151
• The location of the group would NOT be a factor in
determining premiums charged for group disability income.
152
• The any occupation definition in disability income states
the insured must be unable to perform any job they are suited to do by prior training, experience or education.
153
• Intentional injuries are NOT covered by
health insurance.
154
• The return of premium rider that can be added to a disability income policy will provide
a return of a percentage of premiums paid at periodic intervals, provided the insured remains disabled.
155
• Under the California Insurance Code (CIC) life insurance agents CANNOT issue
binders.
156
• If an organization terminates a key employee the organization will still
be eligible to hold a license as their organization will be unaffected.
157
• If the insurance Commissioner issues a Notice of Seizure for documents and the agent fails to produce the documents they would be subject to
up to 1 year in jail and/or a $1,000 fine.
158
• Agents who receive commission related to premium financing must keep their records for
three years.
159
• Financial loss exposure is NOT
one of the three major types of loss exposures.
160
• Hospice care is care for the terminally ill and is covered by most Long Term Care policies. Hospice care would NOT cover costs associated with
rehabilitation.
161
• There are six main Activities of Daily Living that trigger coverage on Long Term Care policies.
• There are six main Activities of Daily Living that trigger coverage on Long Term Care policies.
162
• If an agent issues a binder for a company they are not appointed by the commissioner can
suspend or revoke the agent's license.
163
• Money invested in variable annuities is held in
the insurance companies separate account.
164
• Upon the death of a licensed agent their license will
terminate.
165
• An insurer organized in California and selling in California is considered to be
a domestic insurer in California.
166
Convalescence is NOT a level of care
for which benefits are paid on a LTC policy.
167
• Under the CIC if an applicant enters a plea of "nolo contendere" they will be
convicted. Nolo contendere is Latin for no contest.
168
• The spendthrift clause protects the policy proceeds from
the creditors of the beneficiary. However, the spendthrift clause will not apply if the proceeds are paid out in a lump sum.
169
• Mutual insurers are owned by
policyholders.
170
• When replacing a policy the agent is NOT required to
send a copy of the replacement notice to the existing insurer. The new insurance company will provide notice to the existing insurer.
171
• ERISA is the Federal law that is designed to protect
group plan participants, establish pension equality and mandate strict reporting and disclosure requirements.
172
• If an employee is injured while driving their own car while working their injuries would be covered by
Workers Compensation.
173
• A person who is transacting insurance without a license is guilty of
a misdemeanor.
174
• In order to remain financially solvent under the CIC an insurer must have
enough assets to provide for its liabilities and for reinsurance for all outstanding risks and must also meet minimum requirements equal to their paid-in capital (value of company if liquidated).
175
• HMOs and PPOs are referred to as
service providers since the doctors and hospitals get paid directly for those services provided.
176
• A movie company that is concerned about the financial loss they would incur in case of the illness of one of their starring actors would purchase
miscellaneous insurance.
177
• In insurance terms a representation can be considered
an implied warranty.
178
• If an agent is engaging in unfair methods of competition they are subject to penalties of
no more than $5,000 for each act, not to exceed $10,000 if the act is judged to be willful.
179
• If the insurer discovers the insured has violated a material warranty they can
rescind the contract (void the policy).
180
• An intentional concealment entitles the injured party the option to
rescind the contract.
181
• Neither party to a contract of insurance is bound to communicate, even upon
inquiry, information of his own judgment upon the matters in question.
182
• The Health Insurance Counseling and Advocacy Program (HICAP) does NOT sell insurance, nor endorse any particular carrier or product. HICAP provides
free counseling to seniors on health insurance related issues.
183
Providing free insurance coverage in connection with the sale of services as an inducement for completing the transaction is
NOT legal.
184
When a premium is paid on a universal life policy the insurance company will subtract from it the
mortality and general expenses then add the current interest and deposit it into the cash value.
185
The very poor do NOT need Long Term Care as
they would be eligible for similar coverage provided under Medi-Cal and the very rich would NOT need Long Term Care as if they needed the services they could afford to pay for it themselves.
186
Part 1 of a Workers Compensation policy provides
Workers Compensation coverages as required by state law (statutory coverage).
