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A series of questions and answers related to california life, accident, and health insurance. It covers various aspects of insurance, including annuities, life insurance, disability income insurance, group health insurance, and health insurance principles. A valuable resource for students studying insurance concepts and professionals seeking to refresh their knowledge.
Typology: Exams
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What distinguishes a deferred annuity from an immediate annuity? - Correct Answers ✅✅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? - Correct Answers ✅✅60 payments What is a common reason people purchase an annuity? - Correct Answers ✅✅To protect against the risk of outliving their financial resources What kind of annuity pays income to two annuitants until their deaths?
Which of the following statements regarding a life insurance policy dividend is TRUE? - Correct Answers ✅✅It is the distribution of excess of funds accumulated by the insurer on participating policies. An insured owned by its policyholders is called a - Correct Answers ✅✅mutual insurer 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? - Correct Answers ✅✅Reinsurance What is reinsurance? - Correct Answers ✅✅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? - Correct Answers ✅✅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? - Correct Answers ✅✅Insurance policy
What is an insurance policy? - Correct Answers ✅✅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? - Correct Answers ✅✅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 - Correct Answers ✅✅Driving Which of the following is NOT a provision in a disability income policy? - Correct Answers ✅✅Deductible and coinsurance provision Which of these statements is NOT true concerning recurrent disabilities? - Correct Answers ✅✅The insurer continues coverage after a new elimination period Kim is insured under a disability income insurance policy with an "own- occupation" 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 - Correct Answers ✅✅totally disabled
What percentage of eligible employees must participate in a noncontributory group health plan before it can be put in effect? - Correct Answers ✅✅100% Business Overhead Expense Insurance pays for - Correct Answers ✅✅business expenses when a business owner becomes disabled Minimum participation standards exist for group health insurance plans in order to - Correct Answers ✅✅prevent adverse selection The problem of overinsurance is addressed in which health insurance provision? - Correct Answers ✅✅Coordination of benefits What is the purpose of the coordination of benefits (COB) provision? - Correct Answers ✅✅To avoid duplication of benefit payments and overinsurance when an individual is covered under more than one group health plan Who is financially liable for the payment of covered claims in a fully insured group health plan? - Correct Answers ✅✅Insurer
The insurer has the option of terminating a health insurance policy on a date stated in the contract. What type of policy is this? - Correct Answers ✅✅Optionally renewable What is an optionally renewable policy? - Correct Answers ✅✅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? - Correct Answers ✅✅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?
The conditions, times, and circumstances under which an insured is NOT covered by a health policy are called? - Correct Answers ✅✅exclusions What are exclusions in a health policy? - Correct Answers ✅✅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? - Correct Answers ✅✅insuring clause What does an insuring clause state? - Correct Answers ✅✅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? - Correct Answers ✅✅Intelligence How does rising morbidity rates affect health insurance? - Correct Answers ✅✅Increased premiums In health insurance, morbidity rates show - Correct Answers ✅✅the expected incidence of sickness or disability within a given group during a given period of time
Which of the following factors is NOT used in underwriting health insurance policies? - Correct Answers ✅✅Intelligence Which of the following is NOT a requirement of a contract? - Correct Answers ✅✅Equal consideration is required between the involved parties Which of the following statements correctly describes a contract of indemnity? - Correct Answers ✅✅One party is restored to the same financial position the party was in before the loss occurred Which of the following is NOT required in the content of a policy? - Correct Answers ✅✅Probability of loss Which statement is CORRECT when describing a contract of adhesion? - Correct Answers ✅✅Contract may be accepted or rejected by the insured Restoring an insured to the same condition as before a loss is an example of the principle of - Correct Answers ✅✅Indemnity
Which course of action is the insurer entitled to when deliberate concealment is committed by the insured? - Correct Answers ✅✅Rescinding the contract The importance of representation is demonstrated in what rule? - Correct Answers ✅✅Materiality of concealment What is the price of insurance for each exposure unit? - Correct Answers ✅✅Rate Which of the following is NOT an insurer policy expense? - Correct Answers ✅✅Premiums A beneficiary receives only the death benefit earnings in which settlement option? - Correct Answers ✅✅Interest option Which of these is the automatic mode of settlement for life insurance policy proceeds? - Correct Answers ✅✅Lump-sum A spendthrift clause in a life insurance policy - Correct Answers ✅✅restricts the ability of the beneficiary to sign benefits
Premiums are best described as - Correct Answers ✅✅the amount an insured pays per unit of coverage What does the grace period allow a life insurance policy owner to do? - Correct Answers ✅✅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?
