Insurance Terminology and Concepts, Exams of Nursing

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LIFE, ACCIDENT & HEALTH OR

SICKNESS EXAMINATION

LATEST 2024-2025 ACTUAL

EXAM TEST BANK 200

QUESTIONS & CORRECT

ANSWERS. GRADED A+

A $50,000 whole life policy with a cash value of $10,000 has been in force for eleven years. The policy owner is unable to continue the premium payments. Which of the following describes the reduced paid up nonforfeiture option? - ANSthe cash value is used to select a $20,000 paid up policy. A 10-year certain annuity with an installment refund is purchased. The annuitant dies after receiving monthly payments for 5 years. How many remaining payments will the insurer make? - ANS payments. a beneficiary wants to let the death benefit accumulate and recieve only the monthly investment proceeds. which settlement option should be chosen? - ANSinterest option. a commonly used cost containment measure for emergency hospital care under a major medical expense plan is

the - ANSdeductible. A contract in which one party promises to indemnify another against loss that arises from an unknown event is - ANSan insurance policy. A contract of indemnity is one in which? - ANSone party is restored to the same financial position the party was in before the loss occurred. a group life policy is issued on a contributory basis. this means that the - ANSinsured employees will pay part of the premium. a health insurance issuer offering coverage in the individual market must provide premium rebates if its medical loss ratio (MLR) is less than what percentage? - ANS80% A health insurance issuer offering coverage in the individual market must provide premium rebates if its medical loss ratio (MLR) is less than what percentage? - ANS80% A husband and wife have a disabled child who is financially dependent upon them. the death of one parent would not result in financial disaster for the disabled, child, but the death of both parents would. Which policy should they purchase? - ANSsecond to die policy. a life insurance policy dividend is - ANSLegally defined as a return of excess

premium and not taxable A life insurance policy written after 1988 that fails to meet the seven pay test is known as - ANSa modified endowment contract. a life insurance policy's waiver of premium takes effect if an insured - ANSbecomes totally disabled. A long term care insurance rider can include coverage for all of the following except? - ANSHospital Acute care A long- term care insurance rider can include coverage for all of the following Except - ANSHospital Acute care. a participating life insurance policy is defined as a contract that - ANSallows the policy owner to receive a share of surplus in the form of policy dividends. A person authorized by and on behalf of an insurer who transacts life, disability or life and accident and health insurance is defined as a - ANSlife agent. A person owns a life annuity. He elects to receive his annuity payments monthly for the remainder of his life with "ten years certain". the Annuity will make payments. - ANSfor a minimum of 120 months and a maximum of the remainder of his life. a situation in which there is a possibility of loss or a gain is a - ANSspeculative risk a

supplemental insurance policy that pays a set amount for each day that an individual is hospitalized is known as - ANShospital confinement indemnity a surviving spouse without dependent children is eligible for social security survivor benefits at age - ANS60 A terminating employee who wants to exercise the conversion privilege must meet all of the following requirements EXCEPT - ANSsupply evidence of insurability A worker dies who is credited with 6 quarters of coverage during the last 13-quarter period. What status does the worker have under Social Security? - ANScurrently insured. According to California Insurance Code, if an insurer's certificate of authority is revoked, the Commissioner can proceed with any of the following actions Except? - ANSusing Guarantee Funds to pay salaries. According to the California code, an insurance policy must specify all of the Following Except? - ANSthe financial rating of the insurer According to the California Insurance Code, all of the following Long-term Care (LTC insurance sales are considered unnecessary except - ANSa replacement LTC POLICY

with equal benefits for a lower premium According to the California insurance code, all of the following Long-term Care (LTC) insurance sales are considered unnecessary except - ANSReplacement LTC policy with equal benefits for a lower premium. According to the California Insurance Code, governing the use of life insurance policy illustrations, the term illustration means. - ANSa presentation of policy features that includes non-guaranteed elements. according to the california insurance code, the commissioner can disapprove a licensee's request to use a fictitious name for any of the following reasons except that the name - ANSname is the licensee's actual name. After the deductible is satisfied, what percentage of a reasonable charges does Medicare Part B pay? - ANS80% After the deductible, what portion does a patient pay for covered expenses under Medicare Part B? - ANS80% all of the following are benefits of insurance Except it? - ANSeliminates fraudulent losses. All of the following are characteristics of reinsurance EXCEPT? - ANSIncreases the unearned premium reserve all of

