Final Exam - California Life and Health Questions Answers All Correct Graded A+

$50,000 - Correct Answers Employer-provided group term life insurance is exempt from income taxation up to 3 months - Correct Answers Medicare Part B has an initial enrollment period. How many months after an individual's 65th birthday month does this enrollment period end? A dividend option is selected by the insured at the time of policy purchase - Correct Answers Which statement is true regarding policy dividends? Make whole - Correct Answers What does the insurance term "indemnity" refer to? To protect against the risk of outliving their financial resources - Correct Answers What is a common reason people purchase an annuity? Materiality of concealment - Correct Answers The importance of a representation is demonstrated in what rule? Individual wanting to sell their life policy to a third party - Correct Answers Who does a life settlement broker represent? Insurer - Correct Answers Who is financially liable for the payment of covered claims in a fully insured group health plan? income - Correct Answers The Human Life Value concept is based on business expenses when a business owner becomes disabled - Correct Answers Business Overhead Expense Insurance pays for When claims exceed a specified limit in a set period of time - Correct AnswersAt what point does a self-insured group qualify for stop-loss coverage? 100% - Correct AnswersWhat percentage of eligible employees must participate in a noncontributory group health plan before it can be put in effect? variable life - Correct AnswersA life insurance policy where the insured can choose where the cash value can be invested is called Pure and speculative risks are both insurable - Correct AnswersWhich of these statements correctly describes risk? deductible - Correct AnswersThe elimination period in a disability income policy serves the same purpose as a(n) ______ in a medical expense policy. Notice of appointment must be submitted to the Commissioner - Correct AnswersWhat is required after a life agent sells an insurance policy to an applicant without being appointed by the insurer? Nondiscrimination - Correct AnswersRetirement plans are prevented from favoring highly compensated employees under which government regulation? employer stock - Correct AnswersESOPs are typically invested in protect certain vulnerable segments of the population - Correct AnswersThe reason for social insurance is to 60 payments - Correct AnswersCindy 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? 30 days - Correct Answershe free-look period for life insurance policyowners age 60 or older is Unable to engage in any substantial gainful activity - Correct AnswersWhat is considered to be the definition of disability, according to Social Security? when the insured dies, a death benefit is paid - Correct Answers"Life insurance creates an immediate estate". This phrase means: Exempt from federal income taxes - Correct AnswersHow are death benefits that are received by a beneficiary normally treated for tax purposes? Payment for services goes directly to the provider - Correct AnswersExempt from federal income taxes copy of the signed authorization - Correct AnswersWhen an insurance company requests an attending physician's report, the request must be accompanied by a Grace period - Correct AnswersWhich policy provision protects the policyowner from unintentional lapse of the contract? Joint and survivor annuity - Correct AnswersWhat kind of annuity pays income to two annuitants until their deaths? The premium rates of the policyowner - Correct AnswersWhat type of changes can be made to a guaranteed renewable health insurance policy? Policy premiums - Correct AnswersWhich of the following is NOT considered to be insurer expenses? When an insured becomes totally disabled - Correct AnswersIn what situation does a waiver of premium provision keep a health insurance policy in force without premium payments? A person authorized to assist a broker or agent in transacting insurance. - Correct AnswersWhat is an "insurance broker" according to California Insurance Code? Mutual insurer - Correct AnswersA participating company is also referred to as which type of insurer? Publishing a magazine where one of the advertisers is an insurer - Correct AnswersWhich of the following is NOT considered to be an act of insurance solicitation? Indemnity - Correct AnswersRestoring an insured to the same condition as before a loss is an example of the principle of The name is the licensee's actual name - Correct AnswersAll of these are reasons the Commissioner may disapprove a licensee's request to use a fictitious name EXCEPT endowment insurance - Correct AnswersA life insurance policy that pays the face amount if the insured survives to a specified period of time is called Insurance policy - Correct AnswersWhich of the following is a contract that involves one party which indemnifies another when a loss arises from an unknown event? Speculative risk - Correct AnswersWhich of