Final Exam: California Life, Accident, and Health Insurance – verified questions and answers

Final Exam: California Life, Accident, and Health Insurance – verified questions and answers What distinguishes a deferred annuity from an immediate annuity? - The time at which benefit payments start 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? - 60 payments What is a common reason people purchase an annuity? - To protect against the risk of outliving their financial resources What kind of annuity pays income to two annuitants until their deaths? - Joint and survivor annuity What is a joint and survivor annuity? - 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. 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 - for a minimum of 120 months and a maximum of the remainder of her life Which of the following statements regarding a life insurance policy dividend is TRUE? - It is the distribution of excess of funds accumulated by the insurer on participating policies. An insured owned by its policyholders is called a - mutual insurer 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? - Reinsurance What is reinsurance? - An arrangement by which an insurance company transfers a portion of a risk it has assumed to another insurer Which of the following is NOT a characteristic of reinsurance? - Increases the unearned premium reserve Which of the following is a contract that involves one party which indemnifies another when a loss arises from an unknown event? - Insurance policy What is an insurance policy? - A contract where one party promises to indemnify another against loss that arises from an unknown event What is residual disability income insurance payments based on? - The amount of the insured's income is reduced by the disability 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 - Driving Which of the following is NOT a provision in a disability income policy? - Deductible and coinsurance provision Which of these statements is NOT true concerning recurrent disabilities? - The insurer continues coverage after a new elimination period 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 - totally disabled What percentage of eligible employees must participate in a noncontributory group health plan before it can be put in effect? - 100% Business Overhead Expense Insurance pays for - business expenses when a business owner becomes disabled Minimum participation standards exist for group health insurance plans in order to - prevent adverse selection The problem of overinsurance is addressed in which health insurance provision? - Coordination of benefits What is the purpose of the coordination of benefits (COB) provision? - To avoid duplication of benefit payments and overinsurance when an individual is covered under more than one group health plan Who is financially liable for the payment of covered claims in a fully insured group health plan? - Insurer The insurer has the option of terminating a health insurance policy on a date stated in the contract. What type of policy is this? - Optionally renewable What is an optionally renewable policy? - A provision allowing an insurer to terminate the policy on a date specified in the contract 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? - Waiver of premium provision 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? - Nothing What type of health insurance policy cannot be canceled by the insurer nor increase the premiums? - Noncancellable The conditions, times, and circumstances under which an insured is NOT covered by a health policy are called? - exclusions What are exclusions in a health policy? - Specified hazards listed in a policy for which benefits will not be paid Under a health insurance policy, the provision that states the kind of benefits provided and the circumstances under which they will be paid is called the? - insuring clause What does an insuring clause state? - Under a health insurance policy, the provision that states the kind of benefits provided and the circumstances under which they will be paid Which of these is NOT a relevant factor in the health insurance principle of morbidity? - Intelligence How does rising morbidity rates affect health insurance? - Increased premiums In health insurance, morbidity rates show - the expected incidence of sickness or disability within a given group during a given period of time Which of the following factors is NOT used in underwriting health insurance policies? - Intelligence Which of the following is NOT a requirement of a contract? - Equal consideration is required between the involved parties Which of the following statements correctly describes a contract of indemnity? - One party is restored to the same financial position the party was in before the loss occurred Which of the following is NOT required in the content of a policy? - Probability of loss Which statement is CORRECT when describing a contract of adhesion? - Contract may be accepted or rejected by the insured