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150 Cards in this Set
- Front
- Back
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A disability income policy social insurance supplement (SIS) benefit rider: a. Pays benefits only if it turns out the insured is eligible for benefits from social insurance b. Pays a benefit if the insured is injured on the job and qualifies for workers compensation benefits c. Provides a payment only when the insured is totally disabled, but not receiving any social insurance benefit plans d. Provides for a bonus payment that will match social security disability income benefits, if they are paid |
(C) Statement of fact about the basic Social Insurance Supplement |
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A health maintenance organization (HMO) plan contains costs by promoting a. After-hours care b. Generic care c. Preventative care d. Fee for service care |
(C) Preventative care includes regular checkups, and is encouraged by HMOs. |
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Renewable term insurance can be best described as: a. A level death benefit with an increase in premium b. A level death benefit with a decrease in premium c. A decreasing death benefit with a level premium d. An increasing death benefit with a level premium |
(A) Term insurance premiums increase upon renewal based on attained age. |
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The basic feature of a managed care indemnity plan is that the participants a. Select a provider and submit claims to the insurance company b. Select a provider at work and claims processor c. Pre-select a physician and third-party claims administrator d. Pre-select a clinic and submit claims to the insurance company |
(A) Indemnity plans utilize claim forms and allow choice of providers. |
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How do rights of an irrevocable beneficiary differ from those of a revocable beneficiary? a. An irrevocable beneficiary may be changed by the policy owner without the beneficiary's consent b. An irrevocable beneficiary has a vested right that neither the policy owner nor his creditors can impair without the beneficiary's consent c. A revocable beneficiary can become the policy owner at any time by paying the premiums d. An irrevocable beneficiary has the right to name a contingent beneficiary for the policy |
(B) The irrevocable beneficiary has entitlements that the revocable beneficiary does not. |
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What recourse does an insurer have if a violation of a material warranty on the part of the insured is discovered a. A hearing by the Insurance Commissioner to determine the severity of the misrepresentation, and to determine an appropriate course of action b. None, if the policy has been in force for over 12 months c. Rescission of the policy d. A hearing by a court of law to determine an appropriate course of action an insurer may take |
(C) Rescission is possible during the contestability period. |
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Which of the following describes an insurer who has enough financial resources only to provide for all its liabilities and for all reinsurance of all outstanding risks? a. Guaranteed b. Insolvent c. Solvent d. Non-participating |
(B) In order to be solvent, the insurer's assets must EXCEED its liabilities, not just meet them. |
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All of the following statements about the election of a life insurance policy's settlement options are true, except a. The election is made by the policy owner at the time the application is submitted b. When no settlement option is chosen, the proceeds are automatically paid to the policy owner's estate c. The policy owner may change the settlement option after it has been chosen d. The election may be made by the beneficiary if no settlement option is in force at the time of death of the insured |
(B) Proceeds would be paid to the beneficiary. |
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What is the purpose of "key person" insurance? a. To provide health insurance benefits to key employees b. To give a key employee the ability to purchase the business c. To give retirement benefits to key employees d. To cover decreased business earnings due to the death of a key employee |
(D) Proceeds are paid to the business in order to help carry on the enterprise in the face of a loss of a key person. |
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What would be the Insurance Commissioner's most likely course of action if an applicant for an insurance license had a previous application for a professional license denied for cause by any licensing authority within five years of the date of the filing? a. Deny the application probably after a hearing b. As long as it was not insurance related, the application will be granted c. Approve only after a review by a panel of insurance professionals d. Deny the application without a hearing |
(D) The key word is "for cause". |
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An insured bought a $150,000 non-participating whole life policy many years ago. He is 100 years old today. He has never borrowed from the policy's cash value and has faithfully made all payments when due. The policy's cash value is a. $150,000 b. $100,000 c. $0 d. $50,000 |
(A) The cash value in a whole life insurance policy is calculated and structured actuarially so that it will equal the death benefit and is paid to the insured when the policy matures or "endows" at age 100. |
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An intentional concealment entitles the injured party to which course of action? a. None, due to the fact that the concealment was unintentional. b. $250 fine to be paid to the injured party c. Possible imprisonment to the party who concealed the information d. Rescission of the contract |
(D) Rescission is possible due to the contestability period. |
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Loss retention is an effective risk management technique when all of the following conditions exist, except a. The probability of loss is unknown b. The losses are highly predictable c. The insured chooses to assume the losses involved d. The worst possible loss is not serious |
(A) If the choice is to take the risk of no insurance (loss retention), to not know the probability of loss could be disastrous. |
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A disability policy, described as "guaranteed renewable" is one where the insurance company a. Surrenders the right to change the premiums b. Reserves the right to change any of its terms c. Reserves the right to change the premiums, but may not change any of its terms d. May not renew the policy if the insured ceases to comply with certain conditions such as continued employment |
(C) Premiums may change for the entire class of insureds. |
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When are parties to a contract required to communicate information solely based on personal judgment for a matter in question a. Only when asked b. Only when the policy terms require it c. Only when relevant d. Never |
(C) Parties must communicate material information. |
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Which statement is true regarding Medicare Supplement Insurance plans? a. Insurers may offer only broad coverage plans that contain both core benefits and additional benefits b. Insurers may freely offer whatever supplement coverages they prefer to market c. Insurers may offer policies that contain only the core benefits d. Insurers may create insurance policies for approval by the CA Department of Insurance |
(C) Although Medicare Supplement Insurance plans offer policies that contain only the core benefits, they pay for doctor's bills above the amount paid by Medicare, and hospital bills above the amount paid by Medicare (among other benefits). |
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The guaranteed insurability option provides the ability to: a. Waive premium payments in the event of disability b. Access a portion of the death benefit in the event of serious illness c. Double the amount of the death benefit in the event of accidental death d. Purchase additional insurance regardless of insurability |
(D) Statement of fact. |
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Which type of insurance guarantees the right to renew the policy each year, regardless of health, but at an increase premium a. Convertible term b. Level term c. Decreasing term d. Renewable term |
(D) Specifically, Annual Renewable Term (ART) |
