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CALIFORNIA LIFE, ACCIDENT, AND HEALTH
INSURANCE FINAL EXAM 2025 QUESTIONS AND
ANSWERS ALREADY PASSED
What is a joint life policy? - ANSWER✔✔It covers two or more people and pays the face amount at the first insured's death Which of the following types of life insurance combines a savings element along with a flexible premium option? - ANSWER✔✔Universal life What distinguishes a deferred annuity from an immediate annuity? - ANSWER✔✔The time at which benefit payments start Cindy buys a 10-year certain annuity with an installment refund. After receiving monthly payments for 5 years, Cindy dies. How many remaining payments will the insurer make to her beneficiary? - ANSWER✔✔60 payments An insurance policy written after 1988 that fails to pass the seven-pay test is known as - ANSWER✔✔a modified endowment contract
A life insurance policy where the insured can choose where the cash value can be invested is called - ANSWER✔✔variable life Scott has just purchased a new house. He is now shopping for a life insurance policy that provides a death benefit that matches the projected outstanding debt of his mortgage. Which life policy would best suit his needs? - ANSWER✔✔Mortgage redemption A life insurance policy that pays the face amount if the insured survives to a specified period of time is called - ANSWER✔✔endowment insurance Which of the following is NOT a risk classification that an underwriter would use?
- ANSWER✔✔Dividend risk When an applicant applies for insurance, the process by which he insurer determines whether to issue a policy is called - ANSWER✔✔underwriting A report which is based on creditworthiness and personal characteristics that influences an insurance applicant's eligibility for life and health insurance is called a(n) - ANSWER✔✔consumer report
what point does a self-insured group qualify for stop-loss coverage? - ANSWER✔✔When claims exceed a specified limit in a set period of time What does a Hospital Confinement indemnity policy pay for? - ANSWER✔✔Pays a specified daily amount while the insured is confined to a hospital Medical expense policies will typically cover which of the following? - ANSWER✔✔Injuries caused by accidents All of these are examples of cost sharing in a health insurance policy EXCEPT - ANSWER✔✔Coordination Which of the following is a situation where there is a possibility of either a loss or a gain? - ANSWER✔✔Speculative risk Which of these statements correctly describes risk? - ANSWER✔✔Pure risk is the only insurable risk
All of the following circumstances must be met for loss retention to be an effective risk management technique, EXCEPT - ANSWER✔✔Probability of loss is unknown A situation in which there is ONLY a chance of loss or no loss is a - ANSWER✔✔pure risk Which of the following refers to a condition that may increase the chance of a loss? - ANSWER✔✔Hazard A hazard can be best described as - ANSWER✔✔a condition that may increase the likelihood of a loss occurring How are Roth IRA's treated for tax purposes? - ANSWER✔✔Non-deductible contributions and tax-free distributions Retirement plans are prevented from favoring highly compensated employees under which government regulation? - ANSWER✔✔Nondiscrimination
The "blackout period" affects whose benefits? - ANSWER✔✔Surviving spouse At what age is a surviving spouse without dependents eligible for Social Security survivor benefits? - ANSWER✔✔ 60 According to Social Security, an individual with 6 credits of coverage during the previous 13-quarter is considered to be: - ANSWER✔✔currently insured An individual that has 40 quarters of coverage, for Social Security purposes, is considered to be - ANSWER✔✔fully insured In order to be considered "currently insured" under Social Security, an individual must be credited with: - ANSWER✔✔6 quarters of coverage during the last 13quarter period Key person insurance is intended to - ANSWER✔✔cover business losses due to the death of a key employee
Which of the following pieces of information is NOT gathered during the personal financial planning process? - ANSWER✔✔An individual's civic organization memberships The Human Life Value concept is based on - ANSWER✔✔income An insurance policy issued in California may be called a comprehensive long-term care insurance policy if benefits are provided for - ANSWER✔✔Institutional (nursing facilities) and home care According to the PPACA, an adult can be covered by a parent's health care plan until what age? - ANSWER✔✔Age 26 Kimberly is an employee on leave under the Family and Medical Leave Act (FMLA). What will happen to her group health coverage? - ANSWER✔✔She continues to be enrolled during the leave What is a common reason people purchase an annuity? - ANSWER✔✔To protect against the risk of outliving their financial resources
An insurer enters into a contract with a third party to insure itself against losses from insurance policies it issues. What is the agreement called? - ANSWER✔✔Reinsurance What is reinsurance? - ANSWER✔✔An arrangement by which an insurance company transfers a portion of a risk it has assumed to another insurer Which of the following is NOT a characteristic of reinsurance? - ANSWER✔✔Increases the unearned premium reserve Which of the following is a contract that involves one party which indemnifies another when a loss arises from an unknown event? - ANSWER✔✔Insurance policy What is an insurance policy? - ANSWER✔✔A contract where one party promises to indemnify another against loss that arises from an unknown event What is residual disability income insurance payments based on? - ANSWER✔✔The amount of the insured's income is reduced by the disability
