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70 Cards in this Set
- Front
- Back
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What is required when an applicant reveals conditions that require more information a. Physical examination b. Attending physician's statement c. Investigative consumer report d. Agent's report |
(A) The question assumes medical conditions are revealed. |
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Which risk classification carries the lowest premium? a. Endowed b. Substandard c. Standard d. Preferred |
(D) This is best from insurer's perspective. |
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During the disability elimination period a. Occupational claims are payable b. Small claims are payable c. No benefits are payable d. Residual benefits are payable |
(C) The elimination period is a waiting period similar to a "time deductible". |
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Which of the following statements defines partial disability? a. A disabled employee while he is working part-time and receiving lost income under their long-term disability benefit b. An employee who loses sight in one eye because of an accident on the job c. An employer contributing half of the disability benefit to an employee out on long-term disability |
(A) As defined by the policy. |
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Which statement best describes a life insurance policy dividend? a. It is somewhat larger in a non-participating whole life policy than in a comparable participating policy b. It is the interest paid to the policy owner on the cash value of a permanent insurance policy c. It is the distribution of excess funds accumulated by the insurer on participating policies d. It is a stockholders return on his investments in the company |
(C) Definition of a life insurance policy dividend. |
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If a person was in violation of Section 770 of the CA Insurance Code, what action would the insurance Commissioner most likely take if the violation dealt with loans on the security of real or personal property? a. Require the violator to complete an approved ethics course before soliciting in the state of California again b. Issue a cease and desist order for a violation of more than one transaction c. Charge the violator with a felony with a six month maximum jail sentence per violation d Issue a fine of $205,000 per violation |
(B) This is the usual minimum for violations. |
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If no other method of payment is selected, which of the following is the automatic mode of settlement for life insurance policy proceeds? a. Extended term insurance b. Lump-sum settlement in cash c. Life income d. Paid-up policy |
(B) The beneficiary will receive the death benefit in a single lump sum payment instead of installments. |
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The process whereby a mutual insurer becomes a stock company is called a. Reorganization b. Stock split c. Stock buyout d. Demutualization |
(D) Is often done in order to raise new sources of capital income to compete in the financial services arena. |
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A supplemental insurance policy that pays a set amount for each day that an individual is hospitalized is known as a. Long term care supplement b. Temporary major medical c. Hospital confinement indemnity d. Hospital surgical expense |
(C) Hospital confinement indemnity |
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Any situation that presents the possibility of a loss is known as a. A covered loss b. A loss exposure c. Risk potential d. Consideration |
(B) A loss exposure |
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A commonly used cost containment measure for emergency hospital care under a major medical expense plan is a. Premium tax b. Deductible c. In-patient fee d. Pre-admission test |
(B) Deductibles reduce the number of claims. |
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Which settlement option allows only the death benefit earnings to be paid to the beneficiary a. Cash option b. Fixed amount option c. Interest option d. Fixed period option |
(C) Interest option |
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An agent acting as an insurance agent, broker, solicitor, life agent, or bail agent acts in which capacity when handling premiums or return premiums for an insured a. Legal representative b. Fiduciary c. Managing general agent d. Natural person |
(B) Fiduciary |
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Which statement is true regarding participating in a group health insurance plan a. A min of 75% of eligible members is required for a non-contributory group health plan b. A non-contributory group health plan must cover all eligible members c. A contributory group health plan must cover all eligible members d. A min participation of 50% of eligible members is required for a contributory group health plan |
(B) Helps avoid unfair discrimination.` |
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According to state law, what size print must be used for the licensee's license number on all price quotes, business cards, and printed material a. There are no requirements for the license no. to be printed on any printed material b. Larger print that any other printed info on the material c. The same size print as the licensee's phone number, fax number or address d. Small print at the bottom of the material |
(C) The same size print as the licensee's phone number, fax number or address. |
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Social Security disability benefits are paid to persons expected to die or be disabled at least a. 3 months b. 6 months c. 12 months d. 24 months |
(B) 6 months |
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Which non forfeiture option uses cash surrender values to purchase paid-up term insurance for the full face amount of the policy a. Extended paid-up insurance b. Reduced term insurance c. Extended term insurance d. Reduced paid-up insurance |