187
Life insurance agents must keep records regarding policies sold in this state for a minimum of
5 years.
188
The transplant donor benefit in a disability income policy considers the insured to be
disabled if donating a body organ.
189
The purpose of the rehabilitation provision in a disability income policy is to
encourage a disabled insured to return to their original occupation.
190
In order to determine the amount of premium an insured will pay, the insurer multiplies the rate by
the number of exposure units purchased.
191
Insurance agents are acting in a fiduciary capacity when they are
handling their customer's premiums.
192
Growth accumulating in a qualified plan is NOT currently taxable to the employee.
It is taxable upon
withdrawal.
193
Employee benefit plans CANNOT self fund for life insurance benefits,
only health benefits.
194
The insurance policy is the written instrument in which the insurance contract is
set forth.
195
Life insurance agents are NOT required to
keep records of printed material in general use which has been distributed by the insurer.
196
The interest settlement option will allow only the death benefit earnings to be
paid to the beneficiary.
197
A defined contribution plan is a plan in which
employers make specific contributions to an employee's retirement account.
198
When an applicant reveals medical conditions that require more information the insurer will usually
require an attending physicians report.
199
An employee would be considered to be partially disabled when they are
working part-time and receiving lost income under their long-term disability benefit.
200
• Under Section 770 of the CIC the insurance commissioner will usually issue a cease and desist order for a violation of more than one transaction if the violation
dealt with loans on the security of real or personal property.
201
• The process whereby a mutual insurer becomes a stock company is called
demutualization.
202
• Any situation that presents the possibility of a loss is known as
a loss exposure.
203
• The beneficiary is NOT required to sign
the application for insurance.
204
• The rate is
the cost per exposure unit.
205
• To authorize the release of an attending physician's report, the applicant must
sign a consent form.
206
• Members of the Medical Information Bureau are required to report
medical impairments found during the underwriting process.
207
• The request for an attending physician' s report must be accompanied by
a copy of the signed authorization.
208
• Life insurance companies are
members of the Medical Information Bureau.
209
• Agent records must be made available to
the commissioner at any time.
210
• If an insured is found guilty of turning in a fraudulent claim they can face
imprisonment and/or a $150,000 fine or twice the dollar amount of the fraudulent claim, whichever is greater. For example, if an insured turned in a fraudulent claim totaling $85,000 they would be fined $170,000.
211
• To meet the chronically ill trigger of a long term care policy,
an individual must be unable to perform a minimum of 2 activities of daily living.
212
• The rules regarding life insurance policy illustrations are NOT intended to ensure that
the illustration specify that non-guaranteed elements will continue unchanged for all years shown.
213
• If an insurer is inadvertently found guilty of unfair trade practices while issuing, renewing and servicing a policy, the insurer could be prosecuted for
3 violations, one for each act.
214
• Group life insurance does NOT exclude
accidental death.
215
• California requires a minimum of 2 employees be covered in a group life contract.
• California requires a minimum of 2 employees be covered in a group life contract.
216
• Life insurance creates an immediate estate upon the death of the insured in that the death benefit will be paid to
the beneficiary upon their death.
217
• Every insurer offering individual life insurance policies or annuities to senior citizens that use non- guaranteed elements in illustrations must provide a
statement to that effect which must appear in bold print.
218
• Industrial life insurance is generally written with a death benefit of
$2,000 or less.
219
• In a defined benefit plan, benefits are linked to
the employee's years of service and/or amount of compensation.
220
• Life insurance illustrations showing premiums, values, credits or charges that are not determined at issue demonstrate
non-guaranteed elements.
221
• When an insurer presents an illustration for life insurance they CAN use
the insurer's "disciplined current scale" in the illustration.
222
• An insurance company which is owned by individuals who purchase shares of stock in the company, share in profits in proportion to shares owned, and vote for a board of director's is known as
a stock insurer.
223
• Eligibility for Social Security retirement benefits is based upon
the number of quarters earned.
224
• An insurance broker is NOT appointed by
an insurer.
225
• The California Life and Health Insurance Guarantee Association (CLHIGA) does NOT cover
employer self-funded plans.
226
• The California Life and Health Insurance Guarantee Association (CLHIGA) does NOT cover
group stop-loss plans.