If an insured dies because of an accident, which type of life insurance rider will provide additional coverage? - Correct Answers ✅✅Accidental death rider What time period allows an insured's life insurance policy to remain in force even if the premium was not paid of the due date? - Correct Answers ✅✅Grace period An insurer can be protected from adverse selection with which policy provision? - Correct Answers ✅✅Suicide clause A life insurance policy can be surrendered for its cash value under which policy provision? - Correct Answers ✅✅Nonforfeiture options In a modified endowment contract, the penalty tax imposed on premature withdrawals is - Correct Answers ✅✅10% A life insurance policy's limit of liability would be - Correct Answers ✅✅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 - Correct Answers ✅✅Joint life policy What is a joint life policy? - Correct Answers ✅✅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? - Correct Answers ✅✅Universal life An insurance policy written after 1988 that fails to pass the seven-pay test is known as - Correct Answers ✅✅a modified endowment contract A life insurance policy where the insured can choose where the cash value can be invested is called - Correct Answers ✅✅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? - Correct Answers ✅✅Mortgage redemption
A life insurance policy that pays the face amount if the insured survives to a specified period of time is called - Correct Answers ✅✅endowment insurance Which of the following is NOT a risk classification that an underwriter would use? - Correct Answers ✅✅Dividend risk When an applicant applies for insurance, the process by which he insurer determines whether to issue a policy is called - Correct Answers ✅✅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) - Correct Answers ✅✅consumer report Which of the following types of information is NOT required for a life insurance application? - Correct Answers ✅✅Ethnicity The Medical Information Bureau consists of - Correct Answers ✅✅life and health insurance companies
What must an applicant do in order to authorize the release of an attending physician report? - Correct Answers ✅✅Sign a consent form What are members of the Medical Information Bureau (MIB) required to report? - Correct Answers ✅✅Medical ailments discovered during the underwriting process Which of the following does specified disease insurance NOT cover? - Correct Answers ✅✅costs covered by medical expense insurance Major medical expense plans typically use a cost containment measure for emergency hospital care. This is referred to as a(n) - Correct Answers ✅✅deductible At what point does a self-insured group qualify for stop-loss coverage? - Correct Answers ✅✅When claims exceed a specified limit in a set period of time What does a Hospital Confinement indemnity policy pay for? - Correct Answers ✅✅Pays a specified daily amount while the insured is confined to a hospital
Medical expense policies will typically cover which of the following? - Correct Answers ✅✅Injuries caused by accidents All of these are examples of cost sharing in a health insurance policy EXCEPT - Correct Answers ✅✅Coordination Wat is considered the most common type of specified disease insurance policy? - Correct Answers ✅✅Cancer Moral hazard is described as - Correct Answers ✅✅increased chance of a loss because of an insured's dishonest tendencies Which of the following is any situation that presents the possibility of a loss? - Correct Answers ✅✅Loss exposure Which of the following is a situation where there is a possibility of either a loss or a gain? - Correct Answers ✅✅Speculative risk Which of these statements correctly describes risk? - Correct Answers ✅✅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 - Correct Answers ✅✅Probability of loss is unknown A situation in which there is ONLY a chance of loss or no loss is a - Correct Answers ✅✅pure risk Which of the following refers to a condition that may increase the chance of a loss? - Correct Answers ✅✅Hazard A hazard can be best described as - Correct Answers ✅✅a condition that may increase the likelihood of a loss occurring How are Roth IRA's treated for tax purposes? - Correct Answers ✅✅Non-deductible contributions and tax-free distributions Retirement plans are prevented from favoring highly compensated employees under which government regulation? - Correct Answers ✅✅Nondiscrimination What doe ESOP stand for? - Correct Answers ✅✅Employee Stock Ownership Plan
ESOPs are typically invested in - Correct Answers ✅✅employer stock What type of coverage pays a benefit for part-time nursing care that can be provided in a patient's home? - Correct Answers ✅✅Home health care What portion does an insured pay for covered expenses under Medicare Part B after the deductible? - Correct Answers ✅✅20% Rating an individual's need for long-term care benefits can be measured by - Correct Answers ✅✅activities of daily living Which of the following plans will cover medical costs that Medicare doesn't cover? - Correct Answers ✅✅Medicare supplement Which Social Security status does a worker with 6 quarters of coverage during the last 13-quarter period have? - Correct Answers ✅✅Currently insured The "blackout period" affects whose benefits? - Correct Answers ✅✅Surviving spouse
At what age is a surviving spouse without dependents eligible for Social Security survivor benefits? - Correct Answers ✅✅ 60 According to Social Security, an individual with 6 credits of coverage during the previous 13-quarter is considered to be: - Correct Answers ✅✅currently insured An individual that has 40 quarters of coverage, for Social Security purposes, is considered to be - Correct Answers ✅✅fully insured In order to be considered "currently insured" under Social Security, an individual must be credited with: - Correct Answers ✅✅6 quarters of coverage during the last 13-quarter period Key person insurance is intended to - Correct Answers ✅✅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? - Correct Answers ✅✅An individual's civic organization memberships The Human Life Value concept is based on - Correct Answers ✅✅income
