Life and Casualty

Jaime R. Sandoval
September 22, 2014
PartLH1
Insurers oering individual life insurance policies or annuities to senior citizens that use non-
guaranteed elements in illustrations must provive a statement to that eect. Which of the following
is correct regarding this statement?
Non-garanteed elements mut be in bold print.
Life insurance illustrations showing premiums, values, credits or charges that are not determined
at issue are demostrating:
Non-guaranteed elements.
The rules regarding life insurance policy illustrations are intended to ensure all of the following
except:
Ensure that the illustration species that both guaranteed and non-guaranteed elements will con-
tinue unchanged for all years shown.
All of the following are required to be included in life insurance illustrations, except:
A statement that the benets in the illustration are guaranteed
If an insurer indicates that an illustration will be used, they must do which of the following?
Send a summary status report to the policyowner annually.
Preprinted illustrations used to sell nonguaranteed individual annuity and life policies must show:
Nonguaranteed values in bold print.
Nonpreprinted illustrations selling nonguaranteed individual life and annuity policies must include
a statement providing the following information:
The illustration is an illustration only and not a prediction of actual performance.
All of the following apply to an insurance broker( not an insurance agent), except:
A broker acts on behalf of an insurer.
If an insurer inadvertently is found guilty of unfair trade practices while issuing, renewing and
servicing a policy, the insurer could be prosecuted for how many violations?
1
1
An insurer owned by a parent company that provides insurance to cover the parent companys
loss exposure is a:
Captive insurer.
The minimum number of employees for group life insurance in California is:
2.
A parent who lives at home is being cared for by an adult daughter on a full time basis. Which of
the following would provide care if the daughter needs a period of separation?
Respite care.
What does the phrase life insurance creates an immediate estate mean?
The total death benet will be paid to a beneciary on the death of the insured.
the usual amount of death benet in an industrial life insurance policy is:
Less than $2,000.00.
In which of the following qualied pension plans are benets linked to the employees years of
service and/or amount of compensation?
Dened benet plan.
Which of the following allows employees to share in the nancial success of the company?
Prot sharing plan.
In a WC contract, Part One provides payments for which of the following?
Sums the employer is legally required to pay under State Workers Compensation Laws.
In order to qualify for SS retirement benets the worker must be:
Fully insured.
All of the following are covered by the CLHIGA:
Individual annuities
Group term insurance
individual life insurance policies.
Group stop loss plans is not covered by the CA Life & Health Insurance Guaranteed Associa-
tion.
When a corporation ceases to exist entirely, its insurance license:
Terminates unless the corporation les an application to continue to transact insurance under an
existing license in either a dierent capacity or as a dierent organization or entity if a natural
person is named to exercise the agency or brokerage powers of the license entity, and that natural
person remains eligeble to be so named, and if so substantial change in ownership and no change in
control of the licensed insurance business has taken place; provided, that within 30 days following
the change the corporation les a properly completed and executed application in the form pre-
2
scribed by the commissioner of an appropriate license ane pays the lawful fees therefor.
If an insurer knowingly allows one of its agents to mislead a member of the public in order to
induce the person to change their existing insurance, the Commissioner may:
Suspend the insurers certicate of authority for the class of business involved.
Which of the following contracts provides benets that uctuate automatically with investment
results?
Variable life insurance.
In a noncontributory group disability income insurance plan, what is the tax treatment of ben-
ets recived by an employee?
Benets are included in the employees gross income.
Which policy is a savings instrument designed to rst accumulate funds and then systematically
to liquidate the funds?
Deferred annuity.
What refund is owed when a senior citizen elects the right to return and cancels an individual
variable annuity policy invested in a money market fund?
Paid premiums and policy fees.
Which statement is included in all qualied long-term care policies?
This contract may qualify you for federal and state tax benets.
Rehabilitation benets in a disability income policy may cover all of the following Except:
Six months rent for a new oce.
The following expenses are important characteristics in a Major Medical policy except:
capitation fee.
Disability income insurance payments are based on:
An amount agreed upon by the insurer and the insured.
An elimination period in a disability income policy serves the same function as:
The deductible in a medical expense policy.
A life insurance application is important for all of the following reasons except:
The beneciary must sign the application before the insurer will issue the policy.