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The passage of worker's compensation legislation meant a. Employees no longer had any legal means of obtaining reimbursement for work injuries b. Employees would have to sue their employers to obtain reimbursement for work injuries c. Employers would be held responsible for the cost of their employee's work injuries regardless of fault d. Employers were no longer responsible for work injuries to employees |
(C) This is a true statement, and includes medical care, death, disability, and rehabilitation for employee job-related injuries or diseases. |
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RW and Associates is an agency which represents BLG Insurance Corporation. RW and Associates may leave the name BLG Insurance Corporation in its advertisements by clearly stating the relationship between the two businesses in any of the following ways, except: a. RW and Associates who represent BLG Insurance Corporation b. RW and Associates underwriting for BLG Insurance Corporation c. RW and Associates placing business through BLG Insurance Corp d. RW and Associates using the services of BLG Insurance Corporation |
(B) The agency is not an underwriter. |
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The probationary period in a group health policy is intended for people a. Who joined the group after the policy effective date b. Without health coverage after a qualifying event c. Who declined to join the group at the time of eligibility d. With a pre-existing condition when they joined the group |
(D) Probationary periods limit the effect of pre-existing conditions on the group. |
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Which provision will pay a portion of the death benefit prior to the insured's death due to a serious illness a. Waiver of premium b. Accelerated death benefit c. Cost of living d. Disability income |
(B) a.k.a. "Living Needs Rider" |
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An individual with a low income and high insurance needs should buy a. Whole life insurance b. Universal life insurance c. Endowment insurance d. Term insurance |
(D) Term insurance is the best for the purchase of pure insurance. It has the lowest cost to benefit ratio.
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An example of a third party administrator is a. An agent's supervisor who takes part of his commission b. An employee who handles self-insurance claims c. An employee who is responsible for evaluating for relative quality of competing group d. An outside organization that processes claims for an employers self-funded plans |
(D) [third part='outside organization'] Third party admins are also used for group plans that are not self-funded. |
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A form of rest or relief offered to family members who are caring for a person who requires continual care is a. Hospice care b. Hospital care c. Respite care d. Intermediate care |
(C) Key phrase is "rest or relief". |
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All of the following statements about contingent beneficiaries are true, except a. They receive remaining payments to be made under a settlement agreement upon the primary beneficiary's death b. The contingent beneficiary shares death proceeds equally with the primary beneficiary c They receive the death proceeds if the primary beneficiary is deceased at the time of the insured's death d. More than one contingent beneficiary may be named |
(B) If the primary beneficiary outlives the insured, the primary beneficiary gets 100% of the proceeds. Only if the primary beneficiary does not outlive the insured will the contingent beneficiary receive the proceeds. There is no sharing. |
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The payor rider on a juvenile life policy provides that if the payor dies or becomes disabled before the insured juvenile reaches the age specific on the policy a. The insurer will make the payments until the insured juvenile reaches the specified age b. The insurer will lend money to keep the policy in force c. The insured's estate will make the premium payments d. The insurer will make all of the policy payments |
(A) Typically, insurer pays until juvenile is reaches age 21 or 25. |
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The insured is totally and permanently disabled. The insured's policy continues in force without the payment of a premium because the policy contains a a. Grace period provision b. Guaranteed insurability provision c. Reinstatement provision d. Waiver of premium provision |
(D) Statement of fact, as long as the insured has been disabled for at least 6 months. |
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All of the following statements about survivorship life insurance are true, except a. The policy face amounts are usually more than $1,000,000 b. The policy face amount is paid out only upon the death of the first insured to die c. It offers premiums that are quite low compared to what is charged on separate policies d. It is particularly well suited to meet the needs of estate taxes |
(B) Death benefits are paid on the death of the second insured. |
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If an insurer is not able to meet financial obligations when due, the insurer would be considered a. Insolvent b. Unauthorized c. Impaired d. Non-admitted |
(A) To be solvent, the insurer's assets must exceed the insurer's liabilities. |
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What does the Insurance Commissioner have the right to do if an agent lacks authority from an insurer named on a binder for coverage a. Fine the insurance company for non-compliance b. Suspend or revoke the license of the agent c. Authorize the agent with a certificate of convenience d. Request a certificate of authority be issued immediately |
(B) Agent has issued an incorrect binder and is in violation. |
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Which definition of disability is the most difficult for an injured worker to satisfy? a. The own-occupation definition used by the Social Security Administration b. The typical definition of partial disability used by disability income policies c. The total disability definition used by the Social Security Administration d. The typical definition of temporary disability used by disability income policies |
(C) The disability must have lasted at least 5 months, the individual must be unable to perform ANY substantial gainful work, it must be expected to last (or has lasted) at least 12 months, or the disability is expected to end in death. |
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People commonly purchase an annuity to protect against the risk of a. Dying before their home mortgage is paid off b. Becoming uninsurable c. Outliving their financial resources d. Dying too soon |
(C) Once it annuitizes, the contract holder can receive payments for the rest of their life. |
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In the event of an accidental death, the principal sum in a disability policy will be paid a. Over the course of a set period b. On a sliding schedule c. In one lump sum d. As a monthly indeminity |
(C) The principal sum will be paid in one lump sum for dismemberment, or loss or sight as well |
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Which of the following statements about the HICAP program is false? HICAP a. Stands for Health Insurance Counseling Advocacy Program b. Serves people needing information about Medicare c. Does not sell or endorse any specific types of insurance |
(D) HICAP services are free of charge. |
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Why is having a large number of similar exposure units important to insurers? a. The greater the number insured, the more premium is collected to offset fixed costs b. The insurer increases its market share with every insured c. The greater the number of insured, the greater the amount of premiums collected to help cover losses d. The greater the number insured, the more accurately the insurer can predict losses and set appropriate premiums |
(D) Statement of fact regarding the Law of Large numbers. |
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The insured, age 65, owns a $100,000 non-participating whole life policy. The policy is paid-up as of today. When would the cash value reach $100,00? a. Today b. Age 85 c. Never d. Age 100 |
(D) The policy fully "endows" at age 100. |
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A measure for rating an individual's need for LTC benefits is called: a. Case management b. Activities of daily living c. The gatekeeper mechanism d. Co-insurace |
(B) These activities include: mobility, dressing, toiletry, bathing, eating and transferring.
