CA XCEL LIFE, ACCIDENT, HEALTH LICENSE EXAM QUESTIONS WITH CORRECT ANSWERS

CA XCEL LIFE, ACCIDENT, HEALTH LICENSE EXAM QUESTIONS WITH CORRECT ANSWERS "what does the group life underwriting risk selection process help protect insurance companies from? - CORRECT ANSWER adverse selection" "The open enrollment period for Medicare Part B is... - CORRECT ANSWER January 1 through March 31" "The period in which there are no social security benefits for the surviving spouse is called - CORRECT ANSWER Blackout period (begins when the youngest child turns 16 and continues until the spouse reaches age 60 at the earliest)" "which of the following does restorative dental treamtent cover? - crowns - cleanings - xrays - dentures - CORRECT ANSWER crowns" "What does a life insurance policy guarantee to the stated beneficiary upon the death of the insured? - Funeral expense fund - Specified amount of money - Policy dividend - Policy's cash value - CORRECT ANSWER Specified amount of money" "Which type of life insurance offers flexible premiums, a flexible death benefit, and the choice of how the cash value will be invested? - Modified whole life policy - Adjustable life policy - Universal policy - Variable universal policy - CORRECT ANSWER Variable universal policy" "Which of these premium payment frequencies is not typically available to a policyowner? - Quarterly - Semi-annual - Bi-weekly - Monthly - CORRECT ANSWER Bi-weekly" "Failure to report background changes with 30 days as required under section 1729.2 of the California insurance code could subject a license or applicant to - Suspension - Denial - Fine - All of these - CORRECT ANSWER all of these" "According to PPACA, what is a health benefits exchange? - An entity that offers affordable health coverage to only those with low incomes - An entity where existing policies can be converted to new policies - An entity that provides tax credits to employers for providing health insurance to their employees - An entity to which individuals an d small businesses can have access to affordable health coverage - CORRECT ANSWER an entity to which individuals and small businesses can have access to affordable health coverage" "Shawn, Mike, and Dave are borhters who have a $100,000 "first to die" joint life policy covering all three of their lives. If mike dies first, the policy proceeds - Will be divided by probate - Will go to mike's estate - Will no longer provide insurance protection - Will not be paid until the last brother dies - CORRECT ANSWER Will no longer provide insurance protection" "What will the beneficiary receive if an annuitant dies during the accumulation period? - The lesser of the accumulated cash value or the total premium paid - The interest earned on the accumulated cash value - The greater of the accumulated cash value or the total premium paid - nothing - CORRECT ANSWER The greater of the accumulated cash value or the total premium paid" "Julie has a $100,000 30-year mortgage on her new home. What type of life insurance could she purchase that is designed to pay off the loan balance if she dies within the 30-year period? - Decreasing term insurance - Adjustable life insurance - Modified life insurance - Increasing term insurance - CORRECT ANSWER Decreasing term insurance" "What does the term "illustration" mean when used in the phrase "life insurance policy illustration," according to the California insurance code? - Presentation of policy features that includes non-guaranteed elements - A copy of the terms given for the free-look period - Publication designed to help an applicant reach an informed decision about which coverage is appropriate - A copy of the sales materials used in an insurance transaction - CORRECT ANSWER Presentation of policy features that includes non-guaranteed elements" "Which type of business insurance is meant to cover the costs of continuing to do business while the owner is disabled? - Business continuation policy - Business overhead expense policy - Disability overhead policy - Disability buy-sell policy - CORRECT ANSWER Business overhead expense policy" "Life insurance surplus must be distributed to policyowners at what frequency? - Semi-annually - Monthly - Annually - Quarterly - CORRECT ANSWER annually" "Under a long-term care insurance policy, adult day care coverage will provide for - Part time care at a facility for elderly individual who live at home - Full time care at a facility for elderly individuals - living arrangements in an assisted living center - Full time home health care - CORRECT ANSWER Part time care at a facility for elderly individual who live at home" "an insurer will accept a premium from the insured and continue the coverage in full force as though it was not late during which time period? - Incontestable period - Grace period - Reinstatement period - Probation period - CORRECT ANSWER grace period" "ABC insurance company paid an insured $30,00 in lost wage, $35,000 for hospital costs, and $20,000 for physical therapy treatments. ABC later discovers this was a fraudulent claim. How much may the insured be fined? - $65,000 - $170,000 - $85,000 - $150,000 - CORRECT ANSWER $170,000" "All of the following are characteristics of a Group Life insurance plan EXCEPT - Group underwriting - individual underwriting - probationary period - master contract - CORRECT ANSWER individual underwriting" "Which annuity payout option allows the policy owner to choose a pre-determined number of benefit payments? - installment refund - Amount certain - Straight life - Period Certain - CORRECT ANSWER Period Certain" "All of the following are examples of a business continuation plan EXCEPT - key person insurance - Cross-purchase agreement - Deferred compensation - Stock redemption plan - CORRECT ANSWER Deferred compensation" "Where must you specifically reside to qualify for MRMIP? - California - California and its reciprocal states - United States - North America - CORRECT ANSWER California" "According to the California insurance code, what term is used to describe a fact so important it could affect the policy premium? - Absolute - Materiality - Warranty - Guarantee - CORRECT ANSWER Materiality" "How is an agent's first year commission calculated for a replacement long-term policy? - Based on the new policy's annual premium - Based on the original policy's annual premium - The new policy's commission minus penalty - Based on the difference between the new and original policy annual premiums - CORRECT ANSWER Based on the difference between the new and original policy annual premiums" "At what point does a self-insured group qualify for stop-loss coverage? - When the average claim amount exceeds the limit stated in the policy - When the insured reaches an age stated in the policy - When claims exceed the policy's maximum lifetime benefit limit - When claims exceed a specified limit in a set period of time - CORRECT ANSWER When claims exceed a specified limit in a set period of time" "The double indemnity provision in a life insurance policy pertains to an insured's death caused by a(n) - Sickness - War - Suicide - Accident - CORRECT ANSWER Accident" "An individual that has 40 quarters of coverage, for social security purposes, is considered to be - PIA insured - Partially insured - Fully insured - Currently insured - CORRECT ANSWER Fully insured" "Which of the following does Not have to be included on