Manuel is considered to be a disabled person as defined by the Americans with Disabilities Act (ADA). As such, he is unable to perform any of the following life activities EXCEPT - ANSWER✔✔Driving Which of the following is NOT a provision in a disability income policy? - ANSWER✔✔Deductible and coinsurance provision Which of these statements is NOT true concerning recurrent disabilities? - ANSWER✔✔The insurer continues coverage after a new elimination period Kim is insured under a disability income insurance policy with an "ownoccupation" clause. She was recently injured in an automobile accident and can no longer perform the tasks of her job. Kim is now considered to be - ANSWER✔✔totally disabled What percentage of eligible employees must participate in a noncontributory group health plan before it can be put in effect? - ANSWER✔✔100%
What is an optionally renewable policy? - ANSWER✔✔A provision allowing an insurer to terminate the policy on a date specified in the contract Bruce is involved in an accident and becomes totally and permanently disabled. His insurance policy continues in force without payment of further premiums. Which policy provision is responsible for this? - ANSWER✔✔Waiver of premium provision Christine has a health insurance policy that has been in force beyond the incontestable period. The insurer has discovered that a fraudulent statement was made on the application. What would the insurer have to pay on a claim, assuming this wasn't a guaranteed renewable policy? - ANSWER✔✔Nothing What type of health insurance policy cannot be canceled by the insurer nor increase the premiums? - ANSWER✔✔Noncancellable The conditions, times, and circumstances under which an insured is NOT covered by a health policy are called? - ANSWER✔✔exclusions
What are exclusions in a health policy? - ANSWER✔✔Specified hazards listed in a policy for which benefits will not be paid Under a health insurance policy, the provision that states the kind of benefits provided and the circumstances under which they will be paid is called the? - ANSWER✔✔insuring clause What does an insuring clause state? - ANSWER✔✔Under a health insurance policy, the provision that states the kind of benefits provided and the circumstances under which they will be paid Which of these is NOT a relevant factor in the health insurance principle of morbidity? - ANSWER✔✔Intelligence How does rising morbidity rates affect health insurance? - ANSWER✔✔Increased premiums In health insurance, morbidity rates show - ANSWER✔✔the expected incidence of sickness or disability within a given group during a given period of time
Which course of action is the insurer entitled to when deliberate concealment is committed by the insured? - ANSWER✔✔Rescinding the contract The importance of representation is demonstrated in what rule? - ANSWER✔✔Materiality of concealment What is the price of insurance for each exposure unit? - ANSWER✔✔Rate Which of the following is NOT an insurer policy expense? - ANSWER✔✔Premiums A beneficiary receives only the death benefit earnings in which settlement option? - ANSWER✔✔Interest option Which of these is the automatic mode of settlement for life insurance policy proceeds? - ANSWER✔✔Lump-sum A spendthrift clause in a life insurance policy - ANSWER✔✔restricts the ability of the beneficiary to sign benefits
Premiums are best described as - ANSWER✔✔the amount an insured pays per unit of coverage What does the grace period allow a life insurance policy owner to do? - ANSWER✔✔Make a premium payment after the due date without any loss of coverage Which of the following does a policyowner NOT have a right to change? - ANSWER✔✔Dividend schedule When does a life insurance policy's waiver of premium take effect? - ANSWER✔✔Insured becomes totally disabled What are collateral assignments normally associated with? - ANSWER✔✔Bank loans Jerry is an insured who understated his age on his life insurance application, paying $12 per $1,000 of insurance instead of $15 per $1,000. If he dies, how will
In a modified endowment contract, the penalty tax imposed on premature withdrawals is - ANSWER✔✔10% A life insurance policy's limit of liability would be - ANSWER✔✔the policy's face amount Tom is shopping for a policy that covers two people and would pay the face amount ONLY when the first person dies. The type of life policy he is looking for is called a - ANSWER✔✔Joint life policy People with low income can be provided with medical assistance through which program? - ANSWER✔✔Medi-Cal When selling a long term care insurance rider to an applicant, a life agent must take into consideration all of these factors, EXCEPT - ANSWER✔✔Attending physician's statement In what order are people on the MRMIP waiting list allowed to enroll? - ANSWER✔✔Based on the date an individuals's application is received
Which of the following is NOT an accurate description of Access for infants and Mothers Program (AIM)? - ANSWER✔✔Only women who have private insurance plans with a maternity-only deductible or copayment greater than $1,500 are eligible Which of the following actions is NOT allowed by Health Insurance Counseling and Advocacy Program (HICAP) counselors? - ANSWER✔✔Charge a fee What is the purpose of the Pre-Existing Condition Insurance Plan (PCIP)? - ANSWER✔✔PCIP was created by the PPACA for people rejected by private health insurers due to pre-existing conditions What effect did the Pregnancy Discrimination Act have on the health industry? - ANSWER✔✔Pregnancy must be treated as any other medical condition The California Insurance Code allows an individual how many days to cancel a life policy for a full-refund? - ANSWER✔✔Between 10 and 30 days What prevents a life insurance policy from being rescinded by the insurer after being in force for two years? - ANSWER✔✔Incontestability clause