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In order to receive the principal sum benefit for death from a disability policy, the death must occur a. Within a specified number of days after injury b. Any time during a rehabilitation period c. Any time during a total dismemberment period d. Within the policy period from any cause |
(A) Statement of fact. |
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Which of the following are commonly covered by medical expense policies? a. Elective cosmetic surgeries b. Pre-existing conditions c. Expenses covered by a workers compensation policy d. Accidental injuries |
(D) Excludes all the rest. |
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A health insurance deductible is: a. The insured's payment for healthcare that is not considered a covered expense b. The cost of a covered expense minus the office co-payment c. The portion of insurance premium paid for coverage by the insured d. The amount of coverage expense that the insured pays before the insurer pays |
(D) This sharing of costs is one way to lower the premium. The higher the deductible, the lower the premium. |
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According to the CA Insurance Code, an insured's policy must specify all of the following, except: a. The risks insured against b. The financial rating of the insurer c. The property or life being insured d. The policy period |
(B) Important, but not found here. |
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Which of the following expenses is never covered by a LTC insurance policy? a. Home health care b. Adult day care c. Hospital acute care unit d. Alzheimer's disease |
(C) LTC is for chronic, not acute, conditions. |
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Which of the following is a hazard? a. A large number of similar exposure units b. A peril c. A condition that might increase the likelihood of a loss occurring d. A speculative risk |
(C) This is a true statement, and includes physical, moral, morale, and legal hazards. |
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A hospital confinement indemnity insurance policy pays a. An indemnity to the insured for all expenses incurred when the insured is confined to a hospital b. The daily benefit coverage amount stated in the policy for each day the insured is confined in the hospital c. 100% of the covered medical expenses less the deductible and co-insurance percentage d. The amount of the actual hospital expenses |
(B) Statement of fact. |
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When a licensed agent submits a renewal application with applicable fee on or before the expiration date a. The agent will be able to operate if a receipt for payment is returned prior to the license expiration date. b. The agent will be able to operate for up to 60 days after the specified expiration date. c. The agent will be able to operate if the agent goes in person to the insurance department to receive a temporary extension of the license. d. The agent will be able to continue to operate after a 30 day extension to operate without receipt if requested and approved |
(B) Does not apply to licenses that have been suspended or revoked. |
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A provision stating that health insured's and their insurers will share covered losses in an agreed proportion is called a. The stop-loss provision b. Comprehensive insurance c. Percentage insuring d. Co-insurance |
(D) It is an agreed amount. |
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Common life insurance policy riders include all of the following, except: a. Extended term b. Guaranteed insurability c. Accidental death d. Waiver of premium |
(A) Extended term is a non-forfeiture option. |
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Term insurance is typically characterized by a. Low premiums and high cash value b. High premiums and no cash value c. High premiums and high cash value d. Low premiums and no cash calue |
(D) Cash value is found in whole life policies, not term insurance. |
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A $50,00 whole life policy with a cash value of $10,000 has been in force for 11 years. The policy owner is unable to continue the premium payments. which of the following describes the reduced paid-up non-forfeiture option a. The policy owner begins to receive $200 monthly payments from the insurer that will continue for life b. The policy is surrendered and the policy owner is paid $10,000 by the insurer c. The cash value is used to purchase a $50,000 term policy that is paid-up for 10 years d. The cash value is used to purchase a $20,000 paid-up policy |
(D) Death benefit has been reduced and policy is paid-up. |
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What would we call a representation which fails to correspond with its stipulations or assertions? a. Fatal b. Fraud c. Frivolous d. False |
(D) Assuming it wasn't intentional. |
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In the state of California a. Twisting is an approved practice b. Providing free insurance coverage in connection with the sale of services as an inducement for completing the transaction is not legal c. Life and health ratings may not be related to the age of the insured d A life solicitor's license has the same licensing requirements as a life agent's license |
(D) Offering free insurance is a "no-no". |
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The adjustments that an insurer makes in a cash value account in a universal life policy each time a payment is made includes all of the following, except a. Subtract from mortality and general expense charges b. Add the current interest c. Subtract the policy surrender charges d. Add the current premium paid |
(C) The surrender charge is a fee charged to the policy owner when a life insurance policy or annuity is surrendered (returned) for its cash value. It has nothing to do with the adjustments made in the cash value account in a universal life policy. |
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The Employee Retirement Income Security Act of 1974 (ERISA) mandates requiring plan sponsor to provide participants with a. Plan descriptions and benefit statements b. Reports of tax qualification fulfillment c. Trust and solvency reports d. Annual financial statements |
(D) ERISA established rules and regulations to govern private pension plans, including vesting requirements, funding mechanisms, and general plan design and descriptions. This includes providing participants with annual financial statements. |
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Which of the following requires a reporting company to respond to a consumer's complaint that his file contains inaccurate information about them a. Unfair Practices Act b. Fair Credit Reporting Act c. COBRA d. Medical Information Act |
(B) Fair Credit Reporting Act |