life insurance policy illustrations? - Name of the agent - Age of the insured - Statements that all values and benefits are guaranteed - Name of the insurer - CORRECT ANSWER Statements that all values and benefits are guaranteed" "When calculating the amount of life insurance needed for an income earner, what has to be determined when using the Needs Approach? - The insurance company's financial rating - The family's financial objectives if the income earner were to die or become disabled - The income earner's credit score - The income earner's future projected income - CORRECT ANSWER The family's financial objectives if the income earner were to die or become disabled" "Craig purchased a life insurance policy for enabling his heirs to pay estate taxes. What is this called? - Human value protection - Liquidity maintenance - Survivor fun - Estate conservation - CORRECT ANSWER Estate conservation" "Fraternal Benefit Society has each of the following characteristics EXCEPT - Without capital stock - Incorporated - Exist for profit - Exist for the benefit of its members - CORRECT ANSWER Exist for profit" "Which of the following is considered to be any situation that has the potential for loss? - Law of large numbers - Risk transfer - Adverse Selection - Loss exposure - CORRECT ANSWER Loss exposure" "Who does a life settlement broker represent? - Insurance company - Life agent - Private firm - Individual wanting to sell their life policy to a third party - CORRECT ANSWER Individual wanting to sell their life policy to a third party" "A health insurance policy paid on a quarterly basis has a grace period of - 10 days - 31 days - 7 days - 60 days - CORRECT ANSWER 31 days" "Most U.S. life insurance companies belong to the - Underwriting information Bureau - Medical information Bureau - FINRA - National Association of insurance commissioners - CORRECT ANSWER Medical information Bureau" "A hazard can be best described as - The tendency for poorer than average risks to seek out insurance - A risk that has the potential for both loss and gain - A condition that may increase the likelihood of a loss occurring - The potential for loss - CORRECT ANSWER A condition that may increase the likelihood of a loss occurring" "Which of the following acts is NOT a Federal offense committed by an insurance agent? - Falsifying records - Misrepresentation on an insurance application - Embezzlement - Insurance Fraud - CORRECT ANSWER Misrepresentation on an insurance application" "Which of the following is NOT considered a definition of risk? - The potential for loss - Uncertainty - Exposure to danger - The cause of a loss - CORRECT ANSWER The cause of a loss" "The systematic liquidation of a sum of money is provided by a(n) - Endowment contract - Annuity - Life insurance policy - 1035 contract exchange - CORRECT ANSWER Annuity" "When handling premiums for an insured, an agent is actin in which capacity? - Manager - Representative - Fiduciary - Proxy - CORRECT ANSWER Fiduciary" "An HMO that involves a partnership of physicians and other providers who practice out of a central facility is called a(n) - Group HMO - Managed HMO - Federal HMO - Central HMO - CORRECT ANSWER Group HMO" "Medicaid is intended for - People with kidney failure - Poverty stricken people - People aged 65 and older - Unemployed people - CORRECT ANSWER Poverty stricken people" "All of the following are included as part of a contract in the entire contract provision EXCEPT the - Riders - Application - Policy - Changes made by the producer - CORRECT ANSWER Changes made by the producer" "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 - Modified endowment contract - Joint life policy - Family income policy - Survivorship life policy - CORRECT ANSWER Joint life policy" "How much does Medicare Part B pay for physician fees? - 60% - 40% - 80% - 100% - CORRECT ANSWER 80%" "An individual covered under a disability income policy may be eligible for a partial disability benefit if - The cause of disability was from an accident only - The insured is enrolled in a rehabilitation program - The insured can perform some of their job activities on a part-time basis - The insured cannot perform any of their job activities - CORRECT ANSWER The insured can perform some of their job activities on a part-time basis" "Intentional withholding of material facts that would affect an insurance policy's validity is call a(n) - Estoppel - Misrepresentation - Adhesion - Concealment - CORRECT ANSWER Concealment" "A person who is a nonsmoker, of average weight, an in excellent health would most likely be in which risk classification? - Acceptable - Standard - Substandard - Preferred - CORRECT ANSWER Preferred" "What prevents a life insurance policy from being rescinded by the insurer after being in force for two years? - Grace period provision - Free-look provision - Subrogation - Incontestability clause - CORRECT ANSWER Incontestability clause" "Which of the following types of policies pays a stated amount for each day an individual is hospitalized? - Hospital confinement indemnity - Hospital endowment - Short-term major medical - Surgical expense - CORRECT ANSWER Hospital confinement indemnity" "Which of these statements is NOT true concerning recurrent disabilities? - The recurrence of a disability must occur within a specified time period after the prior disability - A recurrent disability is considered to be a continuation of the prior disability - The insurer continues coverage after a new elimination period - The recurrent disability must be caused from the original disability - CORRECT ANSWER The insurer continues coverage after a new elimination period" "A dread disease policy is considered to be a type of - Group health insurance policy - Hospital expense policy - Limited health insurance policy - Major medical insurance policy - CORRECT ANSWER Limited health insurance policy" "Which of the following enables a life policy to be replaced with another life policy and results in the postponement of the tax consequence? - Section 1040 exchange - Spendthrift option - Nonforfeiture option - Section 1035 exchange - CORRECT ANSWER Section 1035 exchange" "which of the following actions may an insurance company NOT do in a health policy that contains a guaranteed renewable premium benefit? - Cancel policy if premiums are not paid - Stop renewing policy when the insured reaches a specified age - Increase the premiums on the basis of an entire classification - Increase the premiums on an individual basis - CORRECT ANSWER Increase the premiums on an individual basis" "Coming from an insurance point of view, which of the following is the main risk associated with disability? - Decreased work skills - Loss of Limbs - Loss of income - Decreased Mobility - CORRECT ANSWER Loss of income" "ESOPs are typically invested in - Non-qualified plans - Employer Stock - Annuities - IRAs - CORRECT ANSWER Employer Stock" "Which of the following statements about aleatory contracts is NOT true? - Aleatory contracts are conditioned upon the occurrence of an event - The insured and the insurer contribute equally to the contract - Insurance contracts are considered aleatory - The insured and the insurer have the potential for unequal contributions - CORRECT ANSWER The insured and the insurer contribute equally to the contract" "Employer-provided group term life insurance is exempt from income