227
• In a group life policy with a death benefit of more than $50,000,
the premium cost for insurance above $50,000 is taxable as income to the insured.
228
• When a corporation ceases to exist entirely,
their insurance license terminates.
229
• If an insurer knowingly allows one of its agents to mislead a member of the public in order to induce the person to change their existing insurance, the Commissioner may
suspend the insurer's certificate of authority for the class of business involved.
230
• Life insurance illustrations are NOT required to
include a statement that the benefits in the illustration are guaranteed. Benefits may be guaranteed or non-guaranteed.
231
• If an insurer indicates that an illustration will be used, they must send
a summary status report to the policy owner annually.
232
• If a dependent child covered by a group life plan is incapable of self- support,
coverage under the plan may continue without any age limitation.
233
• In a group life plan, a dependent child attending an educational institution may be covered until
age 24.
234
• The IRS requires contributions made into a qualified plan on behalf of employees by employers vest as specified intervals.
Under the 7 year graded vesting plan an employee is required to be at least 20% vested after 3 years of employment. Vesting simply means ownership of employer contributions. An employee is 100% vested in their contributions immediately when made.
235
• Under the 7 year graded vesting schedule the IRS requires employer contributions be vested at least
40% after 4 years, 60% after 5 years, 80% after 6 years and 100% after 7 years.
236
If an agent puts an ad on the internet it must include
their license number, name and business address but NOT their phone number.
237
If an applicant lies about their age to obtain a rate of $8 per thousand of life insurance coverage when in fact the rate at their correct age should have been $12 per thousand, at death the insurer will
only pay 8/12ths of the face amount of the policy.
238
Under the misstatement of age provision, if the insured lies about their age in order to obtain a lower premium,
at death the insurer will pay less than the face amount.
239
Automatic premium loan is
a rider that can be added to a cash value life insurance policy in case the insured forgets to pay their premium. It takes effect at the end of the grace period.
240
The "free look" on life insurance and annuities is also known as
the "right to return". Dividends received by policyholders of a mutual insurer are not taxable.
241
A "binding receipt" provides a
limited amount of coverage right away.
242
There is no coverage under a "conditional" receipt until
all conditions are satisfied.
243
Deferred compensation plans are
non-qualified.
244
A ROTH IRA has
both non-deductible contributions and non-taxable distributions.
245
A qualified plan where the employer contributes a specified amount is known as
a "defined contribution" plan, such as a 401K.
246
Annual renewable term life insurance has
a level face amount, but an increasing premium.
247
On a Family policy of life insurance, the dependents coverage is convertible to
whole life insurance without a physical exam based upon their attained age.
248
A Family life insurance policy consists of
whole life on one spouse and level, convertible term on the other spouse and children.
249
The Guaranteed Insurability Rider allows the insured to
adjust benefits upwards at specified future option dates.
250
Whole life insurance is also known as
"continuous premium" whole life insurance.
251
A life insurance policy that allows the policy owner to "self-direct" cash values into different sub- accounts is known as
Variable life.
252
The Guaranteed Insurability Rider allows the insured to
adjust benefits upwards at specified future option dates.
253
The rate of return paid on the cash value of an Indexed Whole Life policy will keep up with
the rate of inflation.
254
The rate of return paid on the cash value of an Indexed Whole Life policy will
keep up with the rate of inflation.
255
• Group life policies may exclude aviation, suicide and military action, but not death due to other accidents.
...
256
• If a beneficiary wants to leave the life insurance proceeds with the insurer and receive investment income, they should select the "interest" option.
..
257
• All eligible employees must participate in a non-contributory group life plan.
..
258
• Life insurance policies do not contain a probationary period for pre-existing conditions.
..
259
• "Fully insured" status on social security requires 40 quarters of coverage.
...
260
• Both the agent and the applicant must sign the Notice Regarding Replacement.
..
261
• Agents need not have the Commissioner's approval to use their actual name.
...
262
• If an agent hires a website designer to design his website, the agent is responsible for the website's content.
...
263
• Group coverage is usually less expensive than individual coverage.
...
264
• Insurers are concerned about "persistency" because they will lose money if a policy does not stay in force due its high initial acquisition cost.