An insurance policy issued in California may be called a comprehensive long-term care insurance policy if benefits are provided for - Correct Answers ✅✅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? - Correct Answers ✅✅Age 26 Kimberly is an employee on leave under the Family and Medical Leave Act (FMLA). What will happen to her group health coverage? - Correct Answers ✅✅She continues to be enrolled during the leave People with low income can be provided with medical assistance through which program? - Correct Answers ✅✅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 - Correct Answers ✅✅Attending physician's statement In what order are people on the MRMIP waiting list allowed to enroll? - Correct Answers ✅✅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)? - Correct Answers ✅✅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? - Correct Answers ✅✅Charge a fee What is the purpose of the Pre-Existing Condition Insurance Plan (PCIP)? - Correct Answers ✅✅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? - Correct Answers ✅✅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? - Correct Answers ✅✅Between 10 and 30 days
What prevents a life insurance policy from being rescinded by the insurer after being in force for two years? - Correct Answers ✅✅Incontestability clause What does the term "illustration" mean when used in the phrase "life insurance policy illustration", according to the California Insurance Code? - Correct Answers ✅✅Presentation of policy features that includes non-guaranteed elements The free-look period for life insurance policyowners age 60 or older is - Correct Answers ✅✅30 days An agent's attempt to stop the replacement of an existing life insurance policy is known as - Correct Answers ✅✅conservation Who does a life settlement broker represent? - Correct Answers ✅✅Individual wanting to sell their life policy to a third party Paul has an existing annuity and is sold a new one, in which the new policy holds no greater financial benefit to him than the existing contract. This is considered a(n) - Correct Answers ✅✅unnecessary replacement
Which of the following does NOT have to be included on life insurance policy illustrations? - Correct Answers ✅✅Statement that all values and benefits are guaranteed Which of the following describes a contributory group insurance plan? - Correct Answers ✅✅Part of the premium is paid by the employee A terminated employee that has exercised the conversion privilege is able to convert - Correct Answers ✅✅term insurance into permanent insurance How does underwriting differ between group life and individual life insurance? - Correct Answers ✅✅Medical questions must be answered on individual life insurance Tim was recently terminated from his employment and opted to change his existing group term life insurance to individual permanent life insurance. What is this process called? - Correct Answers ✅✅Conversion Who are the parties to the master contract in a group life insurance policy? - Correct Answers ✅✅Insurer and employer
Which of the following does Medicare Part A NOT provide coverage for? - Correct Answers ✅✅Doctor's services Which of the following healthcare providers provides both the healthcare services and healthcare coverage? - Correct Answers ✅✅Health Maintenance Organization (HMO) Individuals become eligible for Medicare Part A benefits at what age? - Correct Answers ✅✅ 65 After the annual deductible is met, a Medicare Part B patient will pay ____ of the remaining covered expenses. - Correct Answers ✅✅20% After the annual deductible is met, Medicare Part B will pay ____ of the remaining approved charges. - Correct Answers ✅✅80% Medicare Part B covers - Correct Answers ✅✅physician expenses How is a Medicare claim submitted? - Correct Answers ✅✅Expenses are submitted to Medicare by the health provider
Jon's health plan pays benefits of 90% for in-network providers and 70% for out-of-network providers. What kind of plan is this? - Correct Answers ✅✅PPO What is PPO? - Correct Answers ✅✅A Preferred Provider Organization pays more for care received from a network provider than it pays for care from a non-network provider Individual health insurance coverage typically excludes injuries at an employee's workplace because - Correct Answers ✅✅it's covered by the state Workers' Compensation program If a healthcare provider is considered to be a "service provider", what does this mean? - Correct Answers ✅✅Payment for services goes directly to the provider Which statement is TRUE regarding Workers' Compensation coverage - Correct Answers ✅✅Employer pays the entire premium for Workers' Compensation coverage Jim is applying to become an insurance agent and has a past misdemeanor conviction that was later expunged due to California Penal Code 1203.4. Which of the following statements is correct? -
Correct Answers ✅✅Jim must still disclose the conviction on his insurance license application The California Insurance Code requires that an insurer must have enough assets to cover its liabilities and for reinsurance of all outstanding risks. To remain solvent, it must also possess additional assets equal to what amount? - Correct Answers ✅✅Its paid-in capital When handling premiums for an insured, an agent is acting in which capacity? - Correct Answers ✅✅Fiduciary An individual who transacts life, disability, or life and accident and health insurance on behalf of an insurer is called a(n): - Correct Answers ✅✅life agent Which of the following does the California Insurance Code NOT require an insurance policy to specify? - Correct Answers ✅✅Insurer's financial rating Which of the following is NOT protected under the California Life and Health Guarantee Association? - Correct Answers ✅✅Insurers
Insurance agents and brokers must make their insurance records available to the Commissioner - Correct Answers ✅✅at all times Any changes in background information that occur after a producer application has been submitted or a license has been issued MUST be reported to the Insurance Commissioner within - Correct Answers ✅✅30 days Failure to report background changes within 30 days as required under section 1729.2 of the California insurance code could subject a license or applicant to - Correct Answers ✅✅fine, suspension, and denial The California Insurance Code defines "policy" as a(n) - Correct Answers ✅✅written contract Before an insurer is allowed to test an individual for HIV, what must be completed? - Correct Answers ✅✅Consent form Which type of jurisdiction requires an insurer to have its rates accepted by the Insurance Department prior to using them? - Correct Answers ✅✅Prior approval Pete is a life agent who has misappropriated fiduciary funds to his own use. What is Pete guilty of? - Correct Answers ✅✅Theft