taxation up to - $40,000 - $10,000 - $50,000 - $25,000 - CORRECT ANSWER $50,000" "The coverage, conditions, and limitations in the master policy of a group contract can be found in which document? - Certificate of authority - Certificate of coverage and benefits - Consumer Report - Coverage document - CORRECT ANSWER Certificate of coverage and benefits" "Ownership of a life insurance policy may be temporarily transferred with a(n) - Collateral assignment - Transferable assignment - beneficiary assignment - Absolute assignment - CORRECT ANSWER Collateral assignment" "In what form do disability income policies typically pay benefits? - Tax credit - Annuity - Lump sum - Periodic income - CORRECT ANSWER Periodic income" "Ron has a life insurance policy with a face value of $100,000 and a cost of living rider. If the consumer price index has gone up 4%, how much may Ron increase the face value of the policy? - $4,000 - $400 - $2,000 - $800 - CORRECT ANSWER $4,000 (100,00 x 0.04 = 4,000)" "A payment system for health care in which the provider is paid for each service given is called - Fee-for-service - A prepaid arrangement - A blanket plan - Lump sum - CORRECT ANSWER Fee-for-service" "A nonparticipating policy will - Provide tax advantages - Not pay dividends - Give policyowners special privileges - Provide a return of premium - CORRECT ANSWER Not pay dividends" "Which of the following is an example of the insured's consideration? - Insurer's promise to pay benefits - Intent - Legal purpose - A paid premium - CORRECT ANSWER A paid premium" "Which of the following describes the increase in probability of a loss due to an insured's dishonest tendencies - Moral hazard - Speculative hazard - Morale hazard - Physical hazard - CORRECT ANSWER Moral hazard" "All of these statements concerning Medicare are true EXCEPT - Long-term care is covered by Medicare Part C - Doctors' services are covered by Medicare Part B - Hospice is covered by Medicare Part A - Medicare is primarily funded by federal payroll and self-employment taxes - CORRECT ANSWER Long-term care is covered by Medicare Part C" "When a decreasing term policy is purchased, it contains a decreasing death benefit and - Decreasing premiums - Variable premiums - Level premiums - Increasing premiums - CORRECT ANSWER level premiums" "Which of these factors is NOT taken into account when determining an applicant's life insurance needs? - Automobile - Social security - Savings - Pension - CORRECT ANSWER Automobile" "Insurance companies determine risk exposure by which of the following? - Law of large numbers and risk pooling - Insurable interest - Population table data - Insurance exchanges - CORRECT ANSWER Law of large numbers and risk pooling" "What is the primary feature of a viatical settlement? - No interest on policy loans - Lower premiums - Reduced death benefit prepayment - Longer contestable period - CORRECT ANSWER Reduced death benefit prepayment" "An underwriter's primary responsibility to an insurer is to protect against - Inverse selection - Adverse selection - Risk selection - Natural selection - CORRECT ANSWER adverse selection" "According to the PPACA, the medical enrollment tier that has 80% actuarial value is called - Silver - Bronze - Platinum - Gold - CORRECT ANSWER Gold" "MRMIP stands for - Major risk medical insurance program - Minor rehabilitation medical insurance plan - Major rehabilitation medical insurance plan - Minor risk medical insurance program - CORRECT ANSWER Major risk medical insurance program" "Which of the following is NOT a feature of equity-indexed annuities? - Offers a maximum interest rate that increases annually - Offers a minimum guaranteed rate - Offers protection during a decline in the stock market - Offers long term inflation protection - CORRECT ANSWER Offers a maximum interest rate that increases annually" "Under the subrogation clause, legal action can be taken by the insurer against the - Responsible third party - State - Beneficiary - Policyowner - CORRECT ANSWER Responsible third party" "Which of the following is not covered by the Family and Medical Leave Act (FMLA)? - Traveling overseas with a spouse - Adoption - Attending to the serious health condition of a parent - Pregnancy - CORRECT ANSWER Traveling overseas with a spouse" "The California Insurance Code requires that an insurer must have enough assets to cover its liabilities and for reinsurance of all outstanding risks. To remain solvent, it must also possess additional assets equal to what amount? - Amount determined by the insurance guarantee association - $10,000,000 - 50% of its stock value - its paid-in-capital - CORRECT ANSWER its paid-in-capital" "MRMIP is a - CORRECT ANSWER State program that offers health coverage to California residents who are not able to obtain coverage due to pre-existing conditions" "How does one qualify as a fully-insured individual under Social Security disability Coverage? - Individual has been credited with the appropriate number of quarters of coverage - Individual is expected to be disabled for 5 months - Individual is currently employed - Individual is currently covered under Medicaid - CORRECT ANSWER Individual has been credited with the appropriate number of quarters of coverage" "What are members of the Medical information Bureau(MIB) required to report? - Medical ailments discovered during the underwriting process - The premium of the policy applied for - The underwriting methods used to acquire personal information - The face amount of the policy applied for - CORRECT ANSWER Medical ailments discovered during the underwriting process" "Under a non-cancellable health insurance policy, an insurer can - Increase the premium - Cancel the policy for any reason - Change the policy provisions - Cancel the policy for nonpayment of premium - CORRECT ANSWER Cancel the policy for nonpayment of premium" "In a life insurance policy, the entire contract consists of - Policy and any verbal agreements - Policy and attached application - Policy and all sales material - Policy and conditional receipt - CORRECT ANSWER Policy and attached application" "Which of the following is NOT required in the content of a policy? - Period to which the coverage exists - Probability of loss - Parties involved in the contract - Risk insured against - CORRECT ANSWER Probability of loss" "According to the PPACA, an adult can be covered by a parent's health care plan until what age? - 21 - 18 - 25 - 26 - CORRECT ANSWER 26" "An agent's attempt to stop the replacement of an existing life insurance policy is known as - Preservation - Prevention - Conservation - Concealment - CORRECT ANSWER Conservation" "Which of these factors do NOT affect the rates of medical insurance? - Health - Occupation - Gender - Race - CORRECT ANSWER Race" "The probability of death, listed by year, is demonstrated in - Mortality tables - frequency tables - morbidity tables - Risk tables - CORRECT ANSWER Mortality tables" "Which of the following is NOT a primary objective of insurance regulation? - Protect policyowners - Interpret policy provision - Insurance code enforcement - licensing agents - CORRECT ANSWER Interpret policy provision" "A group disability income plan that pays tax-free benefits to covered employees is considered - Partially contributory - Group contributory - Fully contributory - Non-contributory - CORRECT ANSWER Fully contributory" "Who