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Insurance Concepts and Terminology, Exams of Nursing

A wide range of insurance-related concepts and terminology, including life insurance, health insurance, disability insurance, and other types of insurance. It provides explanations and definitions for various insurance terms, provisions, and regulations. The document could be useful for students studying insurance, finance, or risk management, as it covers fundamental insurance principles and industry practices. The information presented could be applicable to both university-level courses as well as high school-level insurance education.

Typology: Exams

2023/2024

Available from 10/05/2024

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Who does a life settlement broker represent? - correct answer Individual wanting to sell their life policy to a third party What is the insurance term the State of California uses for an insurer that is eligible to transact business in this state? - correct answer Admitted Most U.S. life insurance companies belong to the - correct answer Medical Information Bureau Which of the following healthcare providers provide both the healthcare services and healthcare coverage? - correct answer Health Maintenance Organization (HMO) Which of the following is NOT covered by the Family and Medical Leave Act (FMLA)? - correct answer Traveling overseas with a spouse Which word implies permissiveness according to the California Insurance Code? - correct answer may When found in California Insurance Code, the word "may" implies permissiveness. Under a long-term care insurance policy, adult day care coverage will provide for - correct answer part time care at a facility for elderly individuals who live at home Major medical expense plans typically use a cost containment measure for emergency hospital care. This is referred to as a - correct answer Deductible 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 Reasonably necessary acts that an agent must perform for carrying out his/her expressly authorized duties are covered by an agent's - correct answer Implied authority 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 answer Totally Disabled What is a common reason people purchase an annuity - correct answer To protect against the risk of outliving their financial resources

Why is a life insurance policy's delivery date important? - correct answer The free-look period begins on the policy delivery date Periodic increases in policy benefits are allowed in which long-term care policy provision? - correct answer Inflation Protection What is the term used to describe the frequency and severity of certain illnesses and accidents? - correct answer Morbidity Key person insurance is intended to - correct answer cover business losses due to death of key employee Minimum participation standards exist for group health insurance plans in order to - correct answer prevent adverse selection Which of the following is NOT included under long-term care insurance? - correct answer Hospital acute care When calculating life insurance premium rates, which component would an agent's commission fall under? - correct answer Insurer's expenses The reason for social insurance is to - correct answer protect certain vulnerable segments of the population 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 answer PPO Which of the following acts is NOT a Federal offense committed by an insurance agent?

  • correct answer Misrepresentation on an insurance application An insurer having a large number of similar exposure units is considered important because - correct answer the greater the number insured, the more accurately the insurer can predict losses and set appropriate premiums Medical expense policies will typically cover which of the following? - correct answer injuries caused by accidents 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 answer 60 payments (10 years annuity received 5 years worth so had 5 years left , multiply the 5 years by 12 months in a year=60) When does a life insurance policy's waiver of premium take effect? - correct answer insured becomes totally disabled

Which of the following is NOT an important reason for a life insurance application? - correct answer The beneficiary must sign the application before the insurer will issue the policy All of the these are examples of cost sharing in a health insurance policy EXCEPT - correct answer Coordination Retirement plans cannot favor highly compensated employs. The government regulation that prevents this from happening is called - correct answer Nondiscrimination 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 What is considered the most common type of specified disease insurance policy? - correct answer cancer 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 answer Joint life policy A life insurance policy can be surrendered for its cash value under which policy provision? - correct answer Nonforfeiture option When an insurance company requests an attending physician's report, the request must be accompanied by a - correct answer copy of the signed authorization Buy-sell plans are typically funded by which two types of insurance? - correct answer Life insurance and disability insurance Which of the following is NOT considered a definition of risk? - correct answer The cause of a loss Lynn owns a life policy that guarantees the right to renew the policy each year, regardless of health, but at an increased premium. What kind of policy is this? - correct answer renewable term What does the grace period allow a life insurance policy owner to do> - correct answer make a premium payment after the due date without any loss AAA Insurance Company has transferred a portion of its loss exposure to BBB Insurance Company. In this reinsurance transaction, what is AAA Insurance Company called? - correct answer Primary insurer 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

Which of the following best describes the statement. "The more times an event is repeated, the more predictable the outcome becomes"? - correct answer Law of Large numbers A hazard can be best described as - correct answer a condition that may increase the likelihood of a loss occurring What does ESOP stand for? - correct answer Employee Stock Ownership Plan At what age is a surviving spouse without dependents eligible for Social Security survivor benefits? - correct answer 50 Which of the following risk classification charges the lowest premium? - correct answer preferred Express power given to an agent in an agency agreement is - correct answer the authority to represent the insurer Which Social Security status does a worker with 6 quarters of coverage during the last 13-quarter period have> - correct answer currently insured 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 Which of the following actions is NOT allowed by Health Insurance Counseling and Advocacy Program (HiCAP) counselors? - correct answer charge a fee The elimination period in a disability income policy serves the same purpose as a _____ in a medical policy. - correct answer deductible Mark, age 45, has a Modified Endowment Contract (MEC). What is the tax penalty for taking a loan against this policy prior to age 59 1/2? - correct answer 10% 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 Which course of action is the insurer entitled to when deliberate concealment is committed by the insured? - correct answer rescinding the contract What must an applicant do in order to authorize the release of an attending physician report? - correct answer sign a consent form