(C) Definition. |
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The group medical plan provisions that applies when a claimant has coverage under more than one plan is known as a. Integration b. Co-insurance c. Coordination of benefits d. Maximum benefits |
(C) Coordination of benefits. |
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All of the following statements about the gatekeeper system are true, except a. Specialists can choose to be gatekeepers for their patients b. The insured must utilize their primary physicians who authorize all care for the insured c. Referrals to specialists must be authorized by the gatekeeper d. Gatekeepers are a common feature of HMO plans |
(B) Exception: medical care outside of service area. |
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Which coverage is available at no cost to all persons at age 65 a. Medicare Part A b. Medicare Part B c. Social Security retirement benefits d. Long term care insurace |
(A) Statement of fact. |
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Which optional program is only for individuals age 65 or older a. Long term care insurance b. Medicare Part A c. Social security retirement benefits d. Medicare Part B |
(D) It is optional. |
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Traditional comprehensive major medical plans include all of the following, except a. Deductibles b. Co-insurance c. Out-of-pocket maximums d. First-dollar coverage |
(D) "First Dollar" (i.e. no deductible) is a feature of Basic Medical Expense plans |
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According to Employee Retirement Income Security Act of 1974 (ERISA) fiduciary standards, benefit plans are operated for a. Plan sponsors and beneficiaries b. Plan participants and employees c. Plan sponsors and employees d. Plan participatns and beneficiaries |
(B) ERISA standards apply to employer-based plans with employee participants. |
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After the deductible is paid, what percentage of the balance of approved charges does Medicare Part B pay? a. 20% b. 50% c. 80% d. 100% |
(C) 80% |
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With Medicare coverage a. Benefits are available only to persons age 65 or older b. Both Part A and Part B provide benefits for care and skilled nursing facilities c. Part B provides benefits for diagnostic tests and x-rays performed on an out-patient basis d. Part A has no deductibles nor co-insurance for the first 60 days of hospitalization |
(C) Part B provides benefits for diagnostic tests and x-rays performed on an out-patient basis. |
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Life insurance settlement options include all of the following, except a. Interest option b. Extended term option c. Fixed amount option d. Fixed period option |
(B) "Extended term" is a non-forfeiture option. |
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All of the following are features of a preferred provider organization (PPO), except a. Dependence upon referrals to see a specialist b. Providers are paid on a fee-for-service basis c. Employees have a choice of practitioners d. Primary care physicians act as gatekeeprs |
(D) Gatekeepers are a feature of HMOs. |
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What must a life agent do in order to be able to sell 24-hour care coverage a. Complete a course on workers compensation and general principles of employer liability b. Nothing; they are already authorized to sell this coverage with a life license c. Compete a course on long-term disability coverage and workers compensation coverage d. Complete the proper application and pay the fee |
(B) Statement of fact. |
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A life insurance application is important for all of the following reasons, except a. Statements made in the application are required to be true to the best of the applicant's knowledge b. The beneficiary must sign the application before the insurer will issue the policy c. The application contains essential information about the applicant d. The application becomes a part of the policy, if a copy is attached |
(B) Th beneficiary is not necessarily a party to the contract. |
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The price of insurance for each exposure unit is called the a. Premium b. Rate c. Adjustment factor d. Package price |
(B) Rate. |
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By adopting a self-funded health plan, an employer will have greater flexibility in all areas of the planning, except a. Claims severity b. Group size c. Benefits provided d. Cost |
(A) By self-funding, the employer is not restricted by the same legal requirements for group size or benefits and therefore has more control over the cost. Self-funding has no effect upon the possible severity of losses. |
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To authorize the release of an attending physician's report, the applicant must a. Sign a consent form b. Send a letter to the physician c. Furnish the name of the physician d. Submit to a physical examination |
(A) Sign a consent form. |
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Yearly probabilities of death are shown in a. Mortality tables b. Morbidity tables c. Policy illustrations d. Policy summaries |
(A) Definition. |
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Members of the Medical Information Bureau are required to report a. The names of all patients treated by member physicians b. The cause of death when death benefits are paid c. Medical impairments found during the underwriting process d. Amounts of insurance applied for by all applicants |
(C) MIB stores medical information for underwriting purposes. |
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When referring to an insurance contract, when must a representation by made? a. Either at the time of or after policy issuance b. Only after a policy is issued c. Only before a policy is issued d. Either at the time of or before policy issuance |
(D) Representations can be made or changed at the time of, or before issuance of the policy. |
