California Life and Health Final Exam 148 Questions with Answers,100% CORRECT

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California Life and Health Final Exam 148 Questions with Answers Employer-provided group term life insurance is exempt from income taxation up to - CORRECT ANSWER $50,000 Medicare Part B has an... initial enrollment period. How many months after an individual's 65th birthday month does this enrollment period end? - CORRECT ANSWER 3 months Which statement is true regarding policy dividends? - CORRECT ANSWER A dividend option is selected by the insured at the time of policy purchase What does the insurance term "indemnity" refer to? - CORRECT ANSWER Make whole What is a common reason people purchase an annuity? - CORRECT ANSWER To protect against the risk of outliving their financial resources The importance of a representation is demonstrated in what rule? - CORRECT ANSWER Materiality of concealment Who does a life settlement broker represent? - CORRECT ANSWER Individual wanting to sell their life policy to a third party Who is financially liable for the payment of covered claims in a fully insured group health plan? - CORRECT ANSWER Insurer The Human Life Value concept is based on - CORRECT ANSWER income Business Overhead Expense Insurance pays for - CORRECT ANSWER business expenses when a business owner becomes disabled At what point does a self-insured group qualify for stop-loss coverage? - CORRECT ANSWER When claims exceed a specified limit in a set period of time What percentage of eligible employees must participate in a noncontributory group health plan before it can be put in effect? - CORRECT ANSWER 100% A life insurance policy where the insured can choose where the cash value can be invested is called - CORRECT ANSWER variable life Which of these statements correctly describes risk? - CORRECT ANSWER Pure and speculative risks are both insurable The elimination period in a disability income policy serves the same purpose as a(n) ______ in a medical expense policy. - CORRECT ANSWER deductible What is required after a life agent sells an insurance policy to an applicant without being appointed by the insurer? - CORRECT ANSWER Notice of appointment must be submitted to the Commissioner Retirement plans are prevented from favoring highly compensated employees under which government regulation? - CORRECT ANSWER Nondiscrimination ESOPs are typically invested in - CORRECT ANSWER employer stock The reason for social insurance is to - CORRECT ANSWER protect certain vulnerable segments of the population Cindy buys a 10-year certain annuity with an installment refund. After receiving monthly payments for 5 years, Cindy dies. How many remaining payments will the insurer make to her beneficiary? - CORRECT ANSWER 60 payments he free-look period for life insurance policyowners age 60 or older is - CORRECT ANSWER 30 days What is considered to be the definition of disability, according to Social Security? - CORRECT ANSWER Unable to engage in any substantial gainful activity "Life insurance creates an immediate estate". This phrase means: - CORRECT ANSWER when the insured dies, a death benefit is paid How are death benefits that are received by a beneficiary normally treated for tax purposes? - CORRECT ANSWER Exempt from federal income taxes Exempt from federal income taxes - CORRECT ANSWER Payment for services goes directly to the provider When an insurance company requests an attending physician's report, the request must be accompanied by a - CORRECT ANSWER copy of the signed authorization Which policy provision protects the policyowner from unintentional lapse of the contract? - CORRECT ANSWER Grace period What kind of annuity pays income to two annuitants until their deaths? - CORRECT ANSWER Joint and survivor annuity What type of changes can be made to a guaranteed renewable health insurance policy? - CORRECT ANSWER The premium rates of the policyowner Which of the following is NOT considered to be insurer expenses? - CORRECT ANSWER Policy premiums In what situation does a waiver of premium provision keep a health insurance policy in force without premium payments? - CORRECT ANSWER When an insured becomes totally disabled What is an "insurance broker" according to California Insurance Code? - CORRECT ANSWER A person authorized to assist a broker or agent in transacting insurance. A participating company is also referred to as which type of insurer? - CORRECT ANSWER Mutual insurer Which of the following is NOT considered to be an act of insurance solicitation? - CORRECT ANSWER Publishing a magazine where one of the advertisers is an insurer Restoring an insured to the same condition as before a loss is an example of the principle of - CORRECT ANSWER Indemnity All of these are reasons the Commissioner may disapprove a licensee's request to use a fictitious name EXCEPT - CORRECT ANSWER The name is the licensee's actual name A life insurance policy that pays the face amount if the insured survives to a specified period of time is called - CORRECT ANSWER endowment insurance Which of the following is a contract that involves one party which indemnifies another when a