Xcel California Life, Accident, and Health Insurance Final Exam Guide, Exams of Sociology of Health and Illness

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Xcel California Life, Accident, and Health

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answers complete update guide 2023

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

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11. 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 - Totally Disabled
12. What is a common reason people purchase an annuity - To protect against the risk of outliving their financial resources

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

• Misrepresentation on an insurance application

23. An insurer having a large number of similar exposure units is considered important because - the greater the number insured, the more accurately the insurer can predict losses and set appropriate premiums
24. Medical expense policies will typically cover which of the following ? - injuries caused by accidents
25. 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? - 60

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payments (10 years annuity received 5 years worth so had 5 years left , multiply the 5 years by 12 months in a year=60)

26. When does a life insurance policy's waiver of premium take effect? - insured becomes totally disabled

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27. Which of the following is NOT an important reason for a life insurance application? - The beneficiary must sign the application before the insurer will issue the policy
28. All of the these are examples of cost sharing in a health insurance policy EXCEPT - Coordination
29. Retirement plans cannot favor highly compensated employs. The government regulation that prevents this from happening is called - Nondiscrimination
30. In regards to a group health insurance plan, which statement is CORRECT? - a non- contributory group health plan must cover all eligible members
31. What is considered the most common type of specified disease insurance policy? - cancer
32. 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 - Joint life policy
33. A life insurance policy can be surrendered for its cash value under which policy provision? - Nonforfeiture option
34. When an insurance company requests an attending physician's report, the request must be accompanied by a - copy of the signed authorization
35. Buy-sell plans are typically funded by which two types of insurance? - Life insurance and disability insurance
36. Which of the following is NOT considered a definition of risk? - The cause of a loss
37. 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? - renewable term
38. What does the grace period allow a life insurance policy owner to do> - make a premium payment after the due date without any loss

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39. 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? - Primary insurer
40. An annuitant would like to determine the amount of an annuity distribution that is exempt from taxation. What is used to calculate this? - Exclusion ratio
41. Which of the following best describes the statement. "The more times an event is repeated, the more predictable the outcome becomes"? - Law of Large numbers

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42. A hazard can be best described as - a condition that may increase the likelihood of a loss occurring
43. What does ESOP stand for? - Employee Stock Ownership Plan
44. At what age is a surviving spouse without dependents eligible for Social Security survivor benefits? - 50
45. Which of the following risk classification charges the lowest premium? - preferred
46. Express power given to an agent in an agency agreement is - the authority to represent the insurer
47. Which Social Security status does a worker with 6 quarters of coverage during the last 13-quarter period have> - currently insured
48. According to the California Insurance Code, which of the following is NOT an example of an insurable event? - an insured suffers a financial loss in the state lottery
49. Which of the following actions is NOT allowed by Health Insurance Counseling and Advocacy Program (HiCAP) counselors? - charge a fee
50. T he elimination period in a disability income policy serves the same purpose as a in a medical policy. - deductible
51. 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? - 10%
52. 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? - insuring clause
53. Which course of action is the insurer entitled to when deliberate concealment is committed by the insured? - rescinding the contract

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54. What must an applicant do in order to authorize the release of an attending physician report? - sign a consent form
55. How is the cost of employer-provided group life insurance with coverage amounts above $50,000 treated for tax purposes? - taxable income to the employee
56. Which of the following describes a contributory group insurance plan? - part of the premium is paid by the employee
57. A life insurance policy where the insured can choose where the cash value can be invested is called - variable life

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58. 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 - Mike has the option of using his cash value to purchase a reduced amount of paid-up whole life insurance
59. Moral hazard is described as the - increased chance of a loss because of an insured's dishonest tendencies
60. An insurer that has been found using higher rates based on race, religion, or ethnicity is said to be engaging in - unfair discrimination
61. How is a life insurance policy dividend legally defined? - a return of excess premium and not taxable
62. How long must life agents keep their transaction records? - 5 years
63. The Consolidated Omnibus Budget Reconciliation Act (COBRA) applies to employers who employ at least - 20 employees
64. Which type of worker has Social Security benefits available to them? - Fully Insured
65. Which of these statements correctly describes risk? - Pure risk is the only insurable risk
66. Individuals age 65 or older are exclusively eligible for which optional program? - Medicare Part B
67. How are acts of war and aviation treated under a group life insurance policy> - policy exclusion
68. Which of the following statements about aleatory contracts is NOT true? - The insured and the insurer contribute equally to the contract
69. Which of the following is an insurer established by a parent company for the purpose of insuring the parent company's loss exposures? - Captive Insurer
70. All of the following are considered characteristics of group life

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insurance EXCEPT - Individual Policies

71. An application has revealed conditions that require more information. Which of the following is needed next? - attending physicians statement
72. Both the Federal and state governments jointly finance which health insurance entitlement program? - Medi-cal

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73. Which policy provision protects the policyowner from unintentional lapse of the contract? - grace period
74. The free-look period for life insurance policyowners age 60 or older is - 30 days
75. 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? - a paid-in capital
76. Which of the following is any situation that presents the possibility of a loss? - loss exposure
77. 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? - second-to-die policy
78. What determines the Social Security normal retirement age? - Year in which worker was born
79. Which of the following is an example of a third=party administrator? - Outside organization that process claims for an employer's self-funded group plan.
80. Which of the following are two examples of activities of daily living (ADL's) used in qualifying for long-term care benefits? - eating and dressing
81. What does the term "illustration" mean when used in the phrase "life insurance policy illustration", according to the California Insurance Code? - presentation of benefits
82. The Human Life Value concept is based on - income
83. A participating company is also referred to as which type of insurer? - Mutual insurer
84. What are residual disability income insurance payments based on? - the amount of the insured's income is reduced by the disability
85. Which of the following terms is NOT associated with Major Medical