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Under an individual health guaranteed renewal contract, the insurer has the right to a. Discontinue coverage on the basis of employment b. Cancel the policy for health reasons c. Make unilateral benefit changes d. Change premiums for the same class insured |
(D) The insurance company cannot refuse to renew a guaranteed renewable policy, and cannot change any of its provisions, except the premium rate, as long as the rate change applies to the entire policyholder classification. |
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All of the following statements about social security disability benefits are true, except a. Benefits are based on the level of a worker's earnings up to the time of the disability b. Benefits will continue only while the worker cannot work at all c. Benefits are designed to replace the entire amount of a worker's earnings d. Workers must be totally and permanently disabled for at least 5 months to be eligible for benefits |
(C) Help supplement a worker's personal, not replace the entire amount of the worker's earnings. |
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Under COBRA, a qualifying event ensures that an employee who loses coverage can a. Transfer coverage to another group b. Convert to an individual policy c. Elect to continue coverage d. Request a waiver of premium |
(C) This continued coverage is at the former employer's group rate for a limited time period. |
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Under social security, the definition of disability is the inability to engage in a. An approved occupation b. An activity with a given level of compensation c. Any substantial gainful activity d. The person's chosen career |
(C) This is a very rigid definition. |
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Which of the following statements about LTC is correct: a. In 1990, the average annual cost for a nursing care home was approximately $10,000 per year b. The need to LTC coverage can arise only after age 50 c. Medi-Cal is one of the most commonly sold LTC policies. It is designed to protect the assets of middle-class Californians d. The very poor and the very rich probably do not need LTC coverage |
(D) LTC is aimed at the middle income consumers |
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Which of the following is a true statement regarding the social security (OASDHI) program? a. The program provides only a minimum floor of income. Individuals are expected to supplement this with their own personal programs. b. The actuarial value of each person's contributions are closely related to the actuarial value of each person's benefits c. With only a few exceptions, this is a voluntary program d. The program is fully funded |
(A) Similar to question #57 |
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The insured's policy has a deductible that is applied between the exhaustion of basic plan limits and the commencement of excess coverage. This is called a a. Family deductible b. Per cause deductible c. Corridor deductible d. Stop-loss limit |
(C) This is a type of major medical deductible amount which acts as a corridor (or bridge) between benefits under a basic health insurance plan and benefits under a major medical insurance plan. |
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What makes up the entire contract in a life policy? a. The policy, and when attached, the application b. The policy, and any sales literature presented by the agent of the policy holder c. The policy the application, and any verbal understandings d. The policy by itself, but never the application |
(A) The policy and attached application make up the entire life contract. |
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Each of the following terms is an important characteristic of a major medical policy, except a. Deductible b. Co-insurnance c. Maximum amounts d. Capitation |
(D) Is a feature of HMO plans. |
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In CA, the min participation requirement for a contributory large group health insurance plan is a. 50% of eligible employees b. 25% of eligible employees c. 75% of eligible employees d. 40% of eligible employees |
(C) 75% of eligible employees |
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Which of the following is a correct statement about life insurance policy types? a. Group life insurance is offered only to employees who provide evidence of insurability b. The initial premium for term insurance is lower than the initial premium for whole life insurance c. Limited payment whole life policies stay in effect only for as long as the premium is paid d. Universal life policies have a structured premium payment schedule that must be followed during the entire contract period |
(B) Term is pure insurance, whereas whole life is insurance plus cash values plus interest. |
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During the disability elimination period a. Residual benefits are payable b. Occupational claims are payable c. No benefits are payable d. All claims are payable |
(C) Period before benefits begin. |
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A provision stating that the insured and the insurer will share covered losses in an agreed proportion is called a. Percentage sharing b. Co-insurance c. Stop-loss provision d. Comprehensive insurance |
(B) Co-insurance |
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While an insurer is paying the premium for a life insurance policy under the waiver of premium rider a. The insurer is named as the primary beneficiary b. The cash value does not increase c. The divided payments cease d. The policy remains in full force in every respect |
(D) Remember that this rider becomes effective after six months of disability. |
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Medicare Part A provides coverage for all of the following, except a. Home health care b. Hospice c. Hospitalization d. Physicians services |
(D) This is covered by Part B. |
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According to the CA Insurance Code, all insurers must maintain a department to investigate: a. Possible abuses of rating laws b. Possible arson c. Possible fraudulent claims from insureds d. Possible abuses of fiduciary responsibilies |
(C) Possible fraudulent claims from insureds |
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Which of the following is a type of deductible that charges the insured after basic medical benefits have been paid, and before other medical coverage begins? a. Out-of-pocket limit b. Calendar deductible c. Carry-over provision d. Corridor deductible |
(D) This is the definition. |
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Which of these statements concerning Medicare is not true? a. Part A provides hospital care b. Part B provides doctors and physicians services c. Part C provides long-term care benefits d. It is part of the Social Security program |
(C) There is no Part C. |