the following are contained in a mortality table except - ANSnumber living at the end of designated year all of the following are optional group medical coverages except - ANSmaternity all of the following are requirements of a contract except? - ANSthere must be equal consideration between the parties. all of the following are true about term life insurance policies except the - ANSface amount is paid if the insured survives to the end of the policy period. all of the following conditions must be met to qualify for residual disability benefits under a disability income policy Except - ANSqualifies for Social security disability benefits all of the following features of a preferred provider organization (PPO) Except - ANSPrimary are physicians act as gatekeepers all of the following information is gathered during the personal financial planning process Except - ANSa listing of a person's civic and professional organization membership. All of the following may opt for a self insured medical and disability plan except - ANSindividuals all of the following qualify as "background

information" as defined in section 1729.2 of the California Insurance Code, Except? - ANSmisdemeanor charges filed, not resulting in a conviction. all of the following statements about aleatory contracts are true EXCEPT? - ANSthe insured and insurer contribute equally to the contract. All of the following statements about Medicare Part B are correct EXCEPT it - ANSpays for virtually all drugs prescribed by a physician. all of the following statements are true regarding Health Insurance Counseling Advocacy Program (HICAP) counselors EXCEPT HICAP counselors - ANSare qualified to give legal advice. all of the following types of insurance pay benefits in addition to those paid by other insurance policies held by the insured EXCEPT - ANSMedical expense. all of the following would be considered unfair trade practices EXCEPT? - ANScommitting any act of discrimination whether it be deemed fair or unfair. All of the occurrences listed below are examples of an insurable event as defined by the California Insurance code EXCEPT? - ANSan insured suffers a financial loss in the state lottery. An

agent who is acting as an insurance agent, broker, solicitor, life agent, accident and health, or bail agent acts in which capacity when handling premiums or return premiums for an insured? - ANSfiduciary An agent who violates the laws governing life insurance policy illustrations is subject to all of the following EXCEPT - ANSmandatory termination of all insurer appointments An attempt by an agent to deter an insured from replacing an existing life insurance policy is called - ANSconservation An example of a third-party administrator is an - ANSOutside organization that processes claims for an employer's self-funded group plan an individual is allowed to enroll in individual health insurance under the following circumstances EXCEPT - ANSwithin 30 days of being diagnosed with an illness An individual is allowed to enroll in individual health insurance under the following circumstances EXCEPT - ANSwithin 30 days of being diagnosed with an illness. an Insured has a disability income policy with a $1500 monthly benefits and a 30 day elimination period. the insured is unable

to work for 120 days following an accident. what amount will the policy pay? - ANS$4,500. An insured replaces an existing annuity with a new one and must pay a surrender charge for cancelling the existing annuity. The new policy holds no greater financial benefits to the insured than the existing contract. This is an example of - ANSan unnecessary replacement. An insurer entitled to transact business by complying with the California Insurance Code is known as an - ANSadmitted carrier. An insurer's request for an attending physician's report MUST be accompanied by a copy of the - ANSsigned authorization Any situation that presents the possibility of a loss is known as? - ANSa loss exposure. As authorized by the California Insurance Code, the Insurance Commissioner has provided standards for names used by life insurance agents. Under these standards which, if any, of the following are automatically acceptable for Mary Brown, a holder of the CLU designation? - ANSMary Brown Insurance Services. As defined in the California insurance Code, "insurance" is a? - ANSContract As established

by PPACA, an adult child may be covered by a parent's health insurance plan until what age? - ANS26 years old. at what age are individuals eligible for Medicare Part A benefits? - ANS Benefits under Social Security are available only for workers who are - ANSfully insured. Common life insurance policy riders include all of the following except - ANSextended term. Creditors have rights to life insurance policy proceeds when the beneficiary is the - ANSinsured estate. Death benefits payable to a beneficiary under a life insurance policy are generally - ANSexempt from federal income tax Death benefits that are received by a beneficiary are generally - ANSare exempt from federally income tax. During the solicitation of a long term care insurance rider, a life agent must consider all of the following EXCEPT the applicant's - ANSattending physician statement. For Social Security purposes, a person with 40 quarters of coverage is considered - ANSfully insured From lowest to highest, which is the Correct order of initial premiums for life insurance policies? - ANSModified premium, ordinary life, single

