California Life, Accident, and Health Licensing Exam: Comprehensive Q&A 2023, Exams of Insurance law

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California Life, Accident, and Health Licensing

Exam Questions and Answers 2023

Co-insurance - ☑️☑️ The policy provision which requires the insurer and the insured to share in the cost of services rendered Exclusion ratio - ☑️☑️ The formula which is used by the IRS to determine how much is taxable to an annuitant during the pay out period. Occupational policy - ☑️☑️ When a disability income policy provides coverage for injuries which occur on and off the job Most disability income policies are non occupational, meaning - ☑️☑️ They only cover the insured if they become disabled while away from work. Self employed individuals doesn't have - ☑️☑️ 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 - ☑️☑️ 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 - ☑️☑️ 60 A surviving spouse is eligible for social security survivor's benefits at age - ☑️☑️ 60 An authorized, or admitted carrier (insurer) - ☑️☑️ 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" - ☑️☑️ Traditional whole life Disability income policy proceeds must be paid out at least - ☑️☑️ monthly What life insurance rider will pay a monthly benefit to the insured when they become disabled - ☑️☑️ The disability income rider. It is a type of health (disability) insurance

2. advertising on behalf of a non-admitted insurer
3. offering free insurance as an inducement to purchase or sale Under a group insurance plan a certificate of insurance is issued to - ☑️☑️ the participants, usually employees. The policy owner, usually employer, gets the master policy Domestic insurer - ☑️☑️ one that domiciled (organized) in this state Foreign insurer - ☑️☑️ one that organized in another state Alien insurer - ☑️☑️ one that organized in another country. All insurers need to obtain - ☑️☑️ 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 - ☑️☑️ the insured to select any provider they wish.

Traditional indemnity plan - ☑️☑️ 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 - ☑️☑️ select a provider and submits claims to the insurer When an insurer wants to have the applicant complete an HIV test, they must do - ☑️☑️ 1) Have the applicant sign a consent form

2. Find out which doctor they should provide the results to
3. 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 - ☑️☑️ 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 - ☑️☑️ non contributory plan Loss exposure - ☑️☑️ a situation which presents the possibility of loss

All are true about "stock" insurance companies - ☑️☑️ 1) Dividends are taxable

2. The stockholders own the company
3. They may pay dividends to share holders out of divisible surplus
4. 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 - ☑️☑️ 12 weeks ESOP invest in - ☑️☑️ Stock of the employer Riders may be added to a policy at issue for an additional premium charge. Examples of riders - ☑️☑️ 1) accidental Death benefit
5. Cost of living
6. Waiver of Premium as used in the CIC the word "shall" is mandatory and the word "may" is - ☑️☑️ permissive

Agents own a policyholder or a prospective policyholder a duty of - ☑️☑️ honesty, good faith, and fair dealing Insurance underwriters are responsible for - ☑️☑️ risk selection and classification. The goal of the underwriter is to make sure that - ☑️☑️ the insurer makes a reasonable underwriting profit at the premium rate charged for the risk accepted Long Term Care insurance include - ☑️☑️ Skilled nursing, custodial care, home health care but not convalescent care Medicare claim, the first step in the process is - ☑️☑️ 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 - ☑️☑️ submitting the claim 403(b) are available to - ☑️☑️ employees of public educational institutions and certain non-profit charitable or religious

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 - ☑️☑️ 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 - ☑️☑️ age 24 What does a deferred annuity have that an immediate annuity does not? - ☑️☑️ an accumulation period Standard levels of care provided by LTC insurance does not include - ☑️☑️ Medical expenses Part A of Medicare covers - ☑️☑️ Hospital services. For example, Hospitalization, Hospice care, home health care Part B of Medicare covers - ☑️☑️ Physician services

Life annuity - ☑️☑️ a product that will pay out every year for the rest of a person's life To be considered as disability for social security - ☑️☑️ a person must be total disability Flexible premium variable life - ☑️☑️ 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 - ☑️☑️ 10% IRS penalty Eligibility of Social Security is based upon - ☑️☑️ 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 - ☑️☑️ 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 - ☑️☑️ WET

underwriting risk classification - ☑️☑️ preferred, standard, non- standard Frequency pricing principle - ☑️☑️ 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 - ☑️☑️ 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 - ☑️☑️ the value of the account on the date of cancellation In an insurance contract, a representation qualifies as - ☑️☑️ an implied warranty If a whole life policy is being kept in-force by the Waiver of Premium rider - ☑️☑️ the cash value will continue to increase as if the insured paid the premium

Roth IRA - ☑️☑️ Contributions are not tax deductible, qualified distributions are not taxable A qualified distribution for Roth IRA is - ☑️☑️ 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 - ☑️☑️ the most hazardous job AD&D (Accidental Death and Dismemberment) insurance - ☑️☑️ is not a life insurance AD&D (Accidental Death and Dismemberment) insurance - ☑️☑️ 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 - ☑️☑️ the insured should not profit from a loss or damage but should be returned (as near as possible) to

Medical expense policies exclude coverage for losses resulting at work in order to reinforce the principle of indemnity, which states - ☑️☑️ the insured cannot recover more than they actually lost Equity indexed annuity - ☑️☑️ 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 - ☑️☑️ 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 - ☑️☑️ it is terminated Under the CIC, if a person refuses to submit books and records to the commissioner they would be guilty of - ☑️☑️ misdemeanor

Characteristics of Ideally insurable risk - ☑️☑️ 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 - ☑️☑️ 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 - ☑️☑️ 2000 or less Industrial life is sold by - ☑️☑️ 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 - ☑️☑️ 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 - ☑️☑️ Insurers may offer plans that contain only the "core" benefits. (Plan A)

Persistency - ☑️☑️ the continued existence of a policy being in force. At what point in time may a representation be altered or withdrawn - ☑️☑️ Prior to the insurance going into effect only During the waiting (elimination period) - ☑️☑️ the insured is not eligible for benefits. They have to wait after becoming totally disabled before receiving any benefits Concealment - ☑️☑️ The failure to disclose a material fact that a party knows and ought to communicate Concealment, whether intentional or not, entitles - ☑️☑️ the injured party to rescind (void) the contract A material fact is on that is important to the - ☑️☑️ underwriter Fraud - ☑️☑️ 1) claims forms must contain a warning that false representations are subject to a penalty of perjury

2. requires the intent to deceive

3. 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 - ☑️☑️ The plan may receive federal and state tax advantages The Doctrine of Utmost Good Faith - ☑️☑️ All parties, including the insurer, the agent and the insured, are honest and acting in good faith. The Doctrine of Adhesion - ☑️☑️ 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 - ☑️☑️ the Doctrine of Adhesion. Waiver and Estoppel are legal doctrines that state - ☑️☑️ once an insurer gives up the right to deny a claim (a waiver), they can no longer deny it (estoppel)