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Concerning Part B of Medicare, which of the following is incorrect? a. There is an annual deductible and co-payment b. It is paid entirely by FICA (social security) payroll taxes. c. An individual must sign a form rejecting Part B or they will be enrolled in it. d. It provides some coverage and benefits for most medical expenses not covered by Part A. |
(B) Part B is paid for by the Medicare recipients. |
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From the list of descriptions below, select the one that is not eligible for Medicare. a. A person who has been entitled to Social Security disability benefits for 24 months. b. A person who has reached 65, is willing to pay a premium but is not eligible for Social Security c. A person who has reached 65 and is eligible for Social Security d. All above are eligible. |
(D) The people who can qualify for Medicare must be memorized. |
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Hospice care provides services to patients who are: a. In a hospital and expected to recover b. Terminally ill c. Receiving respite care through Medicare d. None of the above |
(B) This is the definition of hospice. |
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In the Medicare system, the services provided by doctors and surgeons are covered by: 1. Part A 2. Part B 3. There is no charge for coverage 4. There is a charge for coverage a. 1 & 3 b. 1 & 4 c. 2 & 3 d. 2 & 4 |
(D) This must be memorized. (Part B and there is a charge for coverage) |
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A person reaches the age of 65 and is currently covered under her employer's health plan. She elects to take Medicare coverage by rejecting her employer's plan. This still keeps the company plan primary. a. True b. False |
(B) At age 65, Medicare becomes primary, unless an individual is currently employed and covered under an employer Group Health Plan. However, this person opted out of her employer's plan, therefore, Medicare becomes primary. |
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Which of these statements is not true with regard to insurers and policies that provide Medicare supplement coverage? a. They are required to issue all policies on either a guaranteed renewable or non-cancelable basis. b. If the policy has been in force for at least 6 months, the insurer is prohibited from excluding any preexisting conditions. c. The insurers are prohibited from any exclusion for all preexisting conditions. |
(C) Insurers can exclude preexisting conditions, but only for 6 months. |
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Which of the following is not allowed by code in connection with the sale of Medicare supplement policies? a. Offer only core benefits. b. Offer only broader plans c. Offer core plans as a stand-along or offer core plans along with broader plans. d. Both A and B are not allowed |
(B) "Broader plans" means more comprehensive. If only the most comprehensive plans were offered, then only the most expensive plans would be offered. Some inexpensive plans must be made available for the public to purchase. |
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Medicare covers which of the following in order to provide long-term care for the elderly: a. Very broad and substantial intermediate care benefits b. A wide range of custodial care coverage c. Very limited nursing home coverage. d. Medicare provides none of the above. |
(C) This must be memorized. Very limited nursing home coverage. |
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Choose the correct statement about long-term care (LTC) insurance. a. Those who are very rich or very poor probably are not in need of long term care coverage. b. The annual cost of nursing home care was about $10,000 in 1990. c. One of the best-structured plans for long term care for those in the middle class is Medi-cal. d. The need for long term care insurance begins only at middle age. |
(A) The very rich can afford to take care of themselves. The very poor have Medi-Cal. |
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There is a type of benefit that pays for the cost of relief given to the caregiver of a person who requires constant care and supervision. What is this type of care called? a. Custodial care b. Hospice care c. Intermediate relief care d. Respite care |
(D) This is the definition. |
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Long-term care policies can be sold in various ways. Which of the following is one of these ways? a. As part of an auto policy b. As a part of a comprehensive homeowner umbrella policy c. As part of a life insurance policy through the use of an endorsement |
(C) This must be memorized. |
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Pick from the following choices the features of a long-term care policy that would have the highest premium. 1. Long benefit period 2. Short benefit period 3. Long elimination period 4. Short elimination period a. 1 & 3 b. 2 & 3 c. 1 & 4 d. 2 & 4 |
(C) The sooner the insurance company must pay, and the longer the company must pay, the higher the premiums will be. |
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Which of the following categories of benefits are not covered in a long-term care policy? a. Home care benefits b. Custodial care benefits c. Acute care coverage in a hospital d. Community based care benefits |
(C) Acute care in the hospital is covered under a medical expense policy. |
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Any long-term care policy sold in CA must provide for certain benefits. Select the most correct answer describing these benefits from the choices below. a. Home care only b. Medicare supplement c. Institutional care only d. Institutional care and home care |
(D) This must be memorized. Institutional care and home care is a MUST. |
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Long-term care policies that deliver benefits for community based or home care services must include which of the following: 1. Long benefit period 2. Short benefit period 3. Long elimination period a. 1 & 3 b. 1 & 2 c. 1, 2, & 3 d. None of the above |
(C) This must be memorized. MUST include long benefit period, long elimination period, and short benefit period |
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Which of the following is false about the marketing of long-term care insurance--according to the code? a. They can exclude degenerative conditions like Alzheimer's. b. They may require hospital stays of certain lengths be satisfied before benefits are provided. c. "Inflation guard" is a non-legal provision in LTC policies d. All the above are false. |
(D) This must be memorized. All above are false. |
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The Health Insurance Counseling Advocacy Program (HICAP) provides assistance to the public on a fee basis if the person requiring assistance is financially able to pay. a. True b. False |
(B) HICAP services are provided free. |
