FInal Exam: California Life, Accident,
and Health Insurance Questions &
Answers
What distinguishes a deferred annuity from an immediate annuity? - ANSWERSThe
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? - ANSWERS60 payments
What is a common reason people purchase an annuity? - ANSWERSTo protect against
the risk of outliving their financial resources
What kind of annuity pays income to two annuitants until their deaths? -
ANSWERSJoint and survivor annuity
What is a joint and survivor annuity? - ANSWERSProvides 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 -
ANSWERSfor 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? -
ANSWERSIt is the distribution of excess of funds accumulated by the insurer on
participating policies.
An insured owned by its policyholders is called a - ANSWERSmutual 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? - ANSWERSReinsurance
What is reinsurance? - ANSWERSAn 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? - ANSWERSIncreases
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? - ANSWERSInsurance policy
, What is an insurance policy? - ANSWERSA 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? - ANSWERSThe
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 - ANSWERSDriving
Which of the following is NOT a provision in a disability income policy? -
ANSWERSDeductible and coinsurance provision
Which of these statements is NOT true concerning recurrent disabilities? -
ANSWERSThe 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 - ANSWERStotally disabled
What percentage of eligible employees must participate in a noncontributory group
health plan before it can be put in effect? - ANSWERS100%
Business Overhead Expense Insurance pays for - ANSWERSbusiness expenses when
a business owner becomes disabled
Minimum participation standards exist for group health insurance plans in order to -
ANSWERSprevent adverse selection
The problem of overinsurance is addressed in which health insurance provision? -
ANSWERSCoordination of benefits
What is the purpose of the coordination of benefits (COB) provision? - ANSWERSTo
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? - ANSWERSInsurer
The insurer has the option of terminating a health insurance policy on a date stated in
the contract. What type of policy is this? - ANSWERSOptionally renewable
What is an optionally renewable policy? - ANSWERSA provision allowing an insurer to
terminate the policy on a date specified in the contract
and Health Insurance Questions &
Answers
What distinguishes a deferred annuity from an immediate annuity? - ANSWERSThe
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? - ANSWERS60 payments
What is a common reason people purchase an annuity? - ANSWERSTo protect against
the risk of outliving their financial resources
What kind of annuity pays income to two annuitants until their deaths? -
ANSWERSJoint and survivor annuity
What is a joint and survivor annuity? - ANSWERSProvides 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 -
ANSWERSfor 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? -
ANSWERSIt is the distribution of excess of funds accumulated by the insurer on
participating policies.
An insured owned by its policyholders is called a - ANSWERSmutual 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? - ANSWERSReinsurance
What is reinsurance? - ANSWERSAn 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? - ANSWERSIncreases
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? - ANSWERSInsurance policy
, What is an insurance policy? - ANSWERSA 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? - ANSWERSThe
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 - ANSWERSDriving
Which of the following is NOT a provision in a disability income policy? -
ANSWERSDeductible and coinsurance provision
Which of these statements is NOT true concerning recurrent disabilities? -
ANSWERSThe 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 - ANSWERStotally disabled
What percentage of eligible employees must participate in a noncontributory group
health plan before it can be put in effect? - ANSWERS100%
Business Overhead Expense Insurance pays for - ANSWERSbusiness expenses when
a business owner becomes disabled
Minimum participation standards exist for group health insurance plans in order to -
ANSWERSprevent adverse selection
The problem of overinsurance is addressed in which health insurance provision? -
ANSWERSCoordination of benefits
What is the purpose of the coordination of benefits (COB) provision? - ANSWERSTo
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? - ANSWERSInsurer
The insurer has the option of terminating a health insurance policy on a date stated in
the contract. What type of policy is this? - ANSWERSOptionally renewable
What is an optionally renewable policy? - ANSWERSA provision allowing an insurer to
terminate the policy on a date specified in the contract