loss arises from an unknown event? - CORRECT ANSWER Insurance policy Which of the following is a situation where there is a possibility of either a loss or a gain? - CORRECT ANSWER Speculative risk An agent's attempt to stop the replacement of an existing life insurance policy is known as - CORRECT ANSWER conservation Who would be most likely to submit a Medicare Part A claim? - CORRECT ANSWER Hospital In California, an insurer organized under the state laws of Oregon is called a(n) - CORRECT ANSWER foreign insurer Under a health insurance policy, the provision that states the kind of benefits provided and the circumstances under which they will be paid is called the? - CORRECT ANSWER insuring clause What distinguishes a deferred annuity from an immediate annuity? - CORRECT ANSWER The time at which benefit payments start The elimination period in a disability income policy serves the same purpose as - CORRECT ANSWER a deductible Which of the following is NOT a common life insurance policy rider? - CORRECT ANSWER extended term When an accidental death benefit is added to a whole life policy, how does this affect the policy's cash value? - CORRECT ANSWER Policy's cash value is not affected An insured is protected from the expense of a catastrophic illness by which of the following health insurance provisions? - CORRECT ANSWER Stop-loss A hazard can be best described as - CORRECT ANSWER a condition that may increase the likelihood of a loss occuring Which of the following is NOT a true description of non-medical life insurance? - CORRECT ANSWER Applicants are not required to answer medical questions on the application Tom is shopping for a policy that covers two people and would pay the face amount ONLY when the first person dies. The type of life policy he is looking for is called a - CORRECT ANSWER Joint life policy What does the term "illustration" mean when used in the phrase "life insurance policy illustration", according to the California Insurance Code? - CORRECT ANSWER Presentation of policy features that includes non-guaranteed elements What type of license is required for an individual who charges a fee to review an insured's existing life insurance policy? - CORRECT ANSWER Life and disability analyst What area of group health insurance is regulated under the Employee Retirement Security Act of 1974 (ERISA)? - CORRECT ANSWER Disclosure and reporting Premiums are best described as - CORRECT ANSWER the amount an insured pays per unit of coverage A life insurance policy's limit of liability would be - CORRECT ANSWER the policy's face amount How does underwriting differ between group life and individual life insurance? - CORRECT ANSWER Medical questions must be answered on individual life insurance The risk selection process is primarily given to which insurance company department? - CORRECT ANSWER Underwriting Which of the following describes the increase in the probability of a loss due to an insured's dishonest tendencies? - CORRECT ANSWER Moral hazard he California Insurance Code defines "policy" as a(n) - CORRECT ANSWER written contract Who is NOT eligible for Social Security survivor benefits? - CORRECT ANSWER A deceased worker's dependent parents of any age How are acts of war and aviation treated under a group life insurance policy? - CORRECT ANSWER Policy exclusion How are acts of war and aviation treated under a group life insurance policy? - CORRECT ANSWER Policy exclusion Which of the following is NOT an important reason for a life insurance application? - CORRECT ANSWER The beneficiary must sign the application before the insurer will issue the policy Coverage for care received from a network provider pays more than care received from a non-network provider in what type of health plan? - CORRECT ANSWER Preferred Provider Organization (PPO) An eligible individual who would like to obtain group health insurance without providing evidence of insurability must - CORRECT ANSWER enroll within a specified eligibility period Reasonably necessary acts that an agent must perform for carrying out his/her expressly authorized duties are covered by an agent's - CORRECT ANSWER Implied authority An insurer enters into a contract with a third party to insure itself against losses from insurance policies it issues. What is this agreement called? - CORRECT ANSWER Reinsurance What are residual disability income insurance payments based on? - CORRECT ANSWER The amount of the insured's income is reduced by the disability Medicare Part A covers what type of care? - CORRECT ANSWER Skilled nursing facility care Jim is the insured on a health insurance policy and holds two jobs. If "occupation" is used to classify the risk, the insurer will most likely classify Jim according to the occupation that - CORRECT ANSWER is most hazardous In a modified endowment contract, the penalty tax imposed on premature withdrawals is - CORRECT ANSWER 10% Life insurance surplus must be distributed to policyowners at what frequency? - CORRECT ANSWER Annually Which of the following is an example of a third-party administrator? - CORRECT ANSWER Outside organization that processes claims for an employer's self-funded group