Docsity
Docsity

Prepare for your exams
Prepare for your exams

Study with the several resources on Docsity


Earn points to download
Earn points to download

Earn points by helping other students or get them with a premium plan


Guidelines and tips
Guidelines and tips

California Life, Accident, and Health Licensing Exam Questions and Answers, Exams of Insurance law

California Life, Accident, and Health Licensing Exam Questions and Answers California Life, Accident, and Health Licensing Exam Questions and Answers

Typology: Exams

2024/2025

Available from 11/20/2024

terry-bales
terry-bales 🇬🇧

5

(1)

1.6K documents

Partial preview of the text

Download California Life, Accident, and Health Licensing Exam Questions and Answers and more Exams Insurance law in PDF only on Docsity!

California Life, Accident, and Health

Licensing Exam Questions and Answers

Co-insurance - Correct Answers The policy provision which requires the insurer and the insured to share in the cost of services rendered Exclusion ratio - Correct Answers The formula which is used by the IRS to determine how much is taxable to an annuitant during the pay out period. Occupational policy - Correct Answers When a disability income policy provides coverage for injuries which occur on and off the job Most disability income policies are non occupational, meaning - Correct Answers They only cover the insured if they become disabled while away from work. Self employed individuals doesn't have - Correct Answers workers compensation coverage. They need coverage both on and off the job (occupational).

A life agent who offers for sale or sells any financial product on the basis of its treatment under the MediCal Program must provide - Correct Answers The Notice Regarding Standards for Medi-Cal Eligibility. Must be signed by applicant. A widow or widower without any children is eligible for social security survivors benefits at age - Correct Answers 60 A surviving spouse is eligible for social security survivor's benefits at age - Correct Answers 60 An authorized, or admitted carrier (insurer) - Correct Answers one which is under compliance with the California Insurance Code (CIC) and can operate legally in California Which type of life insurance utilizes the "level premium concept" - Correct Answers Traditional whole life Disability income policy proceeds must be paid out at least - Correct Answers monthly

What life insurance rider will pay a monthly benefit to the insured when they become disabled - Correct Answers The disability income rider. It is a type of health (disability) insurance Dread (Specified) Disease policies, such as cancer insurance, covers - Correct Answers Treatment for one specific disease The benefit paid out for a residual disability in a disability income policy is based upon - Correct Answers a loss of a minimum of 20% of income Agent may be either - Correct Answers Captive (Exclusive) or independent Captive agents - Correct Answers agents who agree by contract to represent only one insurer in the sale of insurance Independent agents - Correct Answers usually self-employed and often represent several insurance companies Under state law, agents must have at least - Correct Answers one appointment in order to keep their license active

Agents are prohibited from engaging in any of the following activities - Correct Answers 1. using a business name that implies that they are an insurer

  1. advertising on behalf of a non-admitted insurer
  2. offering free insurance as an inducement to purchase or sale Under a group insurance plan a certificate of insurance is issued to - Correct Answers the participants, usually employees. The policy owner, usually employer, gets the master policy Domestic insurer - Correct Answers one that domiciled (organized) in this state Foreign insurer - Correct Answers one that organized in another state Alien insurer - Correct Answers one that organized in another country.

All insurers need to obtain - Correct Answers a Certificate of Authority from the Commissioner in order to be admitted to transact insurance in this state, except for Surplus Line insurers Indemnity plans allow - Correct Answers the insured to select any provider they wish. Traditional indemnity plan - Correct Answers the insured generally is supposed to submit their claims directly to an insurer, in reality an "assignment of benefits" form is utilized and the medical care provider submits the claim on the insured's behalf Participants in a managed care indemnity plan - Correct Answers select a provider and submits claims to the insurer When an insurer wants to have the applicant complete an HIV test, they must do - Correct Answers 1) Have the applicant sign a consent form

  1. Find out which doctor they should provide the results to
  2. Provide information on where they can receive counseling

When an insurer wants to have the applicant complete an HIV test, they do not need to - Correct Answers go over a privacy notice 75% of all eligible employees must enroll in a contributory plan. All eligible employees are required to enroll in a - Correct Answers non contributory plan Loss exposure - Correct Answers a situation which presents the possibility of loss Deductibles, co-payments and co-insurance are all features of health insurance which are called - Correct Answers cost sharing Life insurance death benefit policy proceeds paid from an insurer are - Correct Answers Federal tax free when paid to a beneficiary When an insured with a cash value elects to take the reduced paid-up non-forfeiture option, the cash value will be - Correct Answers used to buy him a new hole life policy with a reduced face amount that is paid-up for life