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Frank and Ernest are 25 year old identical twins. They are both in excellent health. Both buy life policies that have $500 annual premiums. Frank buys a 5-year renewable term policy. Ernest buys a whole life policy. Which statement is not true? a. Ernest's whole life policy will have a larger death benefit if he dies during the first 5 years b. Frank has the option of using his cash value to purchase a reduced amount of paid-up whole life insurance c. Ernest's whole life policy will develop a larger cash value d. Ernest's whole life premium will remain the same. Frank's premium will increase every 5 years. |
(A) Whole life is more expensive in dollar cost per $1000 than Term insurance. |
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The request for an attending physician's report must be accompanied by a copy of the a. Policy illustration b. Signed application c. Underwriting criteria d. Signed authorization |
(D) Signed authorization |
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A provision stating that health insureds and their insurers will share covered losses in an agreed proportion is called a. Comprehensive insurance b. Stop-loss provision c. Co-insurance d. Percentage sharing |
(C) Co-insurance |
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Which life insurance classification carries the highest premium a. Substandard b. Standard c. Endowed d. Preferred |
(A) Is the least desirable and therefore more expensive |
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A group insurance plan is contributory when the a. 3rd party administrator collects part of the premium b. Employer pays all of the premium c. Employee pays part of the premium d. Service provider collects part of the premium |
(C) Contributory vs. Non-contributory. |
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The CA Insurance Code states that policies or certificates may be called comprehensive long term care insurance if they provide benefits for a. Institutional (nursing facilities) and home care b. Institutional care (nursing facilities) only c. Disability income d. Home care only |
(A) Institutional (nursing facilities) and home care. Definition. |
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Whose benefits are affected by the blackout period a. The surviving children b. The surviving spouse c. The disabled worker d. The fully insured worker |
(B) Time when no benefits are paid to the surviving spouse. |
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Which of the following is not an option for the use of the policy dividends a. Fund the addition of monthly income payments b. Purchase a one-year term addition c. Purchase paid-up additions d. Reduce the current premium |
(A) There are a total of 5 standard dividend options. |
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Who are members of the Medical Information Bureau a. Life insurance companies b. Physicians c. Hospitals d. Health insurance companies |
(A) Member insurers financially support the MIB. |
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After the deductible, what portion does a patient pay for covered expenses under Medicare Part B a. 20% b. 50% c. 80% d. 100% |
(A) Statement of fact. 20%. |
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Which of the following functions is best defined as an insurance company's identifying and selling to potential customers a. Rate making b. Underwriting c. Claims handling d. Marketing |
(D) Definition. |
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What is it called when an insurer uses higher rates based solely on religion, race, or ethnic group a. Categorizing b. Unfair discrimination c. Social injustice d. Redlining |
(B) i.e. discrimination without adequate cause. |
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A policy owner has the right to change all of the following, except a. The beneficiary b. The payment made c. The dividend schedule d. The dividend option |
(C) The frequency of dividend payments is under the control of the insurer. |
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Long term care policies can be replaced for all of the following reasons, except a. The new policy has a lower premium b. The insured's condition has materially improved c. The new policy has greater benefits d. The new policy has fewer benefits and a higher premium |
(D) The client cannot be left in a worse position. |
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When must insurance records for insurance agents and insurance brokers be made available to the insurance Commissioner a. One month after policy issuance b. At all times c. Within 30 days of written request by the Commissioner d. Annually, and submitted with the proper paperwork |
(B) Commissioner has the right to request and inspect any record at any time. |
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A self-insured group qualifies for stop-loss coverage after claims a. Equal the anticipated loss per month b. Exceed a specified limit in a set period of time c. Meet the out of pocket expense during the policy period d. Average the maximum amount stated on the master policy |
(B) Can be thought of as a "very large deductible". |
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In a reinsurance agreement, the insurance company that transfers its loss exposure to another insurer is called
a. Primary insurer b. Reinsurer c. Captive insurer d. Secondary insurer |
(A) a.k.a. the "ceding" company |
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Which type of insurance policy provides a death benefit that matches the projected outstanding debt on an individual's home a. Family protection b. Level term c. Mortgage protection d. Joint life |
(C) Key is "debt on an individual's home" |
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What do we call the process whereby insurer's decide which customers to insure, and what coverage to offer? a. Underwriting b. Rate making c. Marketing d. Adverse selection |
(A) Definition. |