the following is a situation where there is a possibility of either a loss or a gain? conservation - Correct AnswersAn agent's attempt to stop the replacement of an existing life insurance policy is known as Hospital - Correct AnswersWho would be most likely to submit a Medicare Part A claim? foreign insurer - Correct AnswersIn California, an insurer organized under the state laws of Oregon is called a(n) insuring clause - Correct AnswersUnder 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? The time at which benefit payments start - Correct AnswersWhat distinguishes a deferred annuity from an immediate annuity? a deductible - Correct AnswersThe elimination period in a disability income policy serves the same purpose as extended term - Correct AnswersWhich of the following is NOT a common life insurance policy rider? Policy's cash value is not affected - Correct AnswersWhen an accidental death benefit is added to a whole life policy, how does this affect the policy's cash value? Stop-loss - Correct AnswersAn insured is protected from the expense of a catastrophic illness by which of the following health insurance provisions? a condition that may increase the likelihood of a loss occuring - Correct AnswersA hazard can be best described as Applicants are not required to answer medical questions on the application - Correct AnswersWhich of the following is NOT a true description of non-medical life insurance? Joint life policy - Correct AnswersTom 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 Presentation of policy features that includes non-guaranteed elements - Correct AnswersWhat does the term "illustration" mean when used in the phrase "life insurance policy illustration", according to the California Insurance Code? Life and disability analyst - Correct AnswersWhat type of license is required for an individual who charges a fee to review an insured's existing life insurance policy? Disclosure and reporting - Correct AnswersWhat area of group health insurance is regulated under the Employee Retirement Security Act of 1974 (ERISA)? the amount an insured pays per unit of coverage - Correct AnswersPremiums are best described as the policy's face amount - Correct AnswersA life insurance policy's limit of liability would be Medical questions must be answered on individual life insurance - Correct AnswersHow does underwriting differ between group life and individual life insurance? Underwriting - Correct AnswersThe risk selection process is primarily given to which insurance company department? Moral hazard - Correct AnswersWhich of the following describes the increase in the probability of a loss due to an insured's dishonest tendencies? written contract - Correct Answershe California Insurance Code defines "policy" as a(n) A deceased worker's dependent parents of any age - Correct AnswersWho is NOT eligible for Social Security survivor benefits? Policy exclusion - Correct AnswersHow are acts of war and aviation treated under a group life insurance policy? Policy exclusion - Correct AnswersHow are acts of war and aviation treated under a group life insurance policy? The beneficiary must sign the application before the insurer will issue the policy - Correct AnswersWhich of the following is NOT an important reason for a life insurance application? Preferred Provider Organization (PPO) - Correct AnswersCoverage for care received from a network provider pays more than care received from a non-network provider in what type of health plan? enroll within a specified eligibility period - Correct AnswersAn eligible individual who would like to obtain group health insurance without providing evidence of insurability must Implied authority - Correct AnswersReasonably necessary acts that an agent must perform for carrying out his/her expressly authorized duties are covered by an agent's Reinsurance - Correct AnswersAn insurer enters into a contract with a third party to insure itself against losses from insurance policies it issues. What is this agreement called? The amount of the insured's income is reduced by the disability - Correct AnswersWhat are residual disability income insurance payments based on? Skilled nursing facility care - Correct AnswersMedicare Part A covers what type of care? is most hazardous - Correct AnswersJim is the insured on a health insurance policy and holds two jobs. If "occupation" is used to classify the risk, the insurer will most likely classify Jim according to the occupation that 10% - Correct AnswersIn a modified endowment contract, the penalty tax imposed on premature withdrawals is Annually - Correct AnswersLife insurance surplus must be distributed to policyowners at what frequency? Outside organization that processes claims for an employer's self-funded group plan - Correct AnswersWhich of the following is an example of a third-party administrator? Waiver of premium provision - Correct AnswersBruce 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? only one party (the insurer) makes any kind of legally enforceable promise - Correct AnswersA unilateral contract is one in which Coordination of benefits - Correct AnswersThe problem of overinsurance is addressed in which health insurance provision? Incontestability clause - Correct AnswersWhat prevents a life insurance policy from being rescinded by the insurer after being in force for two years? Hospital acute care - Correct AnswersWhich of the following is NOT included under long-term care insurance? Increase in the elimination period - Correct AnswersWhich of the following could lower the premium of a proposed disability income policy? Benefits can be adjusted - Correct AnswersThe misstatement of age provision in a health policy states that if an insured gives the wrong age at the time of application, what action can the insurance company take? Dividend risk - Correct AnswersWhich of the following is NOT a risk classification that an underwriter would use? Theft - Correct AnswersPete is a life agent who has misappropriated fiduciary funds to his own use. What is Pete guilty of? unfair discrimination - Correct AnswersAn insurer that has been found using higher rates based on race, religion, or ethnicity is said to be engaging in Accept or reject the whole group - Correct AnswersDuring the underwriting process for a group health policy, it was discovered that 15 out of 50 members of the group have major health issues. How would the insurer handle this? The policy's cost basis is exempt from taxation - Correct AnswersWhen a life insurance policy is surrendered, how does the cost recovery rule apply? Mortality - Correct AnswersWhen calculating life insurance premium rates, which component is affected by an insured's age and gender? Attending physician's statement - Correct AnswersAn applicant has revealed conditions that require more information. Which of the following is needed next? Health Maintenance Organization (HMO) - Correct AnswersWhich of the following healthcare providers provides both the healthcare services and healthcare coverage? 20% - Correct AnswersAfter the annual deductible is met, a Medicare Part B patient will pay ___ of the remaining covered expenses. admitted - Correct AnswersWhen an insurer has met the qualifications necessary to transact business in California, it is said to be Participant - Correct AnswersWho is issued a certificate of insurance with a group insurance policy? Participating - Correct AnswersJohn owns an insurance policy that gives him the right to share in the insurer's surplus. What kind of policy is this? Losses due to fraud are eliminated - Correct AnswersWhich of the following is NOT a benefit of insurance? Benefits for diagnostic tests and X-rays performed on an outpatient basis are provided by Part B - Correct AnswersWhich statement regarding Medicare is true? Rate - Correct AnswersWhat is the price of insurance for each exposure unit? Preferred - Correct AnswersWhich of the following risk classifications charges the lowest premium? $5,000 - Correct AnswersAccording to the California Insurance Code, what is the maximum penalty per violation for anyone who unwillfully commits an unfair method of competition? Jim must still disclose the conviction on his insurance license application - Correct AnswersJim 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? Eating and dressing - Correct AnswersWhich of the following are two examples of activities of daily living (ADL's) used in qualifying for long-term care benefits? Eye surgery - Correct AnswersWhich of the following is NOT typically covered under vision care insurance? Surviving spouse - Correct AnswersThe "blackout period" affects whose benefits? Optionally renewable - Correct AnswersThe insurer has the option of terminating a health insurance policy on a date stated in the contract. What type of policy is this? restricts the ability of the beneficiary to assign benefits - Correct AnswersA spendthrift clause in a life insurance policy Medicare supplement - Correct AnswersWhich of the following plans will cover medical costs that Medicare doesn't cover? Inflation protection - Correct AnswersPeriodic increases in policy benefits are allowed in which long-term care policy provision? Specific dollar amount for examinations - Correct AnswersCoverage is limited for vision and dental insurance in all of the following ways, EXCEPT Taxable income to the employee - Correct AnswersHow is the cost of employer-provided group life insurance with coverage amounts above $50,000 treated for tax purposes? Contract may be accepted or rejected by the insured - Correct AnswersWhich statement is CORRECT when describing a contract of adhesion? May - Correct AnswersWhich word implies permissiveness according to the California Insurance Code? After the deductible is satisfied, the percentage paid by the insured for the remaining covered expenses - Correct AnswersWhat does the term coinsurance refer to? Loss exposure - Correct AnswersWhich of the following is any situation that presents the possibility of a loss? exclusions - Correct AnswersThe conditions, times, and