The traditional net cost method of evaluating the true cost of insurance does not take into consideration - Correct Answers the time value of money The primary difference between using the interest adjusted net cost method and the net cost method when evaluating the true cost of a life insurance policy - Correct Answers time value of money Dividends may never be - Correct Answers guaranteed All are true about "stock" insurance companies - Correct Answers 1) Dividends are taxable

  1. The stockholders own the company
  2. They may pay dividends to share holders out of divisible surplus
  3. they issue non-participating policies Under the Family and Medical Leave Act, how many weeks of leave must be provided per year for a qualifying person - Correct Answers 12 weeks

ESOP invest in - Correct Answers Stock of the employer Riders may be added to a policy at issue for an additional premium charge. Examples of riders - Correct Answers 1) accidental Death benefit

  1. Cost of living
  2. Waiver of Premium as used in the CIC the word "shall" is mandatory and the word "may" is - Correct Answers permissive Agents own a policyholder or a prospective policyholder a duty of - Correct Answers honesty, good faith, and fair dealing Insurance underwriters are responsible for - Correct Answers risk selection and classification. The goal of the underwriter is to make sure that - Correct Answers the insurer makes a reasonable underwriting profit at the premium rate charged for the risk accepted

Long Term Care insurance include - Correct Answers Skilled nursing, custodial care, home health care but not convalescent care Medicare claim, the first step in the process is - Correct Answers the individual's provider files the claim with a local Medicare carrier In the original Medicare program, it is the provider which is responsible for - Correct Answers submitting the claim 403(b) are available to - Correct Answers employees of public educational institutions and certain non-profit charitable or religious organizations. Contributions are made in before tax dollars on a payroll deduction basis Renewable term has a level death benefit and - Correct Answers increasing premium. Each time the policy renews, the premium will go up The automatic premium loan rider will go into effect at the end of - Correct Answers the grace period. It can only be added to

a cash value policy and was created to keep the policy in force if the insured forgets to pay their premium HMOs are required to cover all of the following - Correct Answers preventive services, physician services, emergency services. Except prescription drugs Insurance contracts must identify 6 required specifications - Correct Answers 1) the parties between whom the contract is made

  1. the property or life insured
  2. the interest of the insured in the property insured
  3. the risks (perils) insured against
  4. the policy period
  5. the premium Primary (also known as "ceding") insurers who elect to offer insurance coverage for high risk exposures, such as earthquake, often buy reinsurance from larger reinsurance companies (reinsurers) in an effort to lower their exposure to - Correct Answers catastrophic risk.

Under the CIC, an insured may cover a child attending an educational institutional as a dependent on their group life insurance policy through - Correct Answers age 24 What does a deferred annuity have that an immediate annuity does not? - Correct Answers an accumulation period Standard levels of care provided by LTC insurance does not include - Correct Answers Medical expenses Part A of Medicare covers - Correct Answers Hospital services. For example, Hospitalization, Hospice care, home health care Part B of Medicare covers - Correct Answers Physician services Life annuity - Correct Answers a product that will pay out every year for the rest of a person's life To be considered as disability for social security - Correct Answers a person must be total disability

Flexible premium variable life - Correct Answers also known as variable universal life. Allows the insured to pay a flexible premium and direct the case value into a varying selection of investments Distributions taken from modified endowment contracts (MECs) are subject to a - Correct Answers 10% IRS penalty Eligibility of Social Security is based upon - Correct Answers the total number of quarters worked. 40 quarters is needed for fully insured status Under a 7 year graded vesting schedule, the IRS requires that employer contributions to the plan be - Correct Answers vested (owned by the employee) at least 40% after 4 years, 60% after 5 years, 80% after 6 years and 100% after 7 years Three types of ordinary life insurance - Correct Answers WET Whole life Endowment Term