...
265
• Cash surrender of an annuity prior to age 59 '/2 will result in ordinary income tax and a 10% premature distribution penalty, both of which apply to the earnings portion.
...
266
• If you need to multiply the value of an accumulation unit by the number of units owned in the separate account, you have a "variable" annuity.
...
267
• A "non-medical" application allows the insurer to write a life insurance policy without a physical exam.
...
268
• HICAP counselors are not allowed to accept compensation.
.
269
• The amount that is exchanged for coverage is the premium.
..
270
• Third party administrators often help employers administer their self-funded plans.
...
271
• A hazard is something that increases the risk.
...
272
• The quarterly mode of payment costs more than the annual mode of payment.
...
273
• Life insurance premiums are refunded if death occurs due to
suicide within 2 years.
274
• A policy is considered to be "executed" when
coverage is bound.
275
• Most claims are settled by
"negotiation".
276
On disability income insurance, the "waiting period" is like a deductible, except it is stated in terms of time rather than in dollars.
..
277
Disability income policies do not offer a "life time" benefit period.
..
278
On an accident and health policy with an "accidental means" clause, both the cause and the result must be accidental in order for coverage to apply.
.
279
An insurer may not change a "non-cancellable" health insurance policy in any way.
.
280
"Guaranteed renewable" health insurance policies must offer renewal and cannot changed in any way, EXCEPT rates by "class" only.
.
281
Premiums paid for key person life insurance are not tax deductible, but benefits are not taxable. Contributions to social security are compulsory for most workers.
.
282
A terminated employee may not be eligible for group continuation under COBRA if they were terminated for cause.
.
283
A representation as to the future, unless it is merely a statement of an expectation or belief, is considered to be a "promise".
.
284
That portion of the premium used by an employer to buy group life coverage for an employee in excess of $50,000 is taxable to the employee.
.
285
A Variable/Universal life policy has no fixed, guaranteed rate of return.
A
286
On a major medical expense policy, a "stop-loss" feature limits out-of-pocket expenses.
.
287
Extended term is a life insurance non-forfeiture provision, not a rider or a settlement option. ERISA is a federal law that protects qualified plan participants and their beneficiaries.
.
288
On a major medical expense policy, the co-insurance requirements are calculated after subtracting the deductible.
.
289
A computer programmer will still be eligible for disability income benefits although he returned to work as a janitor if he has the "own occupation" definition of total disability in his policy.
.
290
Sole proprietors without any employees are not eligible for group life coverage.
.
291
On non-contributory group disability income, premiums are tax deductible for employers, but benefits are taxable to employees.
.
292
On a disability income policy, the social security offset rider will pay the difference between what social security pays and the insured's actual loss of earned income.
.
293
The Principle of Indemnity is most closely associated with insurable interest.
.
294
A "prohibited" person may not engage in the business of insurance without the written consent of the Commissioner.
.
295
Under federal law, a "prohibited" person is a person whose activities affect interstate commerce and who knowingly, with the intent to deceive, makes any false material statement or financial report to any insurance regulator for the purpose of influencing their actions.
.
296
Under federal law, upon conviction, a "prohibited" person may be imprisoned 10 to 15 years and fined up a maximum of $50,000 per violation.
.
297
Before making a sale, the first thing an agent should do is identify the client's overall financial objectives.
.
298
The Family and Medical Leave Act provides certain employees with up to 12 weeks of unpaid, job- protected leave per year for the birth and care of a newborn child, the adoption of a child, to care for an immediate family member (spouse, child or parent) with a series health condition; or to take medical leave when the employee is unable to work due to a serious health condition.
.
299
Wearing eyeglasses is not considered to be a disability under the Americans with Disabilities Act (ADA), although confinement to a wheelchair, deafness and HIV/AIDs are covered by the act.
.
300
Under Original Medicare, it is the provider (hospital or doctor) of the health care that is required to submit claims to Medicare by law.
.
301
The California Major Risk Medical Insurance Program (MRMIP) was created to provide health insurance to CA residents who are unable to obtain coverage in the individual health insurance market.
.
302
Under the Women's Health and Cancer Rights Act all health insurance plans in California which cover mastectomies MUST also cover reconstructive surgery.