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When Workers Compensation laws became mandatory, it meant: a. HMOs were required to provide medical services to all employees. b. Employers could use common law defenses more to their advantage. c. Employers were financially responsible for employees on-the-job injuries, regardless of fault. d. Employees were required to prove employers fault to file legal action. |
(C) This must be memorized. |
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Who pays the premiums for a Workers Compensation policy for a retail store? a Equally divided between the employees and the storeowner. b. Because of the occupation classification, it is paid entirely by the employees. c. It is always paid entirely by the employer. d. Retail stores are excluded from statutory workers compensation laws. |
(C) The premium must be paid by the employer. |
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Mike drives a truck for a delivery company. In the course of making a delivery he is involved in a serious accident, and is taken to the hospital. The hospital and doctors bills will be paid by: a. The company workers compensation policy. b. Medi-Cal, assuming he qualifies for coverage. c. Mike's private auto insurance policy. d. None of the above. |
(A) Since Mike was working, workers compensation must pay. |
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Benefits will be paid from a Workers Compensation Subsequent Injury Fund only if both the first and second injury are the result of an on-the-job accident. a. True b. False |
(B) Now referred to as the "Subsequent Injury Fund", the answer is false because the first injury does not have to be job related, it just has to affect job performance resulting in at least 35% or more disability. |
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The Workers Compensation portion (Part I) of the Workers Compensation policy covers payments the employer (insured) must pay:
a. Under Workers Compensation law. b. To bring the work environment up to state safety codes. c. To cover common law exposures. d. To coordinate with HMO coverage. |
(A) This must be memorized. |
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"The seamless delivery of medical and indemnity benefits for both occupational and non-occupational injuries and illnesses" is the definition of: a. Workers compensation b. 24-hour coverage c. All disability policies |
(B) This is the definition. "Seamless" |
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In CA after Jan 1, 2002, the definition of health insurance includes all of the following types of coverages, except: a. Group medical coverage b. Accidental death and dismemberment coverage c. Individual hospital coverage d. Individual surgical benefits |
(B) Statement of fact. |
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A group health plan third party administrator might do any of the following, except: a. Receive employee payments b. Pay policy owner premiums c. Track insured eligibility d. Handle member complaints |
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Unintentional concealment entitles the injured party to which course of action? a. Possible imprisonment to the party who concealed the information b. $250 fine to be paid to the injured party c. None, given the fact that the concealment was unintentional d. Rescission of the contract |
(D) Intentional or unintentional concealment entitles the injured party to rescind. |
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When may a representation be withdrawn? a. Only before the insurance is in effect b. At any time as long as both parties agree c. It can never be withdrawn d. Only after the policy is in effect |
(A) A representation may be altered or withdrawn before the insurance is in effect, but not afterwards. |
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A significant benefit to the insured in group underwriting verses individual is a. There are no enrollment restrictions b. Previous claims are not a consideration c. The cost of coverage is lower d. Members are eligible for the entire contract period |
(C) Group policies cost less for the employee than an individual policy (even though the plan may be contributory). In the case of group life insurance (especially with respect to the first $50,000), it is a bargain since, in most cases, the employer pays all or most of the premium. |
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What kind of insurance pays benefits only in the event the insured suffers from one stipulated disease?
a. Critical illness b. Group medical expense c. Specialized disease d. Individual medical expense |
(A) "Critical illness" plans are also called "Specific" or "Dread Disease" plans |
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How long must a life agent maintain records regarding policies sold in this state? a. 1 year b. 2 years c. 3 years d. 5 years |
(D) Statement of fact |
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The purpose of laws regarding the replacement of life and annuity contracts includes all of the following, except: a. To protect the interests of life insurers and their agents b. To establish penalties for failure to comply with replacement requirements c. To assure the purchaser receives information to make an informed decision d. To reduce the opportunity for misrepresentation and incomplete disclosures |
(A) Replacement laws are designed to protect the consumer. |
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All of the following would fall under the category of an "adverse underwriting decision", except: a. Charging a higher rate based upon the info given on the insurance app b. Failure of the agent to submit app to insurance company c. Declination of insurance coverage d. Termination of insurance coverage |
(B) The agent's failure is not an underwriting decision. |
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What is the transplant donor benefit in a disability income policy? a. A provision that provides medical coverage for the surgical expense of donating a body organ b. A provision that considers the insured to be disabled if donating a body organ c. A provision that covers hospital expenses following the donation of a body organ d. A provision that extends coverage for rehab after the donation of a body organ |
(A) Statement of fact. This is a new test area. |
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In order to obtain a group insurance without providing evidence of insurability, what do eligible individuals generally have to do? a. Submit an attending physician's statement with their group enrollment cards b. Pay the first year premium in advance c. Nothing d. Enroll within a specified eligibility period |
(D) Insurability must be proven if the individual joins the group after the enrollment or eligibility period. During the enrollment or eligibility period, there is no medical examination required. (In CA, insurers do ask medical questions to determine the nature and extent of any preexisting conditions.) |
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What is the purpose of the rehabilitation provision in a disability income policy?