is eligible for retirement benefits under Social Security? - Fully insured workers - All disabled workers - Partially insured workers - Currently insured workers - CORRECT ANSWER Fully insured workers" "Which of the following is NOT a benefit of insurance? - Source of investment funds - Makes a loss whole again - Losses due to fraud are eliminated - Reduces the uncertainty of loss exposures - CORRECT ANSWER Losses due to fraud are eliminated" "If an insured's age on a life insurance policy has been misstated, what is the insurer's liability if the insured dies - CORRECT ANSWER A prorated death benefit based on the amount of insurance the insureds premiums would have been if purchased at the correct age" "Which of the following is NOT considered advertising? - Direct mailing from an agency - An illustration - A sales presentation - A rating from a rating service company, such as A.M. Best - CORRECT ANSWER A rating from a rating service company, such as A.M. Best" "Who is the individual paid on a fee-for-service basis? - Administrator - Insured - Subscriber - Provider - CORRECT ANSWER Provider" "How is Medicare Part B funded? - User premiums - Employer taxes - Payroll taxes - General tax revenue and user premiums - CORRECT ANSWER General tax revenue and user premiums" "Within how many days must a traditional IRA be rolled over to another IRA in order to avoid tax consequences? - 90 - 60 - 30 - 45 - CORRECT ANSWER 60" "Health insurance involves two perils, accident and _____ - Death - Sickness - Liability - Disability - CORRECT ANSWER Sickness" "An individual can enroll in a Part C Medicare Advantage Plan at what time? - When becoming eligible for Medicaid - When becoming eligible for Medicare - At age of retirement - Age 59.5 - CORRECT ANSWER When becoming eligible for Medicare" "all of theses are reasons the commissioner may disapprove a licensee's request to use a fictitious name EXCEPT - The name is the licensee's actual name - The name is too similar to a name already filed and in use by another licensee - The name states, infers, or implies that the licensee is an insurance company - The use of the name may mislead the public in any respect - CORRECT ANSWER The name is the licensee's actual name" "Which of the following is Medicare Part B also known as? - Hospital insurance - Medical insurance - Long-term care insurance - Medigap - CORRECT ANSWER Medical insurance" "The California insurance code allows an individual how many days to cancel a life policy for a full-refund? - Between 15 and 20 days - Between 10 and 30 days - Between 30 and 45 days - Up to 10 days - CORRECT ANSWER Between 10 and 30 days" "According to the Affordable Care Act, any plan in existence prior to which date is considered a grandfathered plan? - March 23, 2010 - March 23, 2012 - March 23, 2011 - March 23, 2013 - CORRECT ANSWER March 23, 2010" "When calculating life insurance premium rates, which component would an agent's commission fall under? - Mortality - Occupation - Morbidity - Insurer's expenses - CORRECT ANSWER Insurer's expenses" "Which of the following best describes the statement " the more times an event is repeated, the more predictable the outcome becomes?" - Speculative retention - Average variance - Adverse selection - Law of large numbers - CORRECT ANSWER law of large numbers" "How long is a person expected to be disabled in order to receive social security disability benefits? - 18 Months - 4 Months - 12 Months - 6 Months - CORRECT ANSWER 12 Months" "According to the California insurance code, who is responsible for submitting a life agent's appointment? - Life agent - Insurer - Commissioner - State - CORRECT ANSWER Insurer" "According to life insurance contract law, insurable interest exists - At the time of application - At the time of death - When any business relationship exists - Only when determined by a judge - CORRECT ANSWER At the time of application" "Which of the following risk classifications charges the lowest premium? - Substandard - Level - Standard - Preferred - CORRECT ANSWER Preferred" "Which of the following services are health maintenance organizations (HMO's) NOT required to provide? - Hospitalization - Emergency services - Prescription drugs - Preventative services - CORRECT ANSWER Prescription drugs" "Statements made by an insurance applicant on an application are considered to be - Representations - Guarantees - Warranties - Irrevocable - CORRECT ANSWER Representations" "Which of the following statements regarding a life insurance policy dividend is true? - It represents a refund of overcharge - It is a stockholders return on his investment in the company - It represents the build-up of cash value in a permanent insurance policy - It is the distribution of excess of funds accumulated by the insurer on participating policies - CORRECT ANSWER It is the distribution of excess of funds accumulated by the insurer on participating policies" "All of the following circumstances must be met for loss retention to be an effective risk management technique, EXCEPT - Loss cannot be catastrophic - Loss must be measurable - Highly predictable losses - Probability of loss is unknown - CORRECT ANSWER Probability of loss is unknown" "Kim has health insurance with a deductible of $500 and an 80/20 coinsurance. How much will she pay is she incurs a loss of $1,500? - $700 - $1,300 - $200 - $500 - CORRECT ANSWER $700" "An annuity is primarily used to provide - Death benefits - Retirement income - Long-term care benefits - Disability income - CORRECT ANSWER Retirement income" "Maria is a Preferred provider organization (PPO) subscriber and received care from an out-of-network provider. Which of the following is the likely result? - Care is only covered in a government facility - Care is not covered - Care is covered - Care is only covered if primary care physician gives a referral - CORRECT ANSWER Care is covered" "The California insurance code defines "policy" as a(n) - Written quotation - Written Contract - Accepted offer - Promissory arrangement - CORRECT ANSWER Written Contract" "Under a modified endowment contract, what are the likely tax consequences? - Interest on policy loans is tax deductible - Pre-death distributions will become taxable - Cash value cannot be surrendered early - Premium payments are tax deductible - CORRECT ANSWER Pre-death distributions will become taxable" "What is the name of the provision which states that a copy of the application must be attached to the policy when issued? - Policy summary - Entire Contract - Buyer's guide - Entire policy - CORRECT ANSWER Entire Contract" "If an insured dies during the grace period with no premiums paid - The policy would be payable, minus the premium amount - The claim would be denied - The policy would be payable only after the beneficiary makes past due premium payment - All past premiums will be refunded with interest - CORRECT ANSWER The policy would be payable, minus the premium amount" "Paul has an existing annuity and is sold a new one, in which the new policy holds no greater financial benefit to him than existing contract. this is considered a(n) - Illegal transaction - Deferred annuity - Unnecessary replacement - Immediate annuity - CORRECT ANSWER Unnecessary replacement" "Which of the following is an insurer established by a parent company for the purpose of insuring the parent company's loss exposures? - Fraternal