California Laws and Ethics Pertinent to Insurance Questions and Answers 100% Pass

California Laws and Ethics Pertinent to Insurance Questions and Answers 100% Pass The California Insurance Code defines "policy" as a(n) accepted offer promissory arrangement written contract written quotation written contract A "policy" as described by the California Insurance Code is a written contract in which one party promises to indemnify another against loss that arises from an unknown event. The California Insurance Code allows an individual how many days to cancel a life policy for a full-refund? Every policy of individual life insurance shall have a notice stating that after receipt of the policy by the owner, the policy may be returned by the owner for cancellation by delivering it or mailing it to the insurer or to the agent through whom it was purchased. This period shall not be less than 10 days nor more than 30 days. Which of the following acts is NOT a Federal offense committed by an insurance agent? Embezzlement Insurance fraud Misrepresentation on an insurance application Falsify records Misrepresenting facts on an insurance application is not considered a Federal offense. Which of the following is NOT a primary objective of insurance regulation? Insurance Code enforcement Licensing agents Protect policyowners Interpret policy provisions All of these are considered objectives of insurance regulation EXCEPT "interpret policy provisions". Which type of jurisdiction requires an insurer to have its rates accepted by the Insurance Department prior to using them? A prior approval state requires that an insurance company receives approval for a new insurance rate before it is sent to the public. MRMIP is a state program that offers health coverage to California residents who are not able to obtain coverage due to pre-existing conditions state program that assists single parents obtain affordable health coverage for their children Federal program that offers health coverage to California residents who are not able to obtain coverage due to pre-existing conditions Federal program that gives tax credits to help offset the cost of health insurance state program that offers health coverage to California residents who are not able to obtain coverage due to pre-existing conditions MRMIP is California's insurance program for people with serious health problems /pre-existing conditions who are not able to buy individual health insurance. Both the Federal and state governments jointly finance which health insurance entitlement program? Medi-Cal is a health entitlement program jointly financed by the Federal and state governments. An agent has advertised that the insurer to which the agent is appointed with is a member of the Insurance Guarantee Association. This agent has committed a(n) felony misdemeanor unfair method of competition unauthorized trade practice unfair method of competition It is considered an unfair method of competition for an agent to advertise that the insurer to which the agent is appointed with is a member of the Insurance Guarantee Association. In California, an insurer organized under the state laws of Oregon is called a(n) unauthorized insurer foreign insurer alien insurer domestic insurer foreign insurer In California, an insurer organized under the state laws of Oregon is considered a foreign insurer. Who does a life settlement broker represent? A life settlement broker represents the individual wanting to sell their life policy to a third party. How is an agent's first year commission calculated for a replacement long-term policy? When an agent sells a replacement long-term care policy, the agent's first year sales commission will be determined based on the difference between the new and original policy annual premiums. Before an insurer is allowed to test an individual for HIV, what must be completed? A consent form must be completed before an insurer is permitted to test an individual for HIV. What is an insurance solicitor authorized to do? An insurance solicitor is a person authorized to assist a broker or agent in selling insurance. An individual who transacts life, disability, or life and accident and health insurance on behalf of an insurer is called a(n) adjuster analyst life agent insurance solicitor life agent A person authorized by and on behalf of an insurer who transacts life, disability, or life and accident and health insurance is called a life agent. What is the insurance term the State of California uses for an insurer that is eligible to transact business in this state? The insurance term for an insurer which has met the conditions required to transact business in the State of California is "admitted". 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? 