a. To provide increases in disability benefits to keep pace with inflation b. To compensate insured's who lose their sight in both eyes c. To encourage disabled insureds to return to their original occupations d. To pay a portion of a workers pre-disability income when the insured returns to work |
(C) Rehabilitation=Recovery |
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An agent who acts 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. Natural person b. Fiduciary c. Legal representative d. Managing general agent |
(B) A fiduciary is a person entrusted with the funds of property of another (e.g. premiums) |
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A measure of rating an individual's need for long term care benefits is called
a. Activities of daily living b. The gatekeeper mechanism c. Case management d. Coinsurance |
(A) The trigger for care and benefits payments under a LTC contract is based on how well a person can handle or perform the six activities of daily living. |
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In order to determine the amount of premium an insured will pay, the insurer multiplies the rate by: a. The number of insureds on the policy b. The number of exposure units c. The expense factor d. The premium adjustment factor |
(B) The exposure units are the persons or items exposed to the risk of loss. |
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Viatical settlements are accomplished through the use of a. Non-forfeiture provisions b. Settlement options c. Collateral assignment d. Absolute assignment |
(D) The rights of ownership have been totally and permanently granted to another party, in this case to the viatical settlement company. |
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What rights do individuals have if they disagree with the decision on the amount Medicare will pay? a. They can change Medicare carriers b. They can terminate making premium payments until the claim is resolved c. They can ask a Medicare carrier to review the decision d. They can ask for a second opinion by the state medical examiner |
(C) Medicare allows a formal review process. |
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What is the tax treatment for individual disability income policies a. Non-deductible premiums and tax-free benefits b. Non-deductible premiums and taxable benefits c. Deductible premiums and taxable benefits d. Deductible premiums and tax-free benefits |
(A) If the premiums are paid entirely by the insured, they are not tax deductible, and the benefits are not taxable as income when received. |
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The conversion privilege allows a person to change coverage from a. A life insurance policy to an annuity b. A group policy to an individual policy c. An individual policy to a group policy d. An annuity to a life insurance policy |
(B) This conversion right gives a certificate holder the ability to convert group life or group health insurance to an individual policy without a physical examination to furnish evidence of insurability. Usually, this must be done within 31 days of termination of employment. |
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All of the following statements about qualified pension plans are true, except: a. Employer contributions are taxable to employees in the year they are contributed b. Investment earnings are exempt from income tax until distributed c. Employer contributions are deductible from corporate income taxation d. Employer contributions are taxable to employees in the years they are received as benefits |
(A) Revenue accumulating in a qualified retirement plan grows income tax deferred. |
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What provision prevents a family from receiving benefits from two separate group policies with the same medical expense? a. Assignment of benefits b. Conversion of benefits c. Extension of benefits d. Coordination of benefits |
(D) This same question has been asked several different ways in a variety of other questions. |
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Self-funding of employee benefit plans cannot be used for a. Short-term disability benefits b. Health benefits c. Death benefits d. Hospital benefits |
(C) Health and disability self-funding is permitted. |
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Which of the following coverages is NOT one of the three traditional benefits of a group basic medical expense plan? a. Surgical expense b. Private nursing expense c. Physicians visit expense d. Hospital expense |
(B) Private nursing is excluded by most health plans. |
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The additional premium charged by an insurer for adding the accidental death benefit to a whole life policy a. Increases the yearly dividend amount b. Does not affect the policy's cash value c. Increases the policy's cash value d. Decreases the length of time that premiums are payable |
(B) The cost of riders are fees for the additional benefit provided. They do not affect the amount of money contributed to the policy itself or its cash values. |
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What is the written instrument called in which the insurance contract is set forth? a. The provisions b. The warrantees c. The policy d. The risk |
(C) The policy is the written agreement which puts insurance coverage into effect. |
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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. Extended term insurance c. Reduced term insurance d. Reduced paid-up insurance |
(B) This is a true statement concerning the non-forfeiture option in an ordinary life policy. The length of the term policy depends on the size of the cash value and the attained age of the insured. |
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What is the difference between a defined contribution plan and a defined benefit plan? a. The party receiving the distribution b. The party making the contribution c. The contract period requiring specific payments d. The penalties for early distribution |
(D) Defined Benefit (DB) plans usually have an agreed early distribution date (often age 55) which allows the employee to take a reduced amount of benefits as an annuity without penalty. Otherwise, early distributions are generally not permitted in DB plans. Defined Contribution plans have a 10% penalty for withdrawals before age 591/2 except for allowed distributions. |
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A life agent's records must include all of the following, except: a. All correspondence between the agency and policy holder b. Printed material in general use which has been distributed by the insurer c. A copy of the outline of coverage d. All policies sold by the ageny |
(B) Statement of fact. All other records must be kept by the agent. |
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A worker dies while he is credited with six quarters of the last 13 quarter period. What status does the worker have under social security? a. Partially insured b. Disability insured c. Currently insured d. Fully insured |
(C) To be CURRENTLY INSURED, the worker must have at least six quarters of coverage earned during a three year period which ends with the calendar quarter in which the covered person died, became eligible for retirement benefits, or became disabled. |
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A return premium rider is a rider that a. Returns insurance premiums if the insured surrenders the policy at any time after the third policy year b. Waives the policy premium while the insured is totally disabled c. Provides for the periodic return of a percentage of the premiums that have been paid if the insured becomes and remains disabled d. Permits the policy owner to receive a full refund of premium if the policy is returned during the first 90 days after delivery |
(C) The periodic return of premiums also applies if the insured has not made a claim for a specified period of time. |
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An agent's appointment with an insurer will be discontinued if all of the following circumstances exist, except: a. The agent quits working for the insurer b. The insurer files a notice to terminate the appointment c. Another insurer submits an employment application d. The agent's insurance license expires |
(C) Choices a), b), and d) are all ways in which an agent's appointment with an insurer will be discontinued. Choice c) is not relevant. |