insurer - Participating insurer - Mutual insurer - Captive insurer - CORRECT ANSWER Captive insurer" "An individual who transacts life, disability, or life and accident and health insurance on behalf of an insurer is called a(n): - Adjuster - Life agent - insurance solicitor - analyst - CORRECT ANSWER Life agent" "An insured under a Major Medical expense plan with a zero deductible and 80/20 coinsurance provision files a $1,000 claim. How much of this claim is the insured responsible for? - $160 - $200 - $600 - $800 - CORRECT ANSWER $200" "The federal employees benefit program consists of two types of health plans for federal civilian employees. The two plans are fee-for-service and - Ambulatory - Prepaid - Facility - Blanket - CORRECT ANSWER Prepaid" "How many "activities of daily living" must an insured be unable to perform in order to meet the chronically ill requirement of a long-term care policy - Minimum of 3 activities of daily living - Minimum of 2 activities of daily living - Minimum of 1 activity of daily living - Minimum of 4 activities of daily living - CORRECT ANSWER Minimum of 2 activities of daily living" "Medicare Part B covers - Hospitalization - Disability - Long-term Care - Physician expenses - CORRECT ANSWER Physician expenses" "The authority granted to a licensed producer is provided via the - Principal capacity - Producer's apparent authority - Law of agency - Written contract - CORRECT ANSWER Law of agency" "A life insurance rider that allows an individual to purchase insurance as they grow older, regardless of insurability, is called a(n) - Guaranteed insurability rider - Guaranteed term rider - Accelerated benefit rider - Cost of living rider - CORRECT ANSWER Guaranteed insurability rider" "Which of the following is NOT a characteristic of the conversion privilege? - Employer pays the premium for the converted policy - Proof of insurability is not required - Ex-employee pays the premium for the converted policy - Conversion must take place within 31 days of employment termination - CORRECT ANSWER Employer pays the premium for the converted policy" "A person who asserts a right of recovery under an insurance policy is called - Insured - Claimant - Tertiary - Agent - CORRECT ANSWER Claimant" "The California life and health insurance guarantee association covers all of these types of policies, EXCEPT - Whole life - Self-funded plans - Immediate annuities - Disability - CORRECT ANSWER Self-funded plans" "Under a 10-year vesting schedule, what percentage of employer contributions must be vested after 10 years of service? - 75% - 50% - 100% - 25% - CORRECT ANSWER 100%" "Periodic increases in policy benefits are allowed in which long-term care policy provision? - Entire contract - Deflation protection - Inflation protection - Non-forfeiture - CORRECT ANSWER Inflation protection" "The objective of underwriting is to - Avoid selection a disproportionate number of bad risks - Assign the highest premium possible - Decline as many applications as possible - Avoid selecting a disproportionate number of good risks - CORRECT ANSWER Avoid selection a disproportionate number of bad risks" "A pharmacy benefit covers prescription drugs derived from a list called a(n) - Drug formulary - Controlled substance list - Administrative drug list - Generic benefit manager - CORRECT ANSWER Drug formulary" "Which provision will pay a portion of the death benefit prior to the insured's death due to a serious illness? - Nonforfeiture - Return of premium - Accelerated death benefit - Cash surrender - CORRECT ANSWER Accelerated death benefit" "In a renewable term life insurance policy, the contract will usually - Require a higher premium payable at each renewal - Require a lower premium payable at each renewal - Stipulate a higher cash value at each renewal - Keep the same premium level at each renewal - CORRECT ANSWER Require a higher premium payable at each renewal" "If a healthcare provider is considered to be a "service provider", what does this mean? - Better service is give as compared to a "fee-for-service" provider - Payments for services are always paid on a reimbursement basis - Payment for services goes directly to the provider - Insured may utilize the services of any provider - CORRECT ANSWER Payment for services goes directly to the provider" "Tonya has replaced her whole life policy with an annuity without incurring a tax penalty. This transaction is called a(n) - 1040 exchange - Endowment exchange - 1035 Exchange - Modified Exchange - CORRECT ANSWER 1035 Exchange" "An agent has advertised that the insurer to which the agent is appointed with is a member of the insurance guarantee associated this agent has committed a(n) - Unauthorized trade practice - Misdemeanor - Felony - Unfair method of competition - CORRECT ANSWER Unfair method of competition" "An insured is protected from the expense of a catastrophic illness by which of the following health insurance provisions? - Deductible - Stop-loss - Self-insurance - Reimbursement - CORRECT ANSWER Stop-loss" "Under a disability income insurance policy, which criteria must be met for "bodily injury" to be classified as accidental? - The cause may be intentional, but the results must be accidental - Only the cause need be accidental - Only the result need be of natural cause - Both the injury and the cause need to be accidental - CORRECT ANSWER The cause may be intentional, but the results must be accidental" "Which of these is considered a major tax advantage of life insurance? - Premiums are tax deductible by an employee if paid for by an employer - Tax credits are available for life insurance premiums paid - Annual earnings are tax free - Income tax is typically not owned on proceeds paid directly to a beneficiary - CORRECT ANSWER Income tax is typically not owned on proceeds paid directly to a beneficiary" "Which of the following is NOT considered to be an act of insurance solicitation? - Airing a television commercial recommending an insurance product - An agency sending out direct mail for a promotion - Publishing a magazine where one of the advertisers is an insurer - An agent giving a rate quotation - CORRECT ANSWER Publishing a magazine where one of the advertisers is an insurer" "Which of the following is NOT true regarding a family policy that covers children? - Conversion of child's coverage to permanent insurance requires evidence of insurability - Additional children can be added at no cost - Term insurance is used for the children's rider - Adopted children can be covered - CORRECT ANSWER Conversion of child's coverage to permanent insurance requires evidence of insurability" "When an insurance company requests an attending physician's report, the request must be accompanied by a -Policy illustration - Buyer's guide - Conditional receipt - Copy of the signed authorization - CORRECT ANSWER Copy of the signed authorization" "What is the insurance term the State of California uses for an insurer that is eligible to transact business in this state? - Eligible - Authorized - Valid - Admitted - CORRECT ANSWER Admitted" "What is an insurance solicitor authorized to do? - Help an agent or broker sell insurance - Settle life insurance claims - Manage an insurance agency - Solicit insurance - CORRECT ANSWER Help an agent or broker sell insurance" "Life insurance policies will normally pay for losses arising from - Hazardous jobs - War - Commercial aviation - Suicide - CORRECT ANSWER Commercial aviation" "When comparing an HMO to a PPO, the PPO - Is a prepaid medical service plan - Always requires a referral to specialists - Provides a greater choice of providers - Always requires service in a network - CORRECT ANSWER Provides a greater choice of providers" "What makes an insurance policy a unilateral contract? - Only the insured pays the premium - Only the insured can change the provisions - Only the insured is legally bound - Only the insurer is legally bound - CORRECT ANSWER Only the insurer is legally bound" "Individuals age 65 or older are exclusively eligible for which OPTIONAL program? - METs - Medicare Part A - long-term care - Medicare Part B - CORRECT ANSWER Medicare Part B" "In regards to a group health insurance plan, which statement is CORRECT? - A contributory group health plan only requires participation of key employees - A minimum of 75% of eligible members is required for a non-contributory group health plan - a non-contributory group health plan must cover all eligible members - A contributory group health plan must cover at least 50% of all eligible members - CORRECT ANSWER a non-contributory group health plan must cover all eligible members" "Under a disability income policy, which provision would be payable if the cause of an injury is unexpected and accidental? - Accidental death benefit provision - Absolute accidental provision - Accidental bodily injury provision - Presumptive disability provision - CORRECT ANSWER Accidental bodily injury provision" "Preferred risk policies with reduced premiums are issued by insurance companies because the insured has? - a higher face amount than average - a better ability to pay premiums over a long period of time - worse than average mortality or morbidity experience - better than average mortality or morbidity experience - CORRECT ANSWER better than average mortality or morbidity experience" "which of these annuities requires premium payments that vary from year to year? - Fixed premium immediate annuity - Flexible premium deferred annuity - Flexible premium immediate annuity - Fixed premium deferred annuity - CORRECT ANSWER Flexible premium deferred annuity" "How long must a policy be in force before an insurer is prohibited from denying claims based on misstatements made on the health policy application? - 2 years - 1 year - 4 years - 3 years - CORRECT ANSWER 2 years" "When a preferred provider organization (PPPO) insured goes out-of-network, which of the following actions occur? - The benefits are taxable - The insured will pay a reduced amount - The insurer will pay a reduced amount - The insured has lower out-of-pocket expenses - CORRECT ANSWER The insurer will pay a reduced amount" "According to the California Insurance Code, what is the maximum penalty per violation for anyone who unwilfully commits an unfair method of competition? - $5,000 - $10,000 - $7,000 - $1,000 - CORRECT ANSWER $5,000" "One of the most important considerations when replacing health insurance would be the - Occupation of the insured - Age of the insured - Cost - Exclusions on a new policy - CORRECT ANSWER Exclusions on a new policy" "Joe is a Medicare participant who receives his benefits through a Managed Health Care Plan. Which Medicare plan does he have? - Part A - Part B - Part C - Part D - CORRECT ANSWER Part C" "All of the following are elements of an insurance policy EXCEPT - Definitions - Other insurance - Claim forms - Conditions - CORRECT ANSWER Claim forms" "How do insurers predict the increase of individual risks? - Law of large numbers - Experience of morbidity - U.S. Census - Average mortality incidents - CORRECT ANSWER Law of large numbers" "Which word implies permissiveness according to the California Insurance Code? - May - Shall - Indemnity - Admitted - CORRECT ANSWER May" "All of these are examples of cost sharing in a health insurance policy EXCEPT - Coinsurance - Copayments - Coordination - Deductibles - CORRECT ANSWER Coordination" "All of the following riders can increase the death benefit amount EXCEPT - guaranteed insurability - Cost of living - Waiver of premium - Accidental death rider - CORRECT ANSWER Waiver of premium" "What does the Group Life underwriting risk selection process help protect insurance companies from? - Risk aversion - Risk management - Adverse selection - Natural selection - CORRECT ANSWER Adverse selection" "The free-look period for life insurance policyowners age 60 or older is - 10 days - 15 days - 60 days - 30 days - CORRECT ANSWER 30 days" "Restoring an insured to the same condition as before a loss is known as - Law of large numbers - Fiduciary retention - Adverse selection - Principle of indemnity - CORRECT ANSWER Principle of indemnity" "Purchasing a life insurance policy in order to avoid the forced sale of assets upon death is called - Capital gains - Capital withholding - Estate conservation - Estate funding - CORRECT ANSWER Estate conservation" "In regards to a life insurance contract, which of the following statements is NOT true regarding the concept of insurable interest?- - Individuals are assumed to have insurable interest in themselves - Insurable interest is established by a court of law - Insurable interest can be established sufficiently by sentimental attachment alone - Insurable interest must exist at the time of the application - CORRECT ANSWER Insurable interest can be established sufficiently by sentimental attachment alone" "Long-term care policies may provide coverage for claims arising from - Alcoholism - Acute care in hospital - Senile dementia - Drug addiction - CORRECT ANSWER Senile dementia" "Which of the following is a legal entity created for the sole purpose of providing affordable group health coverage to its participants? - Multiple Trust Arrangement (MTA) - Multiple Employer Welfare Arrangement (MEWA) - Fraternal benefit society - CORRECT ANSWER Multiple Employer Welfare Arrangement (MEWA)" "A dread disease policy is considered to be a type of - Hospital expense policy - Major medical insurance policy - Limited health insurance policy - Group health insurance policy - CORRECT ANSWER Limited health insurance policy" "Which policy provision protects the policyowner from unintentional lapse of the contract? - Settlement options - Free look period - Incontestability - Grace Period - CORRECT ANSWER Grace Period" "Which of the following provides Medicare supplement policies? - Medicare - Associations and employers - Private insurance companies - Medicaid - CORRECT ANSWER Private insurance companies" "Sole proprietors are permitted tax deduction for health costs paid from their earning in the amount of - No deduction permitted - Costs that exceed 10% of AGI - Costs that exceed 7.5% of AGI - 100% of costs - CORRECT ANSWER 100% of costs" "All of these are considered key factors in underwriting life insurance EXCEPT - Marital status - Age - Health history - Tobacco use - CORRECT ANSWER Marital status" "Which contract element is insurable interest a component of? - Consideration - Competent parties - Legal purpose - Offer and Acceptance - CORRECT ANSWER legal purpose" "The type of multiple protection coverage that pays on the death of the last person is called a(n) - Dual life policy - Joint life policy - Survivorship life policy - Annuity joint policy - CORRECT ANSWER Survivorship