Insurance Concepts and Terminology, Exams of Nursing

Download Insurance Concepts and Terminology and more Exams Nursing in PDF only on Docsity! CALIFORNIA LIFE, ACCIDENT, AND HEALTH INSURANCE FINAL EXAM LATEST VERSION QUESTIONS AND DETAILED (VERIFIED) CORRECT ANSWERS Which of the following is considered to be any situation that has the potential for loss? Correct Answer Loss exposure An insurance policy issued in California may be called a comprehensive long-term care insurance policy if benefits are provided for Correct Answer Institutional (nursing facilities) and home care Employer contributions to qualified plans are Correct Answer Tax deductible by the employer According to the California Insurance Code, what is the maximum penalty per violation for anyone who unwillfully commits an unfair method of competition? Correct Answer $5,000 A unilateral contract is one in which Correct Answer only one party (the insurer) makes any kind of legally enforceable promise Disabled workers are covered under Workers' Compensation medical expense benefits for how long? Correct Answer no limit An annuitant would like to determine the amount of an annuity distribution that is exempt from taxation. What is used to calculate this? Correct Answer Exclusion ratio The elimination period in a disability income policy serves the same purpose as a(n) ___ in medical expense policy. Correct Answer deductible Which of the following is NOT considered to be an unfair claims settlement practice? Correct Answer Advising a claimant to hire an attorney What type of license is required for an individual who charges a fee to review an insured's existing life insurance policy? Correct Answer Life and disability analyst What is considered to be the definition of disability, according to Social Security? Correct Answer Unable to engage in any substantial gainful activity Which statement is true regarding policy dividends? Correct Answer A dividend option is selected by the insured at the time of policy purchase Which of the following is NOT considered to be insurer expenses? Correct Answer Policy premiums How is a Medicare claim submitted? Correct Answer Expenses are submitted to Medicare by the health provider Which of the following risk classifications charges the lowest premium? Correct Answer preferred Which of the following is NOT included under long-term care insurance? Correct Answer Hospital acute care Which of the following is NOT a feature of equity-indexed annuities? Correct Answer Offers a maximum interest rate that increases annually What is a common reason people purchase an annuity? Correct Answer To protect against the risk of outliving their financial resources A spendthrift clause in a life insurance policy Correct Answer restricts the ability of the beneficiary to assign benefits Which type of health insurance policy cannot be canceled by the insurer nor increase the premiums? Correct Answer Noncancellable Buy-sell plans are typically funded by which two types of insurance? Correct Answer Life insurance and disability insurance How long must life agents keep their transaction records? Correct Answer 5 years Which of the following is NOT a requirement for a terminated employee that has exercised the conversion privilege? Correct Answer Provide proof of insurability What time period allows an insured's life insurance policy to remain in force even if the premium was not paid on the due date? Correct Answer grace period Which of the following is a contract that involves one party which indemnifies another when a loss arises from an unknown event? Correct Answer insurance policy All of the following are considered characteristics of group life insurance, EXCEPT Correct Answer Individual policies Restoring an insured to the same condition as before a loss is an example of the principle of Correct Answer indemnity According to the PPACA, an adult can be covered by a parent's health care plan until what age? Correct Answer age 26 Which of the following does NOT have to be included on life insurance policy illustrations? Correct Answer Statement that all values and benefits are guaranteed 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 Answer driving Which of the following is a situation where there is a possibility of either a loss or a gain? Correct Answer Speculative risk The California Insurance Code defines "policy" as a(n) Correct Answer written contract How many "activities of daily living" must an insured be UNABLE to perform in order to meet the chronically ill requirement of a Long-Term Care policy? Correct Answer Minimum of two activities of daily living A contract requires Correct Answer an offer and acceptance of the contract terms Pete is a life agent who has misappropriated fiduciary funds to his own use. What is Pete guilty of? Correct Answer theft An insurance policy written after 1988 that fails to pass the seven- pay test is known as Correct Answer Modified Endowment Contract After a policy has lapsed, which provision allows the insured to continue coverage? Correct Answer Reinstatement provision 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 Answer conversion Which of the following does specified disease insurance NOT cover? Correct Answer costs covered by medical expense insurance Who would be most likely to submit a Medicare Part A claim? Correct Answer hospital An individual who transacts life, disability, or life and accident and health insurance on behalf of an insurer is called a(n): Correct Answer life agent According to the PPACA, the medical enrollment tier that has 80% actuarial value is called Correct Answer gold According to the California Insurance Code, which of the following is NOT an example of an insurable event? Correct Answer An insured suffers a financial loss in the state lottery According to the California code governing claim settlement practices, which of the following is NOT considered to be an act of unfair discrimination? Correct Answer Denial of a claim based on reckless behavior Which of the following pieces of information is NOT gathered during the personal financial planning process? Correct Answer An individual's civic organization memberships An insurer enters into a contract with a third party to insure itself against losses from insurance policies it issues. What is this agreement called? Correct Answer Reinsurance Who are the parties to the master contract in a group life insurance policy? Correct Answer