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? A person who asserts a right of recovery under an insurance policy is called claimant As defined by the California Code of Regulations, a person who asserts a right of recovery under an insurance policy is called the claimant. When intentional concealment is involved, what course of action is the injured party entitled to? Rescission of the contract Concealment, whether intentional or unintentional, entitles the injured party to rescind insurance. Which of the following is NOT protected under the California Life and Health Guarantee Association? Policyowners Insureds Primary beneficiaries Insurers Insurers All of these are provided protection through the California Life and Health Guarantee Association except for insurers. Which of the following does NOT have to be included on life insurance policy illustrations? Age of the insured Name of the agent Statement that all values and benefits are guaranteed Name of the insurer Statement that all values and benefits are guaranteed Not all benefits and values are guaranteed in life insurance policies. Some have nonguaranteed values which must be described in the illustration. Pete is a life agent who has misappropriated fiduciary funds to his own use. What is Pete guilty of? Any person who diverts or misappropriates fiduciary funds to his or her own use is guilty of theft and punishable for theft as provided by law. What does the term "indemnity" mean as it pertains to insurance? "Indemnity" means to make whole again, as it pertains to insurance. According to the California Insurance Code, what is "insurance"? According to the California Insurance Code, "insurance" is a contract to indemnify against loss. 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? The incontestable period for a health insurance policy in California is 2 years. Kimberly is an employee on leave under the Family and Medical Leave Act (FMLA). What will happen to her group health coverage? She continues to be enrolled during the leave. FMLA requires the same group health insurance benefits that would exist if the employee were not on leave. 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? It's paid-in capital In order to be solvent, an insurer must not only be able to provide for its liabilities and reinsure capital risks, but must also possess additional assets equivalent to the required paid-in capital. Anyone employed in California to assist an insurance agent in transacting insurance is called an insurance solicitor An insurance solicitor is a person authorized to assist a broker or agent in transacting insurance. According to the California Insurance Code, what is the maximum penalty per violation for anyone who unwillfully commits an unfair method of competition? Any person who unwillfully engages in an unfair method of competition is liable to the state for a fine of up to $5,000 per violation. If the act is determined to be willful, the fine will not exceed $10,000 per act. An agent's attempt to stop the replacement of an existing life insurance policy is known as An agent's attempt to stop the replacement of an existing life insurance policy is known as conservation. Life insurance surplus must be distributed to policyowners at what frequency? Life insurance surplus must be distributed to policyowners annually in a participating policy. Which of the following is NOT covered by the Family and Medical Leave Act (FMLA)? Pregnancy Adoption Traveling overseas with a spouse Attending to the serious health condition of a parent Traveling overseas with a spouse All of these are covered under the FMLA EXCEPT "Traveling overseas with a spouse". The California Life and Health Insurance Guarantee Association covers all of these types of policies EXCEPT Whole life Immediate annuities Disability Self-funded plans Self-funded plans Self-insured plans are not covered under the California Life and Health Insurance Guarantee Association. Where must you specifically reside to qualify for MRMIP? You must be a resident of California to participate in MRMIP. What is the purpose of the Pre-Existing Condition Insurance Plan (PCIP)? PCIP was created by the PPACA for people rejected by private health insurers due to pre-existing conditions The Pre-existing Condition Insurance Plan (PCIP) is a form of health insurance coverage offered to uninsured Americans who have been unable to obtain coverage because of a pre-existing health condition. What effect did the Pregnancy Discrimination Act have on the health industry? Under the Pregnancy Discrimination Act, employers must treat pregnancy the same as any other medical condition. Which of the following is NOT an accurate description of Access for Infants and Mothers Program (AIM)? Eligibility is based on income Low-cost health care coverage for pregnant women Only women who have private insurance plans with a maternity-only deductible or copayment greater than $500 are eligible Only women who have private insurance plans with a maternity-only deductible or copayment greater than $1,500 are eligible All of these statements are true regarding the AIM Program EXCEPT "Only women who have private insurance plans with a maternity-only deductible or copayment greater than $1,500 are eligible". According to PPACA, what is a health benefits exchange? PPACA creates new entities called American Health Benefits Exchanges through which individuals, small businesses, and those who do not have access to affordable employer coverage can purchase coverage. According to the California Insurance Code, how is the word "may" interpreted? When used in the California Insurance Code, the word "may" is intended to be permissive. When selling a long term care insurance rider to an applicant, a life agent must take into consideration all of these factors EXCEPT Ability to pay Attending physician's statement Needs of the client Goals of the client Attending physician's statement During the solicitation of a long term care insurance