life policy" "When an accidental death benefit is added to a whole life policy, how does this affect the policy's cash value? - Policy loans will no longer be available - Decreases the policy's cash value - Increases the policy's cash value - Policy's cash value is not affected - CORRECT ANSWER Policy's cash value is not affected" "Insurable interest does NOT occur in which of the following relationships? - Parent and children - Business owner and business client - Sister and brother - Business partners - CORRECT ANSWER " "Which of the following is NOT protected under the California Life an Health Guarantee Association? - Primary beneficiaries - Insurers - Insureds - Policyowners - CORRECT ANSWER Insurers" "Which type of risk is gambling? - Risk pooling - Speculative risk - Pure risk - Risk transfer - CORRECT ANSWER speculative risk" "This branch of dentistry which deals with the replacement of missing parts is called - Periodontics - Orthodontics - Endodontics - Prosthodontics - CORRECT ANSWER Prosthodontics" "When does a life insurance policy's waiver of premium take effect? - Insured has become terminally ill - Insured becomes unemployed - Insured becomes totally disabled - Insured has had a policy in force for a specified number of years - CORRECT ANSWER Insured becomes totally disabled" "Bob and Tom start a business. Since each partner contributes an important element to the success of the business, they decide to take life insurance policies out on each other, and name each other as beneficiaries. Eventually, they retire and dissolve the business. Bob dies 12 months later. The policies continue in force with no change. Both partners are still married at the time of Bob's death. In this situation, who will receive Bob's policy proceeds? - Tom's spouse - Tom - Bob's estate - Bob's spouse - CORRECT ANSWER Tom" "Medicaid is intended for - People age 65 and older - Poverty stricken people - People with kidney failure - Unemployed people - CORRECT ANSWER Poverty stricken people" "A worker is entitled to Social Security disability benefits if all of the following are true, EXCEPT for: - Disability is expected to continue for 12 months or result in death - Worker is under age 65 - worker cannot perform his or her current job, but is actively seeking other employment - worker is insured for disability benefits - CORRECT ANSWER worker cannot perform his or her current job, but is actively seeking other employment" "The election of Cobra for continuation of health coverage will - Maintain the same coverage and increase premium - Increase out-of-pocket costs and lower premium - Increase the coverage and lower premium - Decrease out-of-pocket costs and maintain the same premium - CORRECT ANSWER Maintain the same coverage and increase premium" "The California Insurance Code defines "policy" as a(n) - Written contract - Promissory arrangement - Accepted offer - Written quotation - CORRECT ANSWER Written contract" "Which of the following healthcare providers provides both the healthcare services and healthcare coverage - Tri-Care - Preferred Provider Organization (PPO) - Health Maintenance Organization (HMO) - Multiple Employer Welfare Arrangements (MEWA) - CORRECT ANSWER Health Maintenance Organization (HMO)" "What is issued to each employee of an employer health plan? - Receipt - Policy - Certificate - Provision - CORRECT ANSWER Certificate" "Loss of income insurance provides - An individual the means to replace wages - An individual the ability to continue with medical coverage after a disability - Unlimited income replacement to a disabled person - An individual the ability to collect workers' compensation - CORRECT ANSWER An individual the means to replace wages" "Both the Federal and state governments jointly finance which health insurance entitlement program? - Social Security - Medicare - MRMIP - Medi-Cal - CORRECT ANSWER Medi-Cal" "All of the following are included as part of a contract in the entire contract provision EXCEPT the - Application - Riders - Policy - Changes made by the producer - CORRECT ANSWER Changes made by the producer" "All of the following statement correctly describe the purpose of social security EXCEPT - it provides a source of income for a meaningful standard of living during retirement - It provides retirement and survivor benefits to a worker and the worker's family - It augments a sound personal insurance plan - It provides basic protection against financial problems accompanying death, disability, and retirement - CORRECT ANSWER it provides a source of income for a meaningful standard of living during retirement" "An individual that has 40 quarters of coverage, for Social Security purpose, is considered to be - Currently insured - PIA insured - Partially insured - Fully Insured - CORRECT ANSWER Fully Insured" "Which of the following annuity payout options make no additional payments regardless of when the annuitant dies? - Life with period certain - Installment refund - Life only - Cash refund - CORRECT ANSWER Life only" "Major Medical expense plans provide coverage for each of the following EXCEPT - Medically necessary surgery - Blood and urine lab screens - Diagnostic test - Work-related injuries - CORRECT ANSWER Work-related injuries" "When calculating life insurance premium rates, which component would an agent's commission fall under? - Occupation - Insurer's expenses - Morbidity - Mortality - CORRECT ANSWER Insurer's expenses" "An insured's status under Social Security can be described as - Completely insured - Actively Insured - Partially insured - Fully insured - CORRECT ANSWER Fully insured" "A life insurance policy that is subject to a contract interest rate is referred to as - Adjustable life - Group life - Term life - Universal life - CORRECT ANSWER Universal life" "Which of the following is considered to be an alternative to a life settlement? - Extended term option - Decreasing term insurance - Accelerated death benefit rider - Waiver of premium rider - CORRECT ANSWER Accelerated death benefit rider" "All of the following are examples of pure risk EXCEPT - injured while playing football - Losing money at a casino - Jewelry stolen during a home robbery - Falling at a casino and breaking a hip - CORRECT ANSWER Losing money at a casino" "Key person insurance is intended to - Cover business losses due to the death of a key employee - Help retain key employees by offering added benefits - Allow a key person to purchase the business - Give premium- grade benefits to key employees - CORRECT ANSWER Cover business losses due to the death of a key employee" "Which of the following is an annuity that is linked to a market-related index? - Fixed-amount annuity - Equity-indexed annuity - Market-related annuity - Deferred- risk annuity - CORRECT ANSWER Equity-indexed annuity" "The time limit for filing claim disputes is addressed in which provision of an accident and health policy? - Payment of claims - Time of payment of claims - Entire contract - Legal actions - CORRECT ANSWER Legal actions" "Employer contributions to qualified plans are - Only found in 403(b) plans - Taxable to the employee - Only available for key employees - Tax-deductible by the employer - CORRECT ANSWER Tax-deductible by the employer" "When a mutual insurer becomes a stock company, the process is called - Reorganization - Mutualization - Reinsurance - Demutualization - CORRECT