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policy? - capitation

86. Which of these is the automatic mode of settlement for life insurance policy proceeds? - Lump-sum
87. The elimination period in a disability income policy serves the same purpose as - a deductible
88. Life insurance creates an immediate estate. This phrase means: - when the insured dies, a death benefit is paid

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89. Which type of risk is gambling? - Speculative risk
90. What prevents a life insurance policy from being rescinded by the insurer after in force for two years? - incontestability clause
91. Which of the following is NOT a primary objective of insurance regulation? - Interpret policy provisions
92. What is an "insurance broker" according to California Insurance Code? - A person compensated for transacting insurance on behalf of another person with an insurer
93. Which of the following statements do NOT apply to child coverage in a family policy? - Children born after the policy's issue date may be covered in a family policy.
94. Premiums are best described as - the amount an insured pays per unit of coverage
95. According to the California Insurance Code, what is "insurance"? - contract
96. What type of changes can be made to a guaranteed renewable health insurance policy?

• the premium rates of the policy owner

97. When a life insurance policy is surrendered, how does the cost recovery rule apply? - the policy's cost basis is exempt from taxation
98. How does rising morbidity rates affect health insurance? - increased premiums
99. The problem of over insurance is addressed in which health insurance provision? - coordination of benefits
100. How are Roth IRA's treated for tax purposes? - Non-deductible contributions and tax- free distributions
101. Which of the following factors is NOT used in underwriting health insurance policies? - Intelligence
102. According to Social Security, an individual with 6 credits of coverage during the previous 13-quarter period is considered to be: -

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currently insured

103. An agent's attempt to stop the replacement of an existing life insurance policy is known as - conservation
104. In a life insurance policy, the entire contract consists of - a policy and attached application
105. The cost of services charged by the Health Insurance Counseling Advocacy Program (HiCAP) is - no cost

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106. 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? - $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.
107. Which of the following does NOT have to be included on life insurance policy illustrations? - Statement that all values and benefits are guaranteed
108. The importance of a representation is demonstrated in what rule? - Materiality of concealment
109. 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? - $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
110. Which of the following services are health maintenance organizations (HMO's) NOT required to provide? - Prescription Drugs
111. 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 - Suspension, Fine, Denial
112. Which of the following types of life insurance is noramlly associated with a mortgage loan? - decreasing term
113. 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? - conversion
114. Disabled workers are covered under Workers' Compensation medical expense benefits for how long? - no limit
115. Employer-provided group term life insurance is exempt from income taxation up to -
116. $50,

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117. What does the term "indemnity " mean as it pertains to insurance?

• to make whole

118. Which of the following is NOT a life insurance settlement option? - extended term option
119. 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? - The same size printed as the licensee's phone number, fax number or address

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120. Which of the following types of life insurance combines a saving element along with a flexible premium option? - Universal life
121. According to PPACA, which is a health benefits exchange? - an entity to which individuals and small businesses can have access to affordable health coverage
122. People with low income can be provided with medical assistance through which program? - Medi-Cal
123. Which of the following does the California Department of Insurance (CDI) have NO jurisdiction over? - Medicare
124. 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? - Benefits can be adjusted
125. Which of the following is NOT a characteristic of a preferred provider organization (PPO)? - Primary Physicians serve as gate keepers
126. In what situation does a waiver of premium provision keep a health insurance policy in force without premium payments? - When an insured becomes totally disabled
127. John owns an insurance policy that gives him the right to share in the insurer's surplus. What kind of policy is this? - Participating
128. Which statement is true regarding policy dividends? - A dividend option is selected by the insured at the time of policy purchase
129. Which of the following is NOT protected under the California Life and Health Guarantee Association? - Insurers
130. An annuity which is backed by a life insurer's separate account is called a(n) - variable annuity
131. 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 - unnecessary replacement

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132. Medicare Part B has an intial enrollment period. How many months after an individual's 65th birthday month does this enrollment period end? - 3 months
133. The Medical Information Bureau consists of - Life and health Insurance companies
134. Which of these statements is NOT true concerning recurrent disabilities? - The insurer continues coverage after a new elimination period

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135. Which principle is accurately described with the statement, "Insureds are entitled to recover an amount NOT greater than the amount of their loss'? - Indemnity
136. According to the California Insurance Code, what is the maximum penalty per violation for anyone who unwillfully commits an unfair method of competition? - $5,000 per violation, if the act is determined to be willful, the fine will not exceed $10,000 per act
137. What is an insurance solicitor authorized to do? - Help an agent or broker sell insurance
138. Who would be most likely to submit a Medicare Part A claim? - Hospital
139. 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? - Variable annuity
140. Under a noncancellable health insurance policy, an insurer can

• cancel the policy for nonpayment of premium

141. After the annual deductible is met, a Medicare Part B patient will pay of the remaining covered expenses. - 20%
142. 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? - 2 years
143. Which of the following is NOT a required uniform provision in individual health policies?

• Change of occupation

144. An insurance policy issued in California may be called a comprehensive long-term care insurance policy if benefits are provided for - Institutional (nursing facilities) and home care
145. If a material warranty violation on the part of the insured is found, what recourse does an insurer have? - Rescind the policy

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146. What is the purpose of the Pre-Existing Condition Insurance Plan (PCIP)? - 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.
147. What is the price of insurance for each exposure unit? - Rate. The price of insurance for each exposure unit is called the rate
148. What is a participating life insurance policy? - Contract that allows the policyowner to receive a share of surplus in the form of policy dividends

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149. Individual health insurance coverage typically excludes injuries at an employee's workplace because - it's covered by the state Workers' Compensation program
150. An insured is protected from the expense of a catastrophic illness by which of the following health insurance provisions? - stop-loss

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