rider, a life agent must consider all of these EXCEPT an attending physician's statement. Which of the following does the California Insurance Code NOT require an insurance policy to specify? Insurer's financial rating Policy period Premium What or who is being insured According to the California Insurance Code, an insurance policy must specify all of these EXCEPT the financial rating of the insurer. A representation may be altered or withdrawn only before the insurance is in effect Which of the following is NOT considered to be an unfair claims settlement practice? Advising a claimant to hire an attorney Failing to provide a reasonable basis for the denial of a claim upon request Failing to adopt and implement reasonable standards for prompt investigation and processing of insured's claims Misrepresenting to insureds pertinent facts or policy provisions relating to coverage at issue Advising a claimant to hire an attorney Directly advising a claimant to hire an attorney is not an unfair claims settlement practice. Which of the following actions is NOT allowed by Health Insurance Counseling and Advocacy Program (HiCAP) counselors? Medical record keeping assistance Charge a fee Assist in policy evaluation Assist in understanding Medicare Supplements Charge a fee HICAP (the Health Insurance Counseling & Advocacy Program) provides free and objective information and counseling about Medicare. According to the PPACA, the medical enrollment tier that has 80% actuarial value is called gold Under the PPACA, gold plans have a medical enrollment tier of 80% actuarial value. Which of the following is NOT considered to be an act of insurance solicitation? An agency sending out direct mail for a promotion An agent giving a rate quotation Airing a television commercial recommending an insurance product Publishing a magazine where one of the advertisers is an insurer Publishing a magazine where one of the advertisers is an insurer is not considered to be an act of solicitation. According to PPACA, how long can an adult be covered as a dependent under their parents' insurance plan? Under PPACA, an adult child be covered by their parents' insurance coverage as a dependent until age 26. When an insurer has met the qualifications necessary to transact business in California, it is said to be The term for an insurer which has met the conditions required to transact business in the State of California is "admitted". 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? Jim is not required to disclose the conviction on his insurance license application Jim must still disclose the conviction on his insurance license application Only convictions that have been expunged within the last 3 years need to be reported on an insurance license application Only expunged felonies are required to be reported on an insurance license application Submit Reset Jim must still disclose the conviction on his insurance license application Pursuant to California Penal Code Section 1203.4, you are required to report a conviction that was later expunged. How long must life agents keep their transaction records? Life agents must keep transaction records for 5 years. The cost of services charged by the Health Insurance Counseling Advocacy Program (HiCap) is no cost HiCap services are mandated by Federal and State laws and are free and unbiased. MRMIP stands for Major Risk Medical Insurance Program MRMIP stands for Major Risk Medical Insurance Program and is a program designed to provide health insurance for individuals who cannot obtain health coverage on the open market because of their medical conditions. Which of the following does the California Department of Insurance (CDI) have NO jurisdiction over? Medicare Health Maintenance Organizations Preferred Provider Organizations Life and health insurance companies Medicare The California Department of Insurance (CDI) has no jurisdiction over Medicare. Which entity has jurisdiction over health care coverage providers? Department of Insurance Overseeing the insurance industry and protecting the state's insurance consumers is the responsibility of the California Department of Insurance (CDI). Which word implies permissiveness according to the California Insurance Code? When found in California Insurance Code, the word "may" implies permissiveness. 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 The California Insurance Code defines "illustration" as a presentation of policy features that includes non-guaranteed elements. What is required after a life agent sells an insurance policy to an applicant without being appointed by the insurer? Notice of appointment must be submitted to the Commissioner If a life agent sells an insurance policy on behalf of an insurer without an appointment, the insurer must submit a notice of appointment to the Commissioner within 14 days. People with low income can be provided with medical assistance through which program? Medi-Cal Medi-Cal is California's Medicaid health care program, designed to provide medical assistance to people with low incomes. The free-look period for life insurance policyowners age 60 or older is 30 days The free-look period for life insurance policies on individuals age 60 and older is 30 days in California. 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) unnecessary replacement This is an example of unnecessary replacement.