CALIFORNIA LIFE, ACCIDENT AND HEALTH
CRAM COURSE EXAM 1-3 WITH A COMPLETE
STUDY GUIDE EXAM QUESTIONS WITH CORRECT
ANSWERS WITH RATIONALES
Medical Information Bureau (MIB) members must report which of the following:
ALife insurance death claims
BHealth conditions discovered during the underwriting process
CInsurance company actions taken
DAdverse underwriting decisions --CORRECT ANSWER--B
Explanation:
The MIB is a non-profit information agency formed to assist health insurers uncover
misrepresentations or fraudulent actions by applicants for insurance. MIB members that find
an impairment in underwriting report such findings, as well as situations which applicants
have previously been involved in and information received from physicians or other persons
commenting on the status of a proposed insured.
If a $100,000 Whole Life insurance policy with a cash value of $10,500 lapsed and the
insured selected the reduced paid-up non-forfeiture option, all of the following would be true
EXCEPT:
AThe new policy would have a cash value
BThe new policy would have a face amount of $100,000
CThe new policy would not require proof of insurability
DThe new policy would provide coverage to age 100 --CORRECT ANSWER--B
Page 1 of 111
,Explanation:
If the insured selects the reduced-paid up non-forfeiture option, the insurer will use the cash
value in the lapsed policy to buy the insured a new Whole life policy at the insured's current
age without evidence of insurability. The new policy will be paid-up until age 100 or the
insured's death, whichever comes first, and will have an immediate cash value. However,
$10,500 would not be enough to buy the insured a $100,000 policy, so coverage will be
reduced.
Under the Women's Health and Cancer Rights Act all health insurance plans which cover
mastectomies must also cover which of the following:
ARehabilitation
BReconstructive surgery
CHome health care
DPrescription drug coverage --CORRECT ANSWER--B
Explanation:
Under WHCRA, group health plans, insurance companies and health maintenance
organizations (HMOs) offering mastectomy coverage also must provide coverage for certain
services relating to the mastectomy in a manner determined in consultation with a attending
physician. This required coverage includes all stages of reconstruction of the breast on which
the mastectomy was performed, surgery and reconstruction of the other breast to produce a
symmetrical appearance, and prostheses and treatment of physical complications of the
mastectomy.
Medical Information Bureau (MIB) members consist of:
Page 2 of 111
,ALife & Health insurers
BWorkers Compensation insurers
CAll answer options are incorrect
DFire & Casualty insurers --CORRECT ANSWER--A
Explanation:
The MIB is a nonprofit information agency supported by Life & Health insurance companies,
in order to help insurers uncover misrepresentations or fraudulent actions by applicants. MIB
member companies that find health impairments in underwriting report their findings to the
MIB in the form of a code number. The MIB discloses to underwriters the applicants prior
health history, including information received from doctors. However, insurance company
underwriting actions are not recorded anywhere in MIB files.
A Comprehensive Major Medical Expense policy generally includes all of the following
EXCEPT:
AFirst dollar coverage with high lifetime limits
BA deductible
CA capitation fee
DCo-insurance --CORRECT ANSWER--c
Explanation:
'Capitation' fees are a characteristic of HMOs, not policies written by insurance companies. A
'capitation' fee is a per person fee that an HMO pays a doctor based upon the number of
patients they see during a specified period of time. Comprehensive Major Medical Expense
insurance is a combination of a Basic plan and a Major Medical plan, which is generally the
best coverage you can obtain from an insurance company.
Page 3 of 111
, When an Agent pleads 'nolo contendere' to a violation of the insurance code, it means:
AHe is pleading guilty to a violation of the insurance code
BHe is pleading not guilty to a violation of the insurance code
CHe is leaving the determination of guilt up to the opinion of the Commissioner
DHe has been convicted of a violation of the insurance code --CORRECT ANSWER--c
Explanation:
A plea of 'nolo contendere' means that the agent neither admits or disputes the charges against
him, and is an alternative to pleading guilty or not guilty. It is also called a plea of 'no
contest'. The Commissioner can use his or her own judgment as to whether or not a violation
has occurred, and if so, what the penalties should be.
Carol is injured driving a company car at work. Her Health insurance coverage:
AProvides excess or supplementary coverage
BWill provide coverage on a pro-rata basis with Workers Compensation
CWill cover her injuries
DWill not cover her since this is an occupational injury --CORRECT ANSWER--D
Explanation:
Most Health insurance provides 'non-occupational' (off the job) coverage for sickness or
injury, meaning that occupational coverage is excluded. However, if a person is not required
to be covered by Workers Compensation, some Health policies will cover both on and off the
job, which is known as 'occupational' coverage.