plan Bruce is involved in an accident and becomes totally and permanently disabled. His insurance policy continues in force without payment of further premiums. Which policy provision is responsible for this? - CORRECT ANSWER Waiver of premium provision A unilateral contract is one in which - CORRECT ANSWER only one party (the insurer) makes any kind of legally enforceable promise The problem of overinsurance is addressed in which health insurance provision? - CORRECT ANSWER Coordination of benefits What prevents a life insurance policy from being rescinded by the insurer after being in force for two years? - CORRECT ANSWER Incontestability clause Which of the following is NOT included under long-term care insurance? - CORRECT ANSWER Hospital acute care Which of the following could lower the premium of a proposed disability income policy? - CORRECT ANSWER Increase in the elimination period The misstatement of age provision in a health policy states that if an insured gives the wrong age at the time of application, what action can the insurance company take? - CORRECT ANSWER Benefits can be adjusted Which of the following is NOT a risk classification that an underwriter would use? - CORRECT ANSWER Dividend risk Pete is a life agent who has misappropriated fiduciary funds to his own use. What is Pete guilty of? - CORRECT ANSWER Theft An insurer that has been found using higher rates based on race, religion, or ethnicity is said to be engaging in - CORRECT ANSWER unfair discrimination During the underwriting process for a group health policy, it was discovered that 15 out of 50 members of the group have major health issues. How would the insurer handle this? - CORRECT ANSWER Accept or reject the whole group When a life insurance policy is surrendered, how does the cost recovery rule apply? - CORRECT ANSWER The policy's cost basis is exempt from taxation When calculating life insurance premium rates, which component is affected by an insured's age and gender? - CORRECT ANSWER Mortality An applicant has revealed conditions that require more information. Which of the following is needed next? - CORRECT ANSWER Attending physician's statement Which of the following healthcare providers provides both the healthcare services and healthcare coverage? - CORRECT ANSWER Health Maintenance Organization (HMO) After the annual deductible is met, a Medicare Part B patient will pay ___ of the remaining covered expenses. - CORRECT ANSWER 20% When an insurer has met the qualifications necessary to transact business in California, it is said to be - CORRECT ANSWER admitted Who is issued a certificate of insurance with a group insurance policy? - CORRECT ANSWER Participant John owns an insurance policy that gives him the right to share in the insurer's surplus. What kind of policy is this? - CORRECT ANSWER Participating Which of the following is NOT a benefit of insurance? - CORRECT ANSWER Losses due to fraud are eliminated Which statement regarding Medicare is true? - CORRECT ANSWER Benefits for diagnostic tests and X-rays performed on an outpatient basis are provided by Part B What is the price of insurance for each exposure unit? - CORRECT ANSWER Rate Which of the following risk classifications charges the lowest premium? - CORRECT ANSWER Preferred According to the California Insurance Code, what is the maximum penalty per violation for anyone who unwillfully commits an unfair method of competition? - CORRECT ANSWER $5,000 Jim is applying to become an insurance agent and has a past misdemeanor conviction that was later expunged due to California Penal Code 1203.4. Which of the following statements is correct? - CORRECT ANSWER Jim must still disclose the conviction on his insurance license application Which of the following are two examples of activities of daily living (ADL's) used in qualifying for long-term care benefits? - CORRECT ANSWER Eating and dressing Which of the following is NOT typically covered under vision care insurance? - CORRECT ANSWER Eye surgery The "blackout period" affects whose benefits? - CORRECT ANSWER Surviving spouse The insurer has the option of terminating a health insurance policy on a date stated in the contract. What type of policy is this? - CORRECT ANSWER Optionally renewable A spendthrift clause in a life insurance policy - CORRECT ANSWER restricts the ability of the beneficiary to assign benefits Which of the following plans will cover medical costs that Medicare doesn't cover? - CORRECT ANSWER Medicare supplement Periodic increases in policy benefits are allowed in which long-term care policy provision? - CORRECT ANSWER Inflation protection Coverage is limited for vision and dental insurance in all of the following ways, EXCEPT - CORRECT ANSWER Specific dollar amount for examinations How is the cost of employer-provided group life insurance with coverage amounts above $50,000 treated for tax purposes? - CORRECT ANSWER Taxable income to the employee Which statement is CORRECT when describing a contract of adhesion? - CORRECT ANSWER Contract may be accepted or rejected by the insured Which word implies permissiveness according to the California Insurance Code? - CORRECT ANSWER