ANSWER Demutualization" "Under the California insurance code, a licensee's license number must be printed at what size on all price quotes, business cards, and printed material? - Minimum 8 point font - Small print added as a footnote at the bottom of the material - The same size print as the licensee's phone number, fax number, or address - There are no requirement for the license number to be printed on any printed material - CORRECT ANSWER The same size print as the licensee's phone number, fax number, or address" "Within how many days must a Traditional IRA be rollover over to another IRA in order to avoid tax consequences? - 90 - 60 - 30 - 45 - CORRECT ANSWER 60" "A medical provider that accepts Medicare Assignment must - Accept payment based upon a defined Medicare schedule and bill no more than 15% of the excess charges - Accept payment based upon a defined Medicare schedule and negotiate any excess fees - accept payment based upon a defined Medicare schedule as payment in full - Accept payment based upon a defined Medicare schedule and bill the insured for any difference - CORRECT ANSWER accept payment based upon a defined Medicare schedule as payment in full" "What is the primary purpose of a rating service company such as A.M Best? - Determine which insurer offers the best rates - Determine which agent to use locally - Determine financial strength of an insurance company - Determine which insurer offers the best policies - CORRECT ANSWER Determine financial strength of an insurance company" "A policyholder has a major medical plan with a 80%/20% coinsurance and a deductible of$75. If the insured has previously met her deductible and receives a bill for $175, how much will the insurer pay? - $35 - $100 - $140 - $75 - CORRECT ANSWER $140 Since the policyholder has previously met her deductible, The insurer will pay 80% of $175 $175 x 0.8 = $140" "What type of license is required for an individual who charges a fee to review an insured's existing life insurance policy? - Adjuster - Life and disability counselor - Life agent - Life and disability analyst - CORRECT ANSWER Life and disability analyst" "All of the following are characteristics of a group life insurance plan EXCEPT - Group underwriting - Master contract - Individual underwriting - Probationary period - CORRECT ANSWER Individual underwriting" "What is the proper order of initial life insurance premiums, from lowest to highest? - Single premium, modified premium, ordinary life - modified premium, ordinary life, Single premium, - ordinary life, modified premium, Single premium, - ordinary life, Single premium, modified premium, - CORRECT ANSWER modified premium, ordinary life, Single premium," "The probability of death, listed by year, is demonstrated in - Frequency tables - Risk tables - Mortality tables - Morbidity tables - CORRECT ANSWER Mortality tables" "Which of the following describes a person who is NOT acceptable by an insurer at standard rates because of health history, occupation, or hobbies? - Substandard risk - Preferred Risk - Standard risk - Unacceptable risk - CORRECT ANSWER Substandard risk" "Which of the following is considered to be an event or condition that increases the probability of an insured's loss? - Indemnity - Risk - Peril - Hazard - CORRECT ANSWER Hazard" "Major medical expense plans typically use a cost containment measure for emergency hospital care. This is referred to as a(n) - Capitation - Limitation - Deductible - Exclusion - CORRECT ANSWER Deductible" "AAA insurance company has transferred a portion of its loss exposure to BBB insurance company. In this reinsurance transaction, what is AAA insurance company called? - Primary insurer - Secondary insurer - Captive insurer - Tertiary insurer - CORRECT ANSWER Primary insurer" "Which of the following does NOT have to be included on life insurance policy illustrations? - Name of the insurer - Statement that all values and benefits are guaranteed - Name of the agent - Age of the insured - CORRECT ANSWER Statement that all values and benefits are guaranteed" "According to the Affordable Care Act, what metal tier is required to have an actuarial value of 70% with covered individuals pay 30% through deductibles, co-pays, and other cost sharing features? - Bronze plan - Gold plan - Platinum plan - Silver plan - CORRECT ANSWER Silver plan" "A person who asserts a right of recovery under an insurance policy is called - Agent - Tertiary - Claimant - Insured - CORRECT ANSWER Claimant" "All health benefit plans issued after January 1, 2014 must provide - Dental care - Long-term care - Preventative health services - Adult vision care - CORRECT ANSWER Preventative health services" "A hospital or medical expense policy will typically cover dental treatment expenses under which circumstance? - If treatment is performed at an in-network provider - Cosmetic dental treatment is performed - After the annual limit of dental policy's coverage is reached - Dental Treatment is needed to repair an injury - CORRECT ANSWER Dental Treatment is needed to repair an injury" "A plan in which an employer pays insurance benefits from a fund derived from the employer's current revenues is called - A self-funded plan - A self-derived plan - A blanket plan - A multiple-employer plan - CORRECT ANSWER A self-funded plan" "Which of the following statements regarding Group Disability income insurance is TRUE? - It usually pays for occupation-related disabilities - It is generally more expensive than individual policies - It provides benefits for non-occupational illness and injuries - It pays 100% or more of an insured's income in the event of a disability - CORRECT ANSWER It provides benefits for non- occupational illness and injuries" "Which of these is NOT subject to income taxation under a modified endowment contract (MEC)? - Death benefit - Policy withdrawal - Policy dividend - Loan against the cash value - CORRECT ANSWER Death benefit" "Which clause defines total disability as being unable to perform the major duties of the insured's regular occupation? - Residual clause - Presumptive clause - Any occupation clause - Own occupation clause - CORRECT ANSWER Own occupation clause" "The conversion privilege under a group life plan allows an employee to convert to a(n) - Individual plan with another insurer that has better rates - Individual plan upon employment termination - family plan with another insurer - Individual policy in the spouse's name - CORRECT ANSWER Individual plan upon employment termination" "In group health care, what is the purpose of the coordination of benefits provision? - Determines what is paid by the primary and secondary insurer in the event a claim - Determines which parent's plan covers a dependent child - Ensures that a health provider receives the proper benefit amount owed - Determines where an insured goes to receive treatment - CORRECT ANSWER Determines what is paid by the primary and secondary insurer in the event a claim" "What does the guaranteed insurability option allow an insured to do? - Transfer ownership of the policy - Provides for the early payment of some portion of he policy face amount should the insured suffer from a terminal illness - Allow the insured to convert a term life policy to whole life with no evidence of insurability required - Purchase additional coverage with no evidence of insurability required - CORRECT ANSWER