The minimum participation percentage for large group insurance under the California code is:
Page 4 of 111
CRAM COURSE EXAM 1-3 WITH A COMPLETE
STUDY GUIDE EXAM QUESTIONS WITH CORRECT
ANSWERS WITH RATIONALES
Medical Information Bureau (MIB) members must report which of the following:
ALife insurance death claims
BHealth conditions discovered during the underwriting process
CInsurance company actions taken
DAdverse underwriting decisions --CORRECT ANSWER--B
Explanation:
The MIB is a non-profit information agency formed to assist health insurers uncover
misrepresentations or fraudulent actions by applicants for insurance. MIB members that find
an impairment in underwriting report such findings, as well as situations which applicants
have previously been involved in and information received from physicians or other persons
commenting on the status of a proposed insured.
If a $100,000 Whole Life insurance policy with a cash value of $10,500 lapsed and the
insured selected the reduced paid-up non-forfeiture option, all of the following would be true
EXCEPT:
AThe new policy would have a cash value
BThe new policy would have a face amount of $100,000
CThe new policy would not require proof of insurability
DThe new policy would provide coverage to age 100 --CORRECT ANSWER--B
Page 1 of 111
,Explanation:
If the insured selects the reduced-paid up non-forfeiture option, the insurer will use the cash
value in the lapsed policy to buy the insured a new Whole life policy at the insured's current
age without evidence of insurability. The new policy will be paid-up until age 100 or the
insured's death, whichever comes first, and will have an immediate cash value. However,
$10,500 would not be enough to buy the insured a $100,000 policy, so coverage will be
reduced.
Under the Women's Health and Cancer Rights Act all health insurance plans which cover
mastectomies must also cover which of the following:
ARehabilitation
BReconstructive surgery
CHome health care
DPrescription drug coverage --CORRECT ANSWER--B
Explanation:
Under WHCRA, group health plans, insurance companies and health maintenance
organizations (HMOs) offering mastectomy coverage also must provide coverage for certain
services relating to the mastectomy in a manner determined in consultation with a attending
physician. This required coverage includes all stages of reconstruction of the breast on which
the mastectomy was performed, surgery and reconstruction of the other breast to produce a
symmetrical appearance, and prostheses and treatment of physical complications of the
mastectomy.
Medical Information Bureau (MIB) members consist of:
Page 2 of 111
,ALife & Health insurers
BWorkers Compensation insurers
CAll answer options are incorrect
DFire & Casualty insurers --CORRECT ANSWER--A
Explanation:
The MIB is a nonprofit information agency supported by Life & Health insurance companies,
in order to help insurers uncover misrepresentations or fraudulent actions by applicants. MIB
member companies that find health impairments in underwriting report their findings to the
MIB in the form of a code number. The MIB discloses to underwriters the applicants prior
health history, including information received from doctors. However, insurance company
underwriting actions are not recorded anywhere in MIB files.
A Comprehensive Major Medical Expense policy generally includes all of the following
EXCEPT:
AFirst dollar coverage with high lifetime limits
BA deductible
CA capitation fee
DCo-insurance --CORRECT ANSWER--c
Explanation:
'Capitation' fees are a characteristic of HMOs, not policies written by insurance companies. A
'capitation' fee is a per person fee that an HMO pays a doctor based upon the number of
patients they see during a specified period of time. Comprehensive Major Medical Expense
insurance is a combination of a Basic plan and a Major Medical plan, which is generally the
best coverage you can obtain from an insurance company.
Page 3 of 111
, When an Agent pleads 'nolo contendere' to a violation of the insurance code, it means:
AHe is pleading guilty to a violation of the insurance code
BHe is pleading not guilty to a violation of the insurance code
CHe is leaving the determination of guilt up to the opinion of the Commissioner
DHe has been convicted of a violation of the insurance code --CORRECT ANSWER--c
Explanation:
A plea of 'nolo contendere' means that the agent neither admits or disputes the charges against
him, and is an alternative to pleading guilty or not guilty. It is also called a plea of 'no
contest'. The Commissioner can use his or her own judgment as to whether or not a violation
has occurred, and if so, what the penalties should be.
Carol is injured driving a company car at work. Her Health insurance coverage:
AProvides excess or supplementary coverage
BWill provide coverage on a pro-rata basis with Workers Compensation
CWill cover her injuries
DWill not cover her since this is an occupational injury --CORRECT ANSWER--D
Explanation:
Most Health insurance provides 'non-occupational' (off the job) coverage for sickness or
injury, meaning that occupational coverage is excluded. However, if a person is not required
to be covered by Workers Compensation, some Health policies will cover both on and off the
job, which is known as 'occupational' coverage.
The minimum participation percentage for large group insurance under the California code is:
Page 4 of 111