premium. Group health plans obligated by the Consolidated Omnibus Budget Reconciliation Act (COBRA) cover groups of at least - ANS20 employees. Health Insurance counseling and advocacy program (HICAP) counselors can do all of the following except. - ANScharge for their services. How can partners guarantee a market for their share of the business in the event of death? - ANSBuy-sell agreements How does the cost recovery rule apply when a life insurance policy is surrendered for its cash value? - ANSthe cost basis of the policy is exempt from taxation. How long do Worker's Compensation medical expenses continue for disabled workers? - ANSthere is no limit. How long is the free cancellation period for the life insurance offered to individuals who are 60 or older? - ANS days How much employer-provided group term life insurance is exempt from income taxation? - ANS$50,000 How often Must an insurer file the National Association of Insurance Commissioners (NAIC) financial statement? - ANSAnnually. If a life agent sells a whole life policy to a prospect on behalf of an

insurer without an appointment, the - ANSinsurer must submit a notice of appointment to the commissioner. If a term life insurance policy is renewable, the renewal provision usually states that: - ANSa higher premium is payable at each renewal. If an insurer must have its rates accepted by the insurance Department prior to using them, the insurer would be operating in which of the following types of jurisdictions? - ANSprior approval. if you have been convicted of a misdemeanor and that misdemeanor conviction is later expunged pursuant to California Penal Code Section 1203.4, which of the following is true? - ANSeven though your misdemeanor conviction was expunged, you must still disclose your misdemeanor conviction on your individual application for an insurance license. in a 5-year vesting schedule, what percentage of employer contributions MUST be vested after 5 years of service? - ANS100% in a group life insurance policy, who are the parties to the master contract? - ANSthe insurer and the employer. in california, a child may obtain individual

health coverage through all of the following Except. - ANSHealthy Families. in financial planning, the human life value concept is based on an individuals - ANSincome In group life insurance, who is issued a certificate of insurance - ANSthe participant. in health insurance the coinsurance is - ANSa percentage paid for covered expenses by the insured and insurer after the deductible is satisfied. in health insurance, the result of rising morbidity rates is - ANSincreased premiums In insurance terminology, "indemnity means? - ANSto make whole. in medical expense insurance, what serves the same purpose as the elimination period in disability income insurance? - ANSDeductible In medical expense insurance, what serves the same purpose as the elimination period in disability income insurance? - ANSDeductible. in order to obtain group insurance without providing evidence of insurability, what do eligible individuals generally have to do? - ANSenroll within a specified eligibility period in the absence of a coordination of benefits clause, all of the following circumstances might result

in recovery of more than 100% of actual health care expenses EXCEPT: - ANSa worker's medical plan includes a carry-over deductible provision. in the absence of a coordination of benefits clause, all of the following circumstances might result in recovery of more than 100%of actual health care expenses EXCEPT: - ANSa worker's medical plan includes a carryover deductible provision in the Worker's Compensation policy, Part one, Workers' Compensation, pays for - ANSsums the insured is required to pay under state Workers' Compensation law. individual life insurance policies sold to seniors in the state of California must include a prominently placed statement that divulges all of the following information Except - ANSproof of surrender must be notarized at the agent's principal office. Insureds are entitled to recover an amount NOT greater than the amount of their loss under the principle of - ANSIndemnity. Insurer policy expenses include all of the following EXCEPT - ANSpremiums Insurers are prohibited from denying claims based on misrepresentations in a disability policy application

after the policy has been in force for - ANStwo years it is considered an unfair method of competition for an agent to advertise that the insurer the gent is appointed with is - ANSa member of the Insurance guarantee association. It is Federal offense for an insurance agent to do all of the following EXCEPT

• ANSmisrepresent facts on an insurance application. life insurance policies written without physical examination are called - ANSnon-medical Life insurers must include all of the following in their financial statements EXCEPT - ANSpolicy summary description. Long-term care insurance may be purchased in all of the following forms Except - ANSfederal government sponsored policies Loss retention is an effective risk management technique when all of the following conditions exist EXCEPT the - ANSprobability of loss is unknown. Making an insured whole by restoring them to the same condition as before a loss is an example of - ANSthe principles of indemnity. Medicare Part A provides coverage for all of the following EXCEPT - ANSPhysician services Medicare

