Xcel Final Exam solutions California life, accident and health insurance.

Xcel Final Exam solutions California life, accident and health insurance. Who does a life settlement broker represent? Answer: Individual wanting to sell their life policy to a third party What is the insurance term the State of California uses for an insurer that is eligible to transact business in this state? Answer: Admitted Most U.S. life insurance companies belong to the Answer: Medical Information Bureau Which of the following healthcare providers provide both the healthcare services and healthcare coverage? Answer: Health Maintenance Organization (HMO) Which of the following is NOT covered by the Family and Medical Leave Act (FMLA)? Answer: Traveling overseas with a spouse Which word implies permissiveness according to the California Insurance Code? Answer: may When found in California Insurance Code, the word "may" implies permissiveness. Under a long-term care insurance policy, adult day care coverage will pro- vide for Answer: part time care at a facility for elderly individuals who live at home Major medical expense plans typically use a cost containment measure for emergency hospital care. This is referred to as a Answer: Deductible Pam is the primary beneficiary of a life insurance policy and wants to let the death benefit accumulate and receive only the monthly investment proceeds. Which settlement option should she choose? Answer: Interest Option Reasonably necessary acts that an agent must perform for carrying out his/her expressly authorized duties are covered by an agent's Answer: Implied authority Kim is insured under a disability income insurance policy with an "own occupation" clause. She was recently injured in an automobile accident and can no longer perform the tasks of her job. Kim is now considered to be Answer: Totally Disabled What is a common reason people purchase an annuity Answer: To protect against the risk of outliving their financial resources Why is a life insurance policy's delivery date important? Answer: The free- look period begins on the policy delivery date Periodic increases in policy benefits are allowed in which long-term care policy provision? Answer: Inflation Protection What is the term used to describe the frequency and severity of certain illnesses and accidents? Answer: Morbidity Key person insurance is intended to Answer: cover business losses due to death of key employee Minimum participation standards exist for group health insurance plans in order to Answer: prevent adverse selection Which of the following is NOT included under long-term care insurance? Answer: Hospital acute care When calculating life insurance premium rates, which component would an agent's commission fall under? Answer: Insurer's expenses The reason for social insurance is to Answer: protect certain vulnerable segments of the population Jon's health plan pays benefits of 90% for in-network providers and 70% for out-of-network providers. What kind of plan is this? Answer: PPO Which of the following acts is NOT a Federal offense committed by an insurance agent? Answer: Misrepresentation on an insurance application An insurer having a large number of similar exposure units is considered important because Answer: the greater the number insured, the more accurately the insurer can predict losses and set appropriate premiums Medical expense policies will typically cover which of the following? Answer: injuries caused by accidents 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? Answer: 60 payments (10 years annuity received 5 years worth so had 5 years left , multiply the 5 years by 12 months in a year=60) When does a life insurance policy's waiver of premium take effect? Answer: insured becomes totally disabled Which of the following is NOT an important reason for a life insurance application? Answer: The beneficiary must sign the application before the insurer will issue the policy All of the these are examples of cost sharing in a health insurance policy EXCEPT Answer: Coordination Retirement plans cannot favor highly compensated employs. The government regulation that prevents this from happening is called Answer: Nondiscrimination In regards to a group health insurance plan, which statement is COR- RECT? Answer: a non-contributory group health plan must cover all eligible members What is considered the most common type of specified disease insurance policy? Answer: cancer 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 Answer: Joint life policy A life insurance policy can be surrendered for its cash value under which policy provision? Answer: Non forfeiture option When an insurance company requests an attending physician's report, the request must be accompanied by a Answer: copy of the signed authorization Buy-sell plans are typically funded by which two types of insurance? Answer: Life insurance and disability insurance Which of the following is NOT considered a definition of risk? Answer: The cause of a loss Lynn owns a life policy that guarantees the right to renew the policy each year, regardless of health, but at an increased premium. What kind of policy is this? Answer: renewable term What does the grace period allow a life insurance policy owner to do Answer: - make a premium payment after the due date without any loss AAA Insurance Company has transferred a portion of its loss exposure to BBB Insurance Company. In this reinsurance transaction, what is AAA Insurance Company called? Answer: Primary insurer An annuitant would like to determine the amount of an annuity distribution that is exempt from taxation. What is used to calculate this? Answer: Exclusion ratio Which of the following best describes the statement. "The more times an event is repeated, the more predictable the outcome becomes"? Answer: Law of Large numbers A hazard can be best described as Answer: a condition that may increase the likelyhood of a loss occurring What does ESOP stand for? Answer: Employee Stock Ownership Plan At what age is a surviving spouse without dependents eligible for Social Security survivor benefits? Answer: 50 Which of the following risk classification charges the lowest premium? Answer: - preferred Express power given to an agent in an agency agreement is Answer: the authority to represent the insurer Which Social Security status does a worker with 6 quarters of coverage during the last 13-quarter period have Answer: currently insured According to the California Insurance Code, which of the following is NOT an example of an insurable event? Answer: an insured suffers a financial loss in the state lottery Which of the following actions is NOT allowed by Health Insurance Coun- seling and Advocacy Program (HiCAP) counselors? Answer: charge a fee The elimination period in a disability income policy serves the same pur- pose as a in a medical policy. Answer: deductible 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? Answer: 10% 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? Answer: insuring clause Which course of action is the insurer entitled to when deliberate conceal- ment is committed by the insured? Answer: rescinding the contract What must an applicant do in order to authorize the release of an attending physician report? Answer: sign a consent form How is the cost of employer-provided group life insurance with coverage amounts above $50,000 treated for tax purposes? Answer: taxable income to the employee Which of the following describes a contributory group insurance plan? Answer: - part of the premium is paid by the employee A life insurance policy where the insured can choose where the cash value can be invested is called Answer: variable life Mike and Ike are 30 year old identical twins. Both are in excellent health. Each brother purchases a life policy that has a $750 annual premium. Mike buys a 10-year renewable term policy. Ike purchases a whole life policy, All of the following statements are true EXCEPT Answer: Mike has the option of using his cash value to purchase a reduced amount of paid-up whole life insurance Moral hazard is described as the Answer: increased chance of a loss because of an insured's dishonest tendencies An insurer that has been found using higher rates based on race, religion, or ethnicity is said to be engaging in Answer: unfair discrimination How is a life insurance policy dividend legally defined? Answer: a return of excess premium and not taxable