How is the cost of employer-provided group life insurance with coverage amounts above $50,000 treated for tax purposes? - correct answer taxable income to the employee Which of the following describes a contributory group insurance plan? - correct answer part of the premium is paid by the employee A life insurance policy where the insured can choose where the cash value can be invested is called - correct answer variable life Mike and Ike are 30 year old identical twins. Both are in excellent health. Each brother purchases a life policy that has a $750 annual premium. Mike buys a 10-year renewable term policy. Ike purchases a whole life policy, All of the following statements are true EXCEPT - correct answer Mike has the option of using his cash value to purchase a reduced amount of paid-up whole life insurance Moral hazard is described as the - correct answer increased chance of a loss because of an insured's dishonest tendencies An insurer that has been found using higher rates based on race, religion, or ethnicity is said to be engaging in - correct answer unfair discrimination How is a life insurance policy dividend legally defined? - correct answer a return of excess premium and not taxable How long must life agents keep their transaction records? - correct answer 5 years The Consolidated Omnibus Budget Reconciliation Act (COBRA) applies to employers who employ at least - correct answer 20 employees Which type of worker has Social Security benefits available to them? - correct answer Fully Insured Which of these statements correctly describes risk? - correct answer Pure risk is the only insurable risk Individuals age 65 or older are exclusively eligible for which optional program? - correct answer Medicare Part B How are acts of war and aviation treated under a group life insurance policy> - correct answer policy exclusion Which of the following statements about aleatory contracts is NOT true? - correct answer The insured and the insurer contribute equally to the contract

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 All of the following are considered characteristics of group life insurance EXCEPT - correct answer Individual Policies An application has revealed conditions that require more information. Which of the following is needed next? - correct answer attending physicians statement Both the Federal and state governments jointly finance which health insurance entitlement program? - correct answer Medi-cal Which policy provision protects the policyowner from unintentional lapse of the contract? - correct answer grace period The free-look period for life insurance policyowners age 60 or older is - correct answer 30 days 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 answer a paid-in capital Which of the following is any situation that presents the possibility of a loss? - correct answer loss exposure 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 What determines the Social Security normal retirement age? - correct answer Year in which worker was born Which of the following is an example of a third=party administrator? - correct answer Outside organization that process claims for an employer's self-funded group plan. 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 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 benefits The Human Life Value concept is based on - correct answer income

A participating company is also referred to as which type of insurer? - correct answer Mutual insurer What are residual disability income insurance payments based on? - correct answer the amount of the insured's income is reduced by the disability Which of the following terms is NOT associated with Major Medical policy? - correct answer capitation Which of these is the automatic mode of settlement for life insurance policy proceeds? - correct answer Lump-sum The elimination period in a disability income policy serves the same purpose as - correct answer a deductible Life insurance creates an immediate estate. This phrase means: - correct answer when the insured dies, a death benefit is paid Which type of risk is gambling? - correct answer Speculative risk What prevents a life insurance policy from being rescinded by the insurer after in force for two years? - correct answer incontestability clause Which of the following is NOT a primary objective of insurance regulation? - correct answer Interpret policy provisions What is an "insurance broker" according to California Insurance Code? - correct answer A person compensated for transacting insurance on behalf of another person with an insurer Which of the following statements do NOT apply to child coverage in a family policy? - correct answer Children born after the policy's issue date may be covered in a family policy. Premiums are best described as - correct answer the amount an insured pays per unit of coverage According to the California Insurance Code, what is "insurance"? - correct answer contract What type of changes can be made to a guaranteed renewable health insurance policy?

  • correct answer the premium rates of the policy owner When a life insurance policy is surrendered, how does the cost recovery rule apply? - correct answer the policy's cost basis is exempt from taxation