Part A provides coverage for all of the following Except - ANSphysicians' services Members of the Medical Information Bureau are required to report: - ANSmedical impairments found during the underwriting process. Moral hazard can be defined as the increase - ANSchance of a loss occurring due to an insured's dishonest tendencies Part-time nursing care that follows a hospitalization and can be provided in a patient's home is covered under - ANShome health care benefits. People commonly purchase an annuity to protect against the risk of: - ANSoutliving their financial resources. Probationary periods reduce costs to employers in all of the following ways EXCEPT - ANSemployees must pay the entire premium during this time. Providers of coverage for all of the following types of care are subject to the jurisdiction of the California Department of Insurance (CDI) EXCEPT - ANSlasik Provision in a disability income policy include all of the following EXCEPT - ANSdeductible and coinsurance amounts Regarding the Health Benefit Exchanges, as created by PPACA, all of the following

statements are true EXCEPT - ANSan individual enrolling in a bronze level plan is not eligible for reduced cost-sharing. Relevant factors in the health insurance principle of morbidity include all of the following EXCEPT. - ANSIntelligence. Residual disability income insurance payments are based on - ANSthe amount the insured's income is reduced by the disability. Risk can be defined as all of the following EXCEPT - ANSthe cause of loss Section 1729.2 of the California Insurance Code requires insurance producer applications and licensees to notify the Insurance Commissioner in writing, within ___days of charges in background information after an application has been submitted or a license has been issued. - ANS30 social security survivor benefits are available for all of the following except - ANSparents of any age who were dependent upon the deceased worker. the accidental benefit riser is also known as - ANSdouble indemnity The additional premium charged by an insurer for adding the accidental death benefit to a whole life policy - ANSdoes not affect the policy's cash value. The

adjustments that insurers make to the cash value account in a universal life policy each time a payment is made includes all of the following EXCEPT - ANSsubtract the policy surrender charges the adult day care coverage level of a long term care policy provides for - ANSpart time nursing at a facility for elderly who live at home. the Americans with Disabilities Act (ADA) defines a disabled person as one who is unable to perform any of the following life activities EXCEPT - ANSdriving the California insurance code requirements regarding the return of life or annuity contracts issued to seniors. - ANSgives a senior at least 30 days to return specified life and/or annuity contracts for a full refund. The components of determining policy premiums include all of the following EXCEPT - ANSdividends the conversion privilege allows a terminating employee to convert - ANSterm insurance into permanent insurance the cost of employer-provided group life insurance above $50,000 is - ANStaxable as income to the employee the direct distribution of insurance utilizes all of the following to

mote the sale of insurance Except? - ANSTelephone call from an agent. the direct response distribution of Insurance utilizes all of the following to promote the sales o insurance Except - ANStelephone call from the agent. the employee retirement income security act of 1974 (ERISA) regulates group health insurance in the area of - ANSdisclosure and reporting. The employee retirement income security act of 1974 (ERISA) regulates group health insurance in the area of - ANSdisclosure and reporting. the family and Medical Leave Act (FMLA) covers all of the following EXCEPT - ANStraveling with a spouse who has been transferred overseas, The Family and Medical Leave Act (FMLA) covers all of the following except - ANStraveling with a spouse who has been transferred overseas. the frequency and severity of certain illnesses and accidents is known as - ANSmorbidity The group medical plan provision that applies when a claimant has coverage under more than one plan is known as - ANScoordination of benefits the increase in the probability of a loss resulting from an insured's dishonest

tendencies is known as - ANSMoral Hazard. the initial enrollment period for Medicare Part B ends how many months after the 65th birthday month? - ANSThree months The insured bought an annuity ten years ago. He will retire in five years. To determine the value of his annuity, he must multiply the value of the "accumulation units" he owns, times the value of the "separate account". This type of annuity is known as a - ANSvariable annuity The insured is totally and permanently disabled. The insured's policy continues in force without payment of further premiums because the policy contains a - ANSwaiver of premium provisions The insurer can do which of the following under a noncancelable health insurance policy? - ANSCancel the policy for nonpayment of premium. the insurer's department with Primary responsibility for the risk selection process is called: - ANSUnderwriting The life insurance grace period allows the insured to - ANSpay the premium after the due date without loss of coverage. the most common type of specified disease insurance policy is - ANScancer The number of