May What does the term coinsurance refer to? - CORRECT ANSWER After the deductible is satisfied, the percentage paid by the insured for the remaining covered expenses Which of the following is any situation that presents the possibility of a loss? - CORRECT ANSWER Loss exposure The conditions, times, and circumstances under which an insured is NOT covered by a health policy are called? - CORRECT ANSWER exclusions Medical expense policies will typically cover which of the following? - CORRECT ANSWER Injuries caused by accidents Any changes in background information that occur after a producer application has been submitted or a license has been issued MUST be reported to the Insurance Commissioner within - CORRECT ANSWER 30 days Which of the following would NOT be accomplished with the purchase of an insurance policy? - CORRECT ANSWER Risk is eliminated 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(n) - CORRECT ANSWER unnecessary replacement Mark, age 45, has a Modified Endowment Contract (MEC). What is the tax penalty for taking a loan against this policy prior to age 59 1/2? - CORRECT ANSWER 10% Which of the following best describes the statement "The more times an event is repeated, the more predictable the outcome becomes"? - CORRECT ANSWER Law of large numbers When an applicant applies for insurance, the process by which the insurer determines whether to issue a policy is called - CORRECT ANSWER underwriting In regards to a group health insurance plan, which statement is CORRECT? - CORRECT ANSWER A non-contributory group health plan must cover all eligible members What determines the Social Security normal retirement age? - CORRECT ANSWER Year in which worker was born Which of these is the automatic mode of settlement for life insurance policy proceeds? - CORRECT ANSWER Lump-sum Buy-sell plans are typically funded by which two types of insurance? - CORRECT ANSWER Life insurance and disability insurance Which of the following terms is NOT associated with a Major Medical policy? - CORRECT ANSWER Capitation When a claimant has coverage under more than one health plan, which group medical plan provision applies? - CORRECT ANSWER Coordination of benefits Which of the following is NOT included in comprehensive major medical plans? - CORRECT ANSWER First-dollar coverage A worker is entitled to Social Security disability benefits if all of the following are true, EXCEPT for: - CORRECT ANSWER worker cannot perform his or her current job, but is actively seeking other employment Which of the following is NOT considered a definition of risk? - CORRECT ANSWER The cause of a loss The California Insurance Code allows an individual how many days to cancel a life policy for a full-refund? - CORRECT ANSWER Between 10 and 30 days Disabled workers are covered under Workers' Compensation medical expense benefits for how long? - CORRECT ANSWER No limit An annuitant would like to determine the amount of an annuity distribution that is exempt from taxation. What is used to calculate this? - CORRECT ANSWER Exclusion ratio Which of these factors do NOT affect the rates of medical insurance? - CORRECT ANSWER Race When does a life insurance policy's waiver of premium take effect? - CORRECT ANSWER Insured becomes totally disabled Minimum participation standards exist for group health insurance plans in order to - CORRECT ANSWER prevent adverse selection Dyan is considered partially disabled by her insurance company. Which of the following BEST describes her situation? - CORRECT ANSWER She is working part-time and receiving lost income under her long-term disability benefit Which of the following does a policyowner NOT have a right to change? - CORRECT ANSWER Dividend schedule mployee participation in a noncontributory group life plan must be - CORRECT ANSWER 100% A person who asserts a right of recovery under an insurance policy is called - CORRECT ANSWER claimant Which of the following pieces of information is NOT gathered during the personal financial planning process? - CORRECT ANSWER An individual's civic organization memberships How are Roth IRA's treated for tax purposes? - CORRECT ANSWER Non-deductible contributions and tax-free distributions At age 65, which of the following is available at no cost to all individuals? - CORRECT ANSWER Medicare Part A According to the California Insurance Code, how is the word "may" interpreted? - CORRECT ANSWER Permissive How is a life insurance policy dividend legally defined? - CORRECT ANSWER A return of excess premium and not taxable Anyone employed in California to assist an insurance agent in transacting insurance is called an insurance - CORRECT ANSWER solicitor Under a disability income insurance policy, which criteria must be met for "bodily injury" to be classified as accidental? - CORRECT ANSWER The cause may be intentional, but the result must be accidental Express power given to an agent in an agency agreement is - CORRECT ANSWER the authority to represent the insurer Which of the following is a life insurance policy that does NOT require a physical exam? - CORRECT ANSWER Non-medical [Show More]

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