.
303
MRMIP subscribers participate in the program by paying monthly premiums, an annual deductible and co-payments. Services are delivered through licensed health insurance plans.
.
304
The MRMIP is funded annually by tobacco tax funds.
.
305
To eligible for the MRMIP, individuals must be a CA resident, not eligible for Medicare or COBRA benefits and have a pre-existing condition as shown by a denial letter from a health insurance plan dated within the last 12 months.
.
306
When the MRMIP reaches its enrollment cap, individuals who qualify will be placed on a waiting list until enrollment slots become available.
.
307
Any time spent on the waiting list does not count towards the MRMIP 3-month pre-existing condition exclusion. However, if an individual has been on the waiting list for 180 days or more the pre- existing condition exclusion will be waived.
.
308
MRMIP premiums are based upon an individual's age, where they live within the state and the number of dependents that are enrolled in the program.
.
309
The federal Patient Protection and Affordable Care Act (PPACA) of 2010 expands health insurance coverage, controls health care costs and improves the health care delivery system. The various provisions of this law will be fully implemented by the year 2015.
.
310
The PPACA requires most U.S. citizens and legal residents to have health insurance starting in 2014.
The PPACA creates state-based American Health Benefit Exchanges through which low income individuals and small businesses can purchase health insurance coverage.
.
311
As a result of the PPACA, California has contracted with the federal Dept. of Health and Human Services to establish a federally-funded high risk pool program to provide health coverage for eligible individuals, known as the Pre-Existing Condition Program (PCIP).
.
312
The PCIP will last until 12/31/13 when national health reform is set to begin. After that date, there will no longer be a need for the PCIP because federal rules will not allow insurers to reject persons with pre-existing conditions or charge them higher rates than those without such conditions.
.
313
To qualify for the California PCIP, an individual must be a CA resident, have no health insurance coverage for the past 6 months, be a U.S. citizen or lawfully present in the U.S., and have been denied coverage within the past 12 months due to a pre-existing condition.
.
314
The PCIP provides medical services through a PPO provider network that has contracted with a wide variety of health providers throughout the state.
.
315
Starting in 2014, the California Health Benefit Exchange will make it easier for individuals and small businesses to compare plans and buy health insurance in the private market.
.
316
The California Health Benefit Exchange will enhance competition and provide the same advantages available to large employer groups by organizing the private insurance market, including a more stable risk pool, greater purchasing power, more competition among insurers and detailed information regarding the price, quality and services.
.
317
The PPACA also requires insurers to provide dependent coverage for children up to age 26 on all individual and group health insurance policies. Children can join or remain on their parent's plan even if they are married, not living with them or attending school.
.
318
Under the PPACA, individual and group health insurance plans cannot limit or deny benefits or deny coverage for a child younger than age 19 because the child has a pre-existing condition. Starting in 2014, these protections will be extended to all Americans.
.
319
The PPACA inter-relates with other federal laws, including Medicare, COBRA, HIPAA and the Children's Health Insurance Program (CHIP).
.
320
The Access for Infants and Mothers (AIM) Program provides low-cost health care coverage for pregnant women who don't have insurance to cover their pregnancy and are not receiving Medi-Cal or Medicare Part A and Part B benefits.
.
321
Babies born to women who are enrolled in AIM are eligible for enrollment in the Healthy Families Program unless the baby is enrolled in employer-sponsored health insurance or no-cost Medi-Cal.
.
322
• To be eligible for AIM, a person shall be a resident of the state, have a household income that does not exceed 250% of the federal poverty level and agree to pay 1.5% of the cost of services.
.
323
• The Healthy Families Program provides low-cost health, dental, and vision coverage for children and teens up to age 19 who reside in households with family incomes below 200% of the federal poverty level.
.
324
• To be eligible for the Healthy Families Program, children must live in CA. be age 18 or younger, not be eligible for no-cost Medi-Cal, live in families without health insurance from an employer for the past 3 months and meet citizenship or immigration requirements.
.
325
• Applicants for the Healthy Families Program may apply by completing a Health e-App, which is an easy to use, interactive, online application that supplements the paper application process.
.