A disability recurs within 90 days, the insurer will waive waiting (elimination) period. Nonetheless, since the disability recurs 6 months later, a new - Correct Answers elimination (waiting) period and benefit period will apply. A new policy need not be written If an employee is receiving benefits under a policy and still able to work, they have a - Correct Answers partial disability A guaranteed renewable disability policy is one where the insurer - Correct Answers has the right to change the premiums, but may not change any of the policy terms Accidental death benefit rider - Correct Answers Double indemnity If the owner of the policy has named on irrevocable beneficiary, they cannot - Correct Answers assign the policy without their consent underwriting risk classification - Correct Answers preferred, standard, non-standard

Frequency pricing principle - Correct Answers Determining how frequently or how often a loss will occur within a group of individuals, how these loses will effect rates Non medical life insurance applications - Correct Answers usually buy low amount of coverage, need not take a physical exam, usually young. but they have to answer medical questions on the application If a person returns a variable annuity invested in mutual funds during the free look, they will receive a return of - Correct Answers the value of the account on the date of cancellation In an insurance contract, a representation qualifies as - Correct Answers an implied warranty If a whole life policy is being kept in-force by the Waiver of Premium rider - Correct Answers the cash value will continue to increase as if the insured paid the premium Roth IRA - Correct Answers Contributions are not tax deductible, qualified distributions are not taxable

A qualified distribution for Roth IRA is - Correct Answers one made to a participant who has been participating in the Roth for at least 5 years and is at least age 59 and a half When a disability income policy provides occupational coverage and the insured has 2 jobs, the insurer will base the premium on - Correct Answers the most hazardous job AD&D (Accidental Death and Dismemberment) insurance - Correct Answers is not a life insurance AD&D (Accidental Death and Dismemberment) insurance - Correct Answers has both a Capital and Principal sum. Principal sum pays a lump sum for accidental death. Capital Sum pays a lump sum for accidental dismemberment Principle of indemnity - Correct Answers the insured should not profit from a loss or damage but should be returned (as near as possible) to the same financial position that existed before the loss or damaged occurred

Managing General Agents (MGA) - Correct Answers Fire and Casualty broker/ agent or a life agent who represents one or more admitted insurers and manages the transaction of insurance by those insurers in a specific territory Surplus Lines Broker - Correct Answers a person licensed by the Commissioner to solicit and place insurance with non- admitted insurers when the insurance cannot be procured from admitted insurers Proof of loss - Correct Answers must be provided in order to collect on a valid claim In Group Health insurance, the period of time that starts when a new employee is hired and ends on the date they become eligible for the employer's Group Health plan - Correct Answers Probationary period Disability income policy covers - Correct Answers only loss of income due to disability, not medical expenses. Medical expense policies exclude coverage for losses resulting at work in order to reinforce the principle of indemnity, which

states - Correct Answers the insured cannot recover more than they actually lost Equity indexed annuity - Correct Answers an annuity that has a fixed guaranteed minimum rate of return but has an excess rate of return which could also keep up with the performance of stock market Variable annuity - Correct Answers the owner of an annuity has to multiply the value of accumulation unit held in the separate account by the number of accumulation units owned In regards to an organizational license, what occurs when a corporation is dissolved - Correct Answers it is terminated Under the CIC, if a person refuses to submit books and records to the commissioner they would be guilty of - Correct Answers misdemeanor Characteristics of Ideally insurable risk - Correct Answers Loss must not be catastrophic in nature, must create economic hardship, must be definable. EXCEPT loss must be certain. Death is certain but it is okay because time of death is uncertain

Coordination of benefits - Correct Answers the provision that applies in group insurance when an insured has coverage under multiple plans at one time Industrial life insurance has a face amount of - Correct Answers 2000 or less Industrial life is sold by - Correct Answers debit insurance agents who call the clients in person on a weekly basis. Policies accrue a cash value. Premiums are paid weekly, the grace period is 28 days a supplementary benefit in a dread disease policy - Correct Answers Treatment, travel and lodging expenses when treatment is far from home, and normal living expenses such as a car payment, mortgage/rent and utility bills Medicare Supplement insurance policies - Correct Answers Insurers may offer plans that contain only the "core" benefits. (Plan A)