deaths during a year compared with the total number of persons exposed in the class is known as the - ANSmortality rate the payor rider on a juvenile life policy provides that if the payor dies or becomes disabled before the insured juvenile reaches the age specified in the policy that the - ANSinsurer will make the payments until the insured juvenile reaches a specified age usually twenty one or twenty five. the policy owner, age 50, has been paying the premiums on his whole life policy for fifteen years. He needs the equivalent of one-third of his policy's cash value for two years. he wants to continue to have the same amount of life insurance protection and he can afford to continue to pay the policy's premium. Which of the following is his best course of action? - ANSUse the policy loan provision to borrow money from the policy, but keep making the premium payments to keep the policy in force. the premium of a proposed disability income policy could be lowered by increasing the - ANSelimination period. the process by which an insurer decides whether to issue requested

insurance is called? - ANSunderwriting the purchase of an insurance policy may accomplish all of the following Except? - ANSthe elimination of risk The required contents of a policy include all of the following EXCEPT? - ANSThe probability of loss the social security normal retirement age depends upon the - ANSWorker's years of birth. the theory of probability is applied to life insurance through the use of - ANSmortality tables the type of health care provider that provides both the health care services and health care coverage is called - ANSa Health Maintenance Organization the use on non medical life insurance accomplishes all of the following Except? - ANSinsureds can avoid answering medical questions on the application they type of health care provider that provides both the health care services and health care coverage is called - ANSHealth Maintenance organization. To reach currently insured status Under the Social Security system, an individual must be credited with a MINIMUM of - ANS6 quarters of coverage during the last 13-quarter period. traditional

comprehensive major medical plans include all of the following except - ANSfirst-dollar coverage. Two of the long-term care chronically ill activities of daily living (ADLs) are - ANSeating and dressing. Under a disability income insurance policy with an own occupation clause, an individual who can no longer perform the tasks of the job held at the time of injury is considered - ANStotally disabled. Under a group life insurance policy, acts of war and aviation are examples of: - ANSpolicy exclusions Under group disability insurance an employee is eligible for a partial disability benefit when they can - ANSperform some of their job activities on a part time basis after injury. Under PPACA, what is a health benefit exchange? - ANSPPACA creates new entities called American Health Benefit Exchanges through which individuals, small businesses, and those who do not have access to affordable employer coverage, can purchase coverage. Under Social Security, the definition of disability is the inability to engage in - ANSany substantial gainful activity Under the Consolidated Omnibus

Budget Reconsolidation Act (COBRA), a qualifying event ensures that an employee who loses coverage can - ANSelect to continue coverage. Under the PPACA, which medical enrollment tier is 80% actuarial value? - ANSgold Under which group term life provision does an insurer make payments to the guardian of a beneficiary who is a minor? - ANSfacility of payment Under which policy provision can a policy be surrendered for its net cash value? - ANSNonforfeiture options Underwriters classify insurance risks as any of the following EXCEPT - ANSdividends risks unintentional concealment entitles the injured party to which course of action, if any? - ANSrescission of the contract. Unless certified by another governmental agency, which entity has jurisdiction over providers of coverage designed to pay for health care services?

• ANSthe department of Insurance Unless it is merely a statement of an expectation or a belief, a representation as to the future is considered which of the following? - ANSPromise Upon notification of a claim, a claimant must be given access to

the California Fair Claims Settlement Practices resolution by all of the following means EXCEPT - ANSby interview appointment with the agent of record. Vision care insurance usually covers all of the following EXCEPT - ANSeye surgery Vision insurance usually limits coverage in all of the following ways EXCEPT - ANSa specific dollar amount for examinations what do we call the process whereby insurers decide which customers to insure and what coverage to offer? - ANSunderwriting. what does the statement "life insurance created an immediate estate" mean?

• ANSthe total death benefit is paid whenever the insured dies. what does the statement "life insurance creates an immediate estate" mean? - ANSthe total death benefit is paid whenever the insured's dies what factor determines the difference between deferred and immediate annuities? - ANSwhen annuity benefit payment begin. what happens if an insurer violates the Medical Loss ratio rate and spends too much money on administrative costs? - ANSInsurers that do not meet the medical loss ratio standard will be required to provide