FInal Exam: California Life,
Accident, and Health Insurance
1. What distinguishes a deferred annuity from an immediate annuity? - ANSWER>>The
time at which benefit payments start
2. 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
3. What is a common reason people purchase an annuity? - ANSWER>>To protect against
the risk of outliving their financial resources
4. What kind of annuity pays income to two annuitants until their deaths? -
ANSWER>>Joint and survivor annuity
5. What is a joint and survivor annuity? - ANSWER>>Provides payments the annuity to
two people. If either person dies, the same income payments continue to the survivor for
life. When the surviving annuitant dies, no further payments are made to anyone.
6. Victoria owns a life annuity and elects to receive annuity payments monthly for the
remainder of her life with "ten years certain". Her annuity will make payments -
ANSWER>>for a minimum of 120 months and a maximum of the remainder of her life
7. Which of the following statements regarding a life insurance policy dividend is TRUE? -
ANSWER>>It is the distribution of excess of funds accumulated by the insurer on
participating policies.
8. An insured owned by its policyholders is called a - ANSWER>>mutual insurer
,9. An insurer enters into a contract with a third party to insure itself against losses from
insurance policies it issues. What is the agreement called? - ANSWER>>Reinsurance
10. What is reinsurance? - ANSWER>>An arrangement by which an insurance company
transfers a portion of a risk it has assumed to another insurer
11. Which of the following is NOT a characteristic of reinsurance? - ANSWER>>Increases
the unearned premium reserve
12. Which of the following is a contract that involves one party which indemnifies another
when a loss arises from an unknown event? - ANSWER>>Insurance policy
13. What is an insurance policy? - ANSWER>>A contract where one party promises to
indemnify another against loss that arises from an unknown event
14. What is residual disability income insurance payments based on? - ANSWER>>The
amount of the insured's income is reduced by the disability
15. Manuel is considered to be a disabled person as defined by the Americans with
Disabilities Act (ADA). As such, he is unable to perform any of the following life
activities EXCEPT - ANSWER>>Driving
16. Which of the following is NOT a provision in a disability income policy? -
ANSWER>>Deductible and coinsurance provision
17. Which of these statements is NOT true concerning recurrent disabilities? -
ANSWER>>The insurer continues coverage after a new elimination period
18. 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
, 19. What percentage of eligible employees must participate in a noncontributory group
health plan before it can be put in effect? - ANSWER>>100%
20. Business Overhead Expense Insurance pays for - ANSWER>>business expenses when a
business owner becomes disabled
21. Minimum participation standards exist for group health insurance plans in order to -
ANSWER>>prevent adverse selection
22. The problem of overinsurance is addressed in which health insurance provision? -
ANSWER>>Coordination of benefits
23. What is the purpose of the coordination of benefits (COB) provision? - ANSWER>>To
avoid duplication of benefit payments and overinsurance when an individual is covered
under more than one group health plan
24. Who is financially liable for the payment of covered claims in a fully insured group
health plan? - ANSWER>>Insurer
25. The insurer has the option of terminating a health insurance policy on a date stated in
the contract. What type of policy is this? - ANSWER>>Optionally renewable
26. What is an optionally renewable policy? - ANSWER>>A provision allowing an insurer
to terminate the policy on a date specified in the contract
27. 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? - ANSWER>>Waiver of premium provision
28. Christine has a health insurance policy that has been in force beyond the incontestable
period. The insurer has discovered that a fraudulent statement was made on the
application. What would the insurer have to pay on a claim, assuming this wasn't a
guaranteed renewable policy? - ANSWER>>Nothing
Accident, and Health Insurance
1. What distinguishes a deferred annuity from an immediate annuity? - ANSWER>>The
time at which benefit payments start
2. 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
3. What is a common reason people purchase an annuity? - ANSWER>>To protect against
the risk of outliving their financial resources
4. What kind of annuity pays income to two annuitants until their deaths? -
ANSWER>>Joint and survivor annuity
5. What is a joint and survivor annuity? - ANSWER>>Provides payments the annuity to
two people. If either person dies, the same income payments continue to the survivor for
life. When the surviving annuitant dies, no further payments are made to anyone.
6. Victoria owns a life annuity and elects to receive annuity payments monthly for the
remainder of her life with "ten years certain". Her annuity will make payments -
ANSWER>>for a minimum of 120 months and a maximum of the remainder of her life
7. Which of the following statements regarding a life insurance policy dividend is TRUE? -
ANSWER>>It is the distribution of excess of funds accumulated by the insurer on
participating policies.
8. An insured owned by its policyholders is called a - ANSWER>>mutual insurer
,9. An insurer enters into a contract with a third party to insure itself against losses from
insurance policies it issues. What is the agreement called? - ANSWER>>Reinsurance
10. What is reinsurance? - ANSWER>>An arrangement by which an insurance company
transfers a portion of a risk it has assumed to another insurer
11. Which of the following is NOT a characteristic of reinsurance? - ANSWER>>Increases
the unearned premium reserve
12. Which of the following is a contract that involves one party which indemnifies another
when a loss arises from an unknown event? - ANSWER>>Insurance policy
13. What is an insurance policy? - ANSWER>>A contract where one party promises to
indemnify another against loss that arises from an unknown event
14. What is residual disability income insurance payments based on? - ANSWER>>The
amount of the insured's income is reduced by the disability
15. Manuel is considered to be a disabled person as defined by the Americans with
Disabilities Act (ADA). As such, he is unable to perform any of the following life
activities EXCEPT - ANSWER>>Driving
16. Which of the following is NOT a provision in a disability income policy? -
ANSWER>>Deductible and coinsurance provision
17. Which of these statements is NOT true concerning recurrent disabilities? -
ANSWER>>The insurer continues coverage after a new elimination period
18. 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
, 19. What percentage of eligible employees must participate in a noncontributory group
health plan before it can be put in effect? - ANSWER>>100%
20. Business Overhead Expense Insurance pays for - ANSWER>>business expenses when a
business owner becomes disabled
21. Minimum participation standards exist for group health insurance plans in order to -
ANSWER>>prevent adverse selection
22. The problem of overinsurance is addressed in which health insurance provision? -
ANSWER>>Coordination of benefits
23. What is the purpose of the coordination of benefits (COB) provision? - ANSWER>>To
avoid duplication of benefit payments and overinsurance when an individual is covered
under more than one group health plan
24. Who is financially liable for the payment of covered claims in a fully insured group
health plan? - ANSWER>>Insurer
25. The insurer has the option of terminating a health insurance policy on a date stated in
the contract. What type of policy is this? - ANSWER>>Optionally renewable
26. What is an optionally renewable policy? - ANSWER>>A provision allowing an insurer
to terminate the policy on a date specified in the contract
27. 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? - ANSWER>>Waiver of premium provision
28. Christine has a health insurance policy that has been in force beyond the incontestable
period. The insurer has discovered that a fraudulent statement was made on the
application. What would the insurer have to pay on a claim, assuming this wasn't a
guaranteed renewable policy? - ANSWER>>Nothing