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Which of the following is the best definition of premium? a. The amount the insured pays per unit of coverage b. Money the insured pays the insurer to obtain the benefits in the policy c. Money the insurer pays the insured to obtain the benefits in the policy d. Bonus paid by an agent to convince an insured to buy a policy |
(A) Definition. |
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If an insurer pays in insured $25,000 in lost wages, $45,000 for physicians visits and hospital costs, and $15,000 for physical therapy treatments, and later discovers that the claim was fraudulent, the insured may be fined as much as: a. $25,000 b. $60,000 c. $85,000 d. $170,000 |
(D) Imprisonment, $50,000 or twice the dollar amount of fraud, whichever is greater. |
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What rule is used to determine the importance of a representation a. The materiality of concealment b. That of aleatory contracts c. The insurable interest standard d. The law of adhesion |
(A) Definition. |
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All of the following statements about social security disability benefits are true, except
a. Benefits are based upon the level of the worker's earnings up to the time of disability b. Benefits will continue only as long as the recipient cannot work at all c. Benefits are designed to replace the entire amount of the worker's earnings d. Worker's must be totally and permanently disabled for at least 5 months to be eligible for benefits. |
(C) The waiting period before Social Security benefits begin to be paid is five (5) months from disability. Benefits are limited. |
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An agent must submit all of the following to the insurer, except a. A copy of all printed communications used for the presentation b. A copy of signed replacement notice, if replacement is involved c. A statement signed by the applicant as to whether replacement of existing life insurance is involved in the transaction d. A signed statement as to whether or not the agent knows a replacement is involved in the transaction |
(A) Statement of fact. |
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What is the difference between a conditional premium receipt and a binding premium receipt? a. The applicant must be insurable in order to have overage only under the binding receipt b. Only a conditional receipt always provides insurance that is effected from the date the receipt is given c. Only a binding receipt always provides insurance that is effective from the date the receipt is given d. Premiums must be paid to receive only a conditional receipt |
(C) Conditional receipts are only binding if the applicant is insurable. |
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After a life insurance policy has been in effect for two years, what prevents it from being rescinded by the insurer? a. The incontestability clause b. The reinstatement clause c. The grace period provision d. The right to return provision |
(A) Definition. |
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Under a disability income insurance policy with an "own occupation" clause, an employee who can no longer perform the tasks of the job held at the time of injury is considered a. Gainfully disabled b. Totally disabled c. Presumptively disabled d. Medically disabled |
(B) Definition. |
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Which of the following may be offered by insurers providing Medicare supplement insurance a. Broad plans that exclude the core benefits b. The core benefit plan without any additional benefits c. Plans that duplicate benefits covered by Medicare d. Plans without a right to return premium |
(B) At least core benefits must be offered. |
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To meet the chronically ill trigger of a long term care policy, an individual must be unable to perform a minimum of a. 1 activity of daily living b. 2 activities of daily living c. 3 activities of daily living d. 4 activities of daily living |
(B) Statement of fact. Minimum of 2 |
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The initial requirements for a licensed agent to sell long term care insurance includes training all of the following areas, except a. Financial planning b. Available long term care services and facilities c. California regulations d. Alternatives to the purchase of long term care insurance |
(A) Answers 'b', 'c', and 'd' are directly relevant to LTC sales. |
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Health maintenance organizations (HMOs) are required to provide for all of the following services, except a. Prescription drugs b. Emergency services c. Preventive services d. Physicians services |
(A) Statement of fact. |
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A measure for rating an individuals need for long term care benefits is called
a. A gatekeeper mechanism b. Activities of daily living c. Case management d. Co-insurance |
(B) Statement of fact. |
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Under disability income insurance, bodily injury must meet the following criteria to be classified as accidental
a. Only the result need be accidental b. Only the cause need be accidental c. Both the cause and the result need be accidental d. The cause may be intentional, but the result must be accidental |
(A) The cause is usually not taken into account. |
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Jean's healthcare provider is a "service provider". This means: a. Her payment for services goes directly to the provider b. She will get better service than a "fee for service" provider c. Her payment for services are always paid to the insured d. All of the above statements are true |
(A) Statement of fact. |
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All of the following are used in underwriting for health insurance, except: a. Income b. Sex c. Age d. Intelligence |
(D) Although some may argue that intelligence plays a part in health decisions, the intelligence of a person is not one of the criteria for underwriting. |