There are 12 standardized Medicare Supplement policies, identified as - Correct Answers Plans A through L Medicare Supplements are sold by private insurers to supplement Medicare, which is generally only available to those who are at least age - Correct Answers 65 In disability income insurance in order for bodily injury to be classife3d as accidental - Correct Answers the cause may be intentional but the result must be accidental Which of the following best illustrates the Principle of Indemnity - Correct Answers Insurable Interest Factors used to underwrite group medical expense insurance policies - Correct Answers the location of the group, term of the probationary period, the age and gender of those making up the group morbidity - Correct Answers the likelihood of illness or injury The minimum number of employees which must be covered in a group life insurance plan in California is - Correct Answers 2

Persistency - Correct Answers the continued existence of a policy being in force. At what point in time may a representation be altered or withdrawn - Correct Answers Prior to the insurance going into effect only During the waiting (elimination period) - Correct Answers the insured is not eligible for benefits. They have to wait after becoming totally disabled before receiving any benefits Concealment - Correct Answers The failure to disclose a material fact that a party knows and ought to communicate Concealment, whether intentional or not, entitles - Correct Answers the injured party to rescind (void) the contract A material fact is on that is important to the - Correct Answers underwriter

Fraud - Correct Answers 1) claims forms must contain a warning that false representations are subject to a penalty of perjury

  1. requires the intent to deceive
  2. every admitted insurer must maintain a fraud unit to investigate possible fraudulent claims An agent can only provide this statement during a tax qualified Long Tern Care insurance policy presentation - Correct Answers The plan may receive federal and state tax advantages The Doctrine of Utmost Good Faith - Correct Answers All parties, including the insurer, the agent and the insured, are honest and acting in good faith. The Doctrine of Adhesion - Correct Answers since the insurer wrote the contract, any vague language will be construed in favor of the insured, since they had no choice when they bought it. The Doctrine of Reasonable Expectations reinforces - Correct Answers the Doctrine of Adhesion.

Waiver and Estoppel are legal doctrines that state - Correct Answers once an insurer gives up the right to deny a claim (a waiver), they can no longer deny it (estoppel) An insurer who provides for all of its liabilities and purchases reinsurance on all of its outstanding risks is considered to be - Correct Answers Insolvent On a fully contributory group disability income policy, the benefits payable to disabled employees are - Correct Answers not taxable On what type of Life insurance is the beneficiary also the policyholder - Correct Answers Credit Life Survivorship life - Correct Answers Policies pays a death benefit when the second insured person dies Equity Indexed Annuity - Correct Answers an annuity with a fixed minimum rate of return with the potential for excess stock market like returns

Required duties regarding the organizational license of a co- partnership whose membership has changed - Correct Answers 1) pay the required fees

  1. must file within 30 days an application for registering the change in membership signed by a general partner
  2. at least one person authorized to exercise the agency powers of the original partnership must continue with the surviving partnership When membership has changed in a co-partnership for the organizational license - Correct Answers they do not need to return the old license with the signatures of all the original member to the co-partnership to the commissioner Joint Life - Correct Answers Policies pays a death benefit when the first insured person dies Incontestability - Correct Answers the provision which keeps a policy which has been in force for two years from being rescinded by the insurer

A difference between group and individual life insurance plans - Correct Answers Insurers use experience rating for group life policies Cost of Living rider - Correct Answers increase coverage relative to cost of living changes in the economy. Once an upward adjustment occurs, coverage will never be decreased. If the face amount is adjusted up, the premium will increase It is the materiality of the concealment which will ultimately determine the importance of a - Correct Answers representation the insurer require what when an applicant reveals conditions that require more information - Correct Answers Attending physicians statement The elimination period in a disability income policy is most similar to - Correct Answers deductible in a medical expense policy if there is a loan outstanding at the time of death, and the Fixed period settlement option by the beneficiary, what effect will it

have on payout - Correct Answers it will reduce the value of the payments made only An avocation is a another name for - Correct Answers a hobby The Facility of Payment clause in a group life policy allows the policy proceeds to be paid to - Correct Answers The guardian of a child who is the beneficiary The Facility of Payment clause - Correct Answers allows the insurer to elect to choose who to pay the policy proceeds to if the beneficiary named in the policy is a minor, or is deceased Features of major medical insurance - Correct Answers Deductibles, co-insurance, high lifetime limits Capitation fee - Correct Answers also known as a per head fee. A fee that some HMO's pay their providers to service their subscribers Under the CIC, if an agent receives a notice of claim, they are supposed to - Correct Answers send the insured proper forms