The laws of most states require that a cash surrender benet be provided in all of the follow-
ing types of life insurance policies except:
10-year convertible term policy. It is a type of life insurance policy that, it would not have any
cash value.
3
Which of the following replaces the universal lifes purely xed fund cash value with a facility
for the policyowner to select the investment media in which the cash value is placed?
Flexible premium variable life.
If an employer wants to provide their own coverage, but does not have the sta or expertise
to administer the coverage. Which option is available?
Establish a self-funded plan and hire a third party administrator.
Which nonforfeiture option uses an existing policys cash value to purchase a paid-up policy with
a lower face value than the original policy?
Reduced paid-up insurance option.
In life insurance, the only measure of liability is the amount:
Payable as provided in the policy.
What refund is owed when a senior citizen elects the right to return and cancels an individual
variable annuity policy invested in a mutual fund?
Account Value.
If a child is incapable of self-sustaining employment due to mental retardation, how long may
coverage continue under an employers group life insurance plan?
As long as the child is dependent upon the employee due to the handicap.
From the lowest to highest, which is the correct order of initial premiums for the insurance policies?
Modied premium, ordinary premium, single premium.
In disability insurance the benet waiting period is also known as the:
Elimination period.
Qualied events that would result in the loss of coverage under COBRA include all of the fol-
lowing except:
Reduction of an employees hours.
Insurance solicitation include all of the following activities except:
Publishing a newspaper in which one of the advertisers is an insurance agent.
What is the Medicare PartD?
Prescription Drug coverage.
When an insurance agent advertises on the internet for insurance transacted in the State of Cali-
fornia, all of the following information must be provided except:
the agents business phone number.
Negotiating an insurance policy means which of the following?
Promising a commission rebate to an existing insured if she renews.
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According to California Insurance Code, how must an agent publicize the right to return infor-
mation to a senior citizen purchasing an annuity policy?
On the cover page of a policy jacket.
The insurance code requires insurance companies selling term life insurance to individuals 55 or
older must inform the consumer that:
Benets and limitations should be considered prior to purchase.
Violating the Federal law that prohibits certain acts in the business of insurance is punishable
by imprisonment for up to:
10 or 15 years.
Violating the Federal law that prohibits certain acts in the business of insurance is punishable
by a ne up to:
$ 50,000.00.
Transferring ownership rights from the current owner to another person is know as:
Assignment.
All of the following are eligible dependent coverage under an employers group life insurance policy
except:
All unmarried grandchildren under age 21.
After receiving care by a physician, how is a patient notied of Medicares decision to cover it?
Explanation of Your Medicare Part B Benets.
Who pays the premiums for voluntary group life insurance benets made available through an
employer?
the employee.
The insured is totally and permanently disabled. The insureds policy continues in force with-
out the payment of a premium because the policy contains a:
Waiver of premium provision.
When one person applies for an insurance policy on the life of another the application must be
signed by both the applicant and the person whose life is to be insured. The proposed insureds
signature on the application indicates that he or she:
Consents to the issuance of insurance on his or her life that will be owned and controlled by some-
one else.
To be fully insured for ss benets, a worker must be credited with:
40 quarters of coverage.
Non-participatin life insurance policies provide all of the following, except:
5
Dividends.
The insurance term used for an insurer who has not complied with the requirements to obtain
a certicate of authority from the California Insurance Commissioner is:
Non-admitted.
A product provides annuity benets that may vary according to any separate account or account
mainained by the insurer. This describes:
Variable annuity.
The payor rider on a juvenile life policy provides that if the payor dies or becomes disable be-
fore the insured juvenile reaches the age specied on the policy:
The insurer will make the payments until the insured juvenile reaches the specied age - usually
twenty- one or twenty-ve.
In a group life insurance policy, who are the parties to the contract?
The insurer and the employer.
When an agent takes an application or receives premium moneys for an application, including
a health policy, the insurance code specically requires the agent to disclose to the insured or ap-
plicant:
The eective date of coverage, if known, or the circumstances under which coverage will be eective.
In the state of California:
Providing free insurance coverage in connection with an inducement to completing the transaction
is prohibited.
According to the California Code of Regulations governing the settlement of claims, which of
the following actions is fair and equitable in settling a claim?