326
• Applicants for the Healthy Families Program must meet federal income guidelines. If income is below the Healthy Families income level, applications will be forwarded to the Dept. of Social services who will contact the applicant to inform them if their family qualifies for no-cost Medi-Cal.
.
327
Be able to identify information that does NOT need to be communicated a contract:
(a) known information
(b) information that should be known
(c) information which the other party waives
(d) information that is not material to the risk
328
Know that a representation in an insurance contract qualifies as an implied warranty.
.
329
Know that the materiality of concealment is the rule used to determine the importance of a misrepresentation.
.
330
Know that a representation is false when the facts fail to correspond with its assertions or stipulations.
.
331
Know that the financial rating of the insurer is NOT required to be specified in the insurance policy.
.
332
Know that either intentional or unintentional concealment entitles an injured party to rescission of a contract.
.
333
Know the price of insurance for each exposure unit is called the rate.
.
334
Know that an MGA can be any person, firm, association, partnership, or corporation that manages all or part of an insurer's business (including a separate division, department or underwriting office)
.
335
Know that an MGA acts as an agent and produces and underwrites gross direct written premium equal to or more than 5 percent of the policyholder surplus as reported in the insurer's last annual statement and either:
a. Adjusts or pays claims in excess of an amount determined by the Commissioner, or; b. Negotiates and binds ceding reinsurance on behalf of the insurer
.
336
Know the duties of a co-partnership whose membership has changed. Note: To return the old license with signatures of the original members to the commissioner is NOT one of those duties.
.
337
Know that the interpretation of policy provisions is not a primary objective of insurance regulation.
.
338
Be able to identify that a primary insurer is the insurance company who transfers its loss exposure to another insurer in a reinsurance transaction.
.
339
Be able to identify who may be an insurer: person, association, organization, partnership, business trust, limited liability company or corporation.
.
340
Know that de-mutualization is a process whereby a mutual insurer becomes a stock company.
.
341
Know that it is a misdemeanor to refuse to deliver any books, records, or assets to the Commissioner once a seizure order has been executed in an insolvency proceeding.
.
342
Know that if an insured signs a fraudulent claim form, the insured may be guilty of perjury.
.
343
Know that it would be a discriminatory practice for an insurer to refuse to accept, charge higher premiums for, or provide different terms of insurance when a potential applicant for a disability insurance policy is shown to have a genetic characteristic which could contribute to the person's disability.
.
344
Know the following concerning survivorship life insurance: (a) offers premiums that are quite low compared with those that would be charged for separate policies; (b) well situated to meet the need for cash to cover estate taxes; (c) face amounts are usually more than one million dollars.
.
345
Know that extended term insurance is the nonforfeiture option that uses cash surrender values to purchase paid-up term insurance for the full face amount of the policy.
.
346
Know how viatical settlements are effected through the use of absolute assignment.
.
347
Know that a written binder is deemed a valid insurance policy for the purpose of proving that the insured has insurance coverage. This excludes life insurance.
.
348
Know that the employee pays all or part of the costs in a contributory group insurance plan.
.
349
Know that an attending physician's statement is required when an application reveals conditions that require more information.
.
350
Know that with indemnity plans claim forms are typically completed and submitted by the participant.
.
351
Know that the following may opt for a self insured medical and disability plan: labor unions, fraternals, and co-ops.
.
352
Know that the probationary period in a group health policy is intended for people who join the group after the policy effective date.
.
353
Know that the Employee Retirement Income Security Act of 1974 (ERISA) fiduciary standards benefit plan participants and beneficiaries.
.
354
Know coverage provided by Medicare Part B - Medical Insurance (deductibles, coinsurance, physician services, second opinion before surgery, hospital outpatient, other covered services, mental illness, diagnostic tests and x-rays performed on outpatient basis, etc.)
.
355
Know that Medicare Part B is only for individuals age 65 or older.
.
356
Know that insurers MAY offer Medicare Supplement insurance plans that contain only core benefits.
.
357
Know that skilled nursing care, intermediate nursing care, custodial care, home health care, home care and community based care are standard levels of care in a Long Term Care policy.
.
358
Know that Social Security disability benefits are paid to persons whose disability is expected to last at least 12 months or lead to death.
.