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Social Security provides protection against the financial consequences of all of the following, except: a. Premature death b. Disability c. Poor investments d. Retirement |
(C) If you make a poor investment, there is no insurance that can be helpful. |
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Which retirement plan utilizes non-deductible contributions? a. Simplified employee pension plan b. Roth IRAs c. Profit-sharing plan d. Tax-sheltered annuity |
(B) Roth IRAs feature non-deductible contributions and tax free distributions. |
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Wellness benefits under a Health Maintenance Organization (HMO) typically include all of the following, except: a. Routine physicals b. Immunizations c. Fluoride treatments d. Vision checks |
(C) While maintaining a good oral hygiene program will contribute to general wellness, fluoride treatments, per se, are not typically included. |
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All of the occurrences listed below are examples of an insurable event as defined by the CA Insurance Code, except: a. An insured suffers a financial loss in the state lottery b. A guest is injured by a fall from the insured's deck c. An insured is sued for unintentional slander of another person d. An insured is admitted to the hospital for delivery of a newborn |
(A) Gambling is an uninsurable speculative risk. |
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The social security normal retirement age depends upon a. The number of quarters of coverage b. The number of years of employment c. The worker's year of birth d. The worker's average annual earnings |
(C) Social Security retirement benefits begin at specified ages and are therefore dependent on date of birth. |
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The complete transfer by the existing owner of all rights in an insurance policy to another person is a. Absolute assignment b. Endowment c. Collateral assignment d. Non-forfeiture |
(A) When assigning all rights in an insurance policy to another person, it is absolute. Key word: "complete". When assigning the designation of a policy's death benefit or its cash surrender value to a creditor as security for a loan, it is known as Collateral Assignment. |
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Which retirement plan was designed for employees of public school systems? a. TSA b. IRA c. 401(k) d. Keogh |
(A) Tax Sheltered Accounts (TSAs) are designed for non-profit organizations |
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Which settlement option allows only the death benefit earnings to be paid to the beneficiary a. Interest option b. Cash option c. Fixed period option d. Fixed amount option |
(A) Earnings on the death benefit=interest |
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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: a. A worker's medical plan includes a carryover deductible provision b. A person working for two employers has health insurance through both c. Spouses are both employed and eligible for group medical benefits d. An executive has additional coverage through an association policy |
(A) Having a carryover deductible does not mean the insured is covered by more than one plan |
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All of the following apply to the life insurance cost-of-living rider, except: a. There is an additional premium for the additional coverage b. No evidence of insurability is required for the annual increases in coverage c. The insured receives an automatic increase in the policy's death benefit when there is an increase in the cost of living index d. The face value of the policy raises or lowers as the cost of living index increases or decreases |
(D) The face value will not decrease in deflationary periods |
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The social security blackout period ends when the surviving spouse reaches the age of a. 65 b. 60 c. 62 d. 65 |
(B) 60 is the minimum age for a widow/widowers benefit. It is not the same as the minimum retirement age (62). |
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Retirement benefits under social security are available only for workers who are a. Medicare insured b. Currently insured c. Disability insured d. Fully insured |
(D) Statement of fact. |
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In which plans do employers make specific contributions to an employee's retirement account? a. Defined contribution plans b. Individual retirement accounts c. Defined benefit plans d. Keogh |
(A) The phrase "specific (defined) contributions" is key. |
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Traditional comprehensive major medical plans include all of the following, except: a. Deductibles b. Out-of-pocket maximums c. First-dollar coverage d. Coinsurance |
(C) Comprehensive Major Medical plans do not include first dollar benefits. Supplementary Major Medical plans, which combine Basic and Major medical expenses, do. |
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In a 7 year vesting schedule, what percentage of employer contributions must be vested after 7 years of service? a. 40% b. 60% c. 80% d. 100% |
(D) Under a 7 year or graded vesting schedule the employee is 0% vested in the first year, 0% in the second year, 20% in the third year, 40% in the fourth year, 60% in the fifth year, 80% in the sixth year and 100% in the seventh year of service. |
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A representation in an insurance contract qualifies as which of the following? a. An express warranty b. An implied warranty c. An amendment d. A policy provision |
(B) Statement of fact. |
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A policy holder stops making payments on a 20-pay life policy and converts the cash surrender value to extended term insurance. All of the following statements are true, except: a. The extended term coverage will stay in force for a specified period of time, and then coverage will cease b. No further premium payments are required c. The term policy will have the same loan value as the original policy d. The extended term insurance will be for the same face amount as the 20-pay life policy |
(C) No loan is available because Extended Term has no cash values. |
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Identify which of the following is not a principal factor used to determine group disability income rates a. Average age of the insured who make up the group b. Maximum indemnity period c. Length of the waiting/elimination period d. Location of the insured entity |
(A) All are factors but answer "a" is not a principal factor. |
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Which non-forfeiture options uses an existing policy's cash value to purchase a paid-up policy with a lower face value than the original policy? a. Extended paid-up insurance option b. Reduced paid-up insurance option c. Cash surrender value option d. Extended term option |
(B) Statement of fact. |
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A husband and wife work for different companies. The husband works for ABC company. The wife works for XYZ company. Each has group health insurance coverage from their own employer that also insurers their spouse. Both plans have a coordination of benefits clause. Which of the following statements is true regarding the coordination of benefits clause for medical services covered by the group policies. d. The husband received medical care. XYZ group insurer is SECONDARY. |
(D) The plan that covers the insured as an employee is primary. |
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The commonly used 30, 60, 90, 180 disability terminology refers to the a. Amount paid by the insured before benefits are payable b. Payable amount split by the insured are the insurer c. Number of days for which no benefits are payable d. Number of days in which benefit payments end |
(C) Reference to the "Elimination Period" |
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Each of the following terms is an important characteristic of a major medical policy, except a. Capitation fee b. Deductible c. Co-insurance d. Maximum amounts |
(A) Fee-for-service vs. Capitation fee found in HMO plans |
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HMOs are involved in all of the following, except a. Providing healthcare services b. Emphasizing the use of speciality physicians c. Controlling costs by encouraging preventive care d. Providing healthcare financial coverage |
(B) HMOs minimize the use of speciality physicians |