Delaying a decision in order to investigate.
Which of the following is not a characteristic of a contributory group insurance plan?
The policyowner pays all of the cost.
All of the following may be named as exclusions in a group disability income policy except:
Pregnancy.
When is the automatic loan provision activated?
At the end of the grace period.
Who must sign a statement acknowledging that a life insurance policy is to be replaced by an
applicant?
The applicant and the agent.
How long is the life insurance policy grace period?
6
1 month.
The California Insurance Code that provides an applicant the right to cancel an insurance pol-
icy by returning it only applies to policies with a face amount of:
Less than $ 10,000.00.
All of the following might opt for a self-insured medical and disability policy, except:
Individuals.
A beneciary wants to let the death benet accumulated and receive only the monthly invest-
ment proceeds. Which settlement option should be chosen?
Interest option.
Sales materials promoting term life insurance to individuals 55 or older must provide the con-
sumer all of the following information except:
Conversion options.
What does the term non-medical life insurance mean?
No physical examination is required.
An employer allows each employee to choose insurance in addition to the basic insurance plan.
Who pays the premium for the voluntary life insurance?
Only the employees who choose to purchase it.
What is the dierence between a conditional premium receipt and a binding premium receipt?
Only a binding receipt always provides insurance that is eective from the date the receipt is given.
All of the following are considered insurance transactions except:
An agency installs new premium accounting software.
Which contract promises to pay the owner a guaranteed minimum income for as long as the indi-
vidual lives?
A life annuity.
All of the following conditions must be met to qualify for residual disability benets under a
disability income policy except:
Qualies for SS disability benets.
When premium payments on a whole life insurance policy are being waived because the person
whose life is insured is totally disabled, the actual eect on the policys cash value will be to:
Provide for the continued increase in the cash value during the period of disability.
Under a disability insurance policy, an insured is eligible for a waiver of premium benet:
After total disability.
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All of the following are qualied retirement plans except:
Deferred.
In California, an insurer organized under the state laws of Nevada is considered:
A foreign insurer.
Which retirement plan is often used to distribute a portion of an empoyers favorable nancial
experience to employees?
Prot sharing plans.
Which of the following statements denes partial disability?
A disable employee while he is working part-time and receiving lost income under companys long-
term disability benet.
Which of the following statements about life insurance policy provisions is correct?
Certain provisions are prohibited by law from appearing in a life insurance contract.
Under the ADA, which of the following is an activity of daily living:
eating.
Direct Response marketing uses all of the following except:
phone calls from agents.
In a qualied benet plan with a 5 year vesting schedule, employer contributions are vested at
what percentage at 5 years?
100%
An insured has a disability income policy that pays $1500/month with a 30 -day elimination period.
He is disable for 120 days. His policy has paid benets totalling:
$4500.
What is an Aleatory contract? A contract
which the performance of one or both parties to the contract are based upon the occurrence of a
particular event.
The following classes of service are all under the jurisdiction of the DOI except:
Lasik.
What is the PCIP?
PPACA created program to assist people who did not qualify for private insurance because of a
pre-existing condition.
The following qualify for the Access for Infants and Mothers (AIM) public coverage program except:
A pregnant woman with deductible of $500.
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When notifying the insured of a policy information change, the California Insurance Code rules
that notication must be sent by:
mail.
What is ERISA about for group health insurance?
Reporting and disclosure.
What does MRMIP stand for?
Major Risk Medical Insurance Program.
An annuitant dies after being paid monthly income for 5 years from an annuity where the set-
tlement option is life income with a 10-year period certain. How many payments are left to the
beneciary?
60 payments.
Is a person with Medicare A & B eligible for MRMIP?
No
Is a person who is eligible for Medicare A & B eligible for MRMIP?
no, unless that individual has end-stage renal disease.
Which of the following provisions can protect an insurance company from a lawsuit before they
have time to investigate a claim?
Incontestability.
How does an individual become eligible for MRMIP coverage?
All of the above.
How is Medical Loss Ratio used?
It lets consumers know how much money an insurer is paying out in claims and how much it uses
to cover its administrative costs and prots.
What is PPACA?
Federal statute (Patient Protection & Aordable Care