Insurer and employer Which of the following contracts is defined as "one that restores an injured party to the condition that was present before the loss"? Correct Answer Indemnity contract Which of the following is NOT a provision in a disability income policy? Correct Answer Deductible and coinsurance provision What does the term coinsurance refer to? Correct Answer After the deductible is satisfied, the percentage paid by the insured for the remaining covered expenses In regards to a group health insurance plan, which statement is CORRECT? Correct Answer A non-contributory group health plan must cover all eligible members The objective of underwriting is to Correct Answer avoid selecting a disproportionate number of bad risks The objective of underwriting is to Correct Answer avoid selecting a disproportionate number of bad risks The reason for social insurance is to Correct Answer protect certain vulnerable segments of the population Premiums are best described as Correct Answer the amount an insured pays per unit of coverage 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 Answer Optionally renewable Which of the following would be considered an activity of daily living under a long term care policy? Correct Answer bathing Which type of worker has Social Security benefits available to them? Correct Answer fully insured Which of the following are two examples of activities of daily living (ADL's) used in qualifying for long-term care benefits? Correct Answer Eating and dressing Which type of risk is gambling? Correct Answer Speculative risk The elimination period in a disability income policy serves the same purpose as Correct Answer deductible Life insurance surplus must be distributed to policyowners at what frequency? Correct Answer Annually When an applicant applies for insurance, the process by which the insurer determines whether to issue a policy is called Correct Answer Underwriting What is considered the most common type of specified disease insurance policy? Correct Answer cancer Pam is the primary beneficiary of a life insurance policy and wants to let the death benefit accumulate and receive only the monthly investment proceeds. Which settlement option should she choose? Correct Answer Interest option What does the term "illustration" mean when used in the phrase "life insurance policy illustration", according to the California Insurance Code? Correct Answer Presentation of policy features that includes non-guaranteed elements When calculating life insurance premium rates, which component would an agent's commission fall under? Correct Answer Insurer's expenses 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 Answer 30 days Which of the following is a characteristic of the disability elimination period? Correct Answer Benefits are not payable All of the following circumstances must be met for loss retention to be an effective risk management technique, EXCEPT Correct Answer Probability of loss is unknown What is the price of insurance for each exposure unit? Correct Answer rate Which statement about Health Maintenance Organizations is NOT true? Correct Answer When a member uses out-of-network providers, a higher monthly fee is charged Which of the following is an insurer established by a parent company for the purpose of insuring the parent company's loss exposures? Correct Answer Captive insurer An agent has advertised that the insurer to which the agent is appointed with is a member of the Insurance Guarantee Association. This agent has committed a(n) Correct Answer unfair method of competition 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 Answer Insuring clause Individuals age 65 or older are exclusively eligible for which optional program? Correct Answer Medicare Part B Retirement plans cannot favor highly compensated employs. The government regulation that prevents this from happening is called Correct Answer Nondiscrimination What prevents a life insurance policy from being rescinded by the insurer after being in force for two years? Correct Answer Incontestability clause In a modified endowment contract, the penalty tax imposed on premature withdrawals is Correct Answer 10% Most U.S. life insurance companies belong to the Correct Answer Medical Information Bureau Medicare Part B covers Correct Answer Physician expenses What are collateral assignments normally associated with? Correct Answer bank loans The risk selection process is primarily given to which insurance company department? Correct Answer Underwriting An insurer can be protected from adverse selection with which policy provision? Correct Answer Suicide clause A life insurance policy can be surrendered for its cash value under which policy provision? Correct Answer nonforfeiture options Which of the following statements correctly describes a contract of indemnity? Correct Answer One party is restored to the same financial position the party was in before the loss occurred At what age is a surviving spouse without dependents eligible for Social Security survivor benefits? Correct Answer 60 Which of the following is NOT a true description of non-medical life insurance? Correct Answer Applicants are not required to answer medical questions on the application John and Mary have a handicapped child that is financially dependent upon them. The death of one of the parents would not be financially disastrous, however the death of both likely would be. Which policy would be best suited for them? Correct Answer Second-to-die policy A life insurance policy that pays the face amount if the insured survives to a specified period of time is called Correct Answer endowment insurance Who acts as the gatekeeper in a Health Maintenance Organization (HMO)? Correct Answer primary care physician What area of group health insurance is regulated under the Employee Retirement Security Act of 1974 (ERISA)? Correct Answer Disclosure and reporting Which of the following is NOT covered by the Family and Medical Leave Act (FMLA)? Correct Answer Traveling overseas with a spouse What kind of annuity pays income to two annuitants until their deaths? Correct Answer Joint and survivor annuity What does the grace period allow a life insurance policyowner to do? Correct Answer Make a premium payment after the due date without any loss of coverage An employee for XYZ Corp is injured on the job. Where does coverage for the employee's injuries come from? Correct Answer workers compensation