How does rising morbidity rates affect health insurance? - correct answer increased premiums The problem of over insurance is addressed in which health insurance provision? - correct answer coordination of benefits How are Roth IRA's treated for tax purposes? - correct answer Non-deductible contributions and tax-free distributions Which of the following factors is NOT used in underwriting health insurance policies? - correct answer Intelligence According to Social Security, an individual with 6 credits of coverage during the previous 13-quarter period is considered to be: - correct answer currently insured An agent's attempt to stop the replacement of an existing life insurance policy is known as - correct answer conservation In a life insurance policy, the entire contract consists of - correct answer a policy and attached application The cost of services charged by the Health Insurance Counseling Advocacy Program (HiCAP) is - correct answer no cost ABC Insurance Company paid an insured $30,000 inlost wages, $35,000 for hospital costs, and $20,000 for physical therapy treatment. ABC later discovers this was fraudulent claim. How much may the insured be fines? - correct answer $170,000 In a felony prosecution of insurance fraud for worker's compensation benefits, the fine might increase up to $170,000 or an amount that is double the value of the defrauded amount, depending on which penalty is greater. 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 The importance of a representation is demonstrated in what rule? - correct answer Materiality of concealment Allen has a disability income policy with a $2,500 monthly benefit and a 30-day elimination period. He is unable to work 90 days following an automobile accident. What will the policy pay? - correct answer $5,000, 90 days- 30 day elimination period is 60 days (2 months). 2 months X $2,500/month benefit = $5,000 total benefit paid Which of the following services are health maintenance organizations (HMO's) NOT required to provide? - correct answer Prescription Drugs

Failure to report background changes within 30 days as required under section 1729. of the California insurance code could subject a license or applicant to - correct answer Suspension, Fine, Denial Which of the following types of life insurance is noramlly associated with a mortgage loan? - correct answer decreasing term 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 Disabled workers are covered under Workers' Compensation medical expense benefits for how long? - correct answer no limit Employer-provided group term life insurance is exempt from income taxation up to - correct answer $50, What does the term "indemnity " mean as it pertains to insurance? - correct answer to make whole Which of the following is NOT a life insurance settlement option? - correct answer extended term option Under the California Insurance Code, a licensee's license number must be printed at what size on all price quotes, business cards, and printed material? - correct answer The same size printed as the licensee's phone number, fax number or address Which of the following types of life insurance combines a saving element along with a flexible premium option? - correct answer Universal life According to PPACA, which is a health benefits exchange? - correct answer an entity to which individuals and small businesses can have access to affordable health coverage People with low income can be provided with medical assistance through which program? - correct answer Medi-Cal Which of the following does the California Department of Insurance (CDI) have NO jurisdiction over? - correct answer Medicare The misstatements of age provision in a health policy states that if an insured gives the wrong age at the time of application, what action can the insurance company take? - correct answer Benefits can be adjusted Which of the following is NOT a characteristic of a preferred provider organization (PPO)? - correct answer Primary Physicians serve as gate keepers

In what situation does a waiver of premium provision keep a health insurance policy in force without premium payments? - correct answer When an insured becomes totally disabled John owns an insurance policy that gives him the right to share in the insurer's surplus. What kind of policy is this? - correct answer Participating 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 protected under the California Life and Health Guarantee Association? - correct answer Insurers An annuity which is backed by a life insurer's separate account is called a(n) - correct answer variable annuity 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 - correct answer unnecessary replacement Medicare Part B has an intial enrollment period. How many months after an individual's 65th birthday month does this enrollment period end? - correct answer 3 months The Medical Information Bureau consists of - correct answer Life and health Insurance companies Which of these statements is NOT true concerning recurrent disabilities? - correct answer The insurer continues coverage after a new elimination period Which principle is accurately described with the statement, "Insureds are entitled to recover an amount NOT greater than the amount of their loss'? - correct answer Indemnity 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 per violation, if the act is determined to be willful, the fine will not exceed $10,000 per act What is an insurance solicitor authorized to do? - correct answer Help an agent or broker sell insurance Who would be most likely to submit a Medicare Part A claim? - correct answer Hospital An annuitant would like to determine the current value of her annuity. To do this, she multiplies the number of "accumulation units" she owns times the unit value of the

"separate account". What kind of annuity BEST matches this description? - correct answer Variable annuity Under a noncancellable health insurance policy, an insurer can - correct answer cancel the policy for nonpayment of premium After the annual deductible is met, a Medicare Part B patient will pay ____of the remaining covered expenses. - correct answer 20% How long must a policy be in force before an insurer is prohibited from denying claims based on misstatements made on the health policy application? - correct answer 2 years Which of the following is NOT a required uniform provision in individual health policies?

  • correct answer Change of occupation 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 If a material warranty violation on the part of the insured is found, what recourse does an insurer have? - correct answer Rescind the policy What is the purpose of the Pre-Existing Condition Insurance Plan (PCIP)? - correct answer The Pre-existing Condition Insurance Plan(PCIP) is a form of health insurance coverage offered to uninsured American who have been unable to obtain coverage because of pre-existing health condition. What is the price of insurance for each exposure unit? - correct answer Rate. The price of insurance for each exposure unit is called the rate What is a participating life insurance policy? - correct answer Contract that allows the policyowner to receive a share of surplus in the form of policy dividends Individual health insurance coverage typically excludes injuries at an employee's workplace because - correct answer it's covered by the state Workers' Compensation program An insured is protected from the expense of a catastrophic illness by which of the following health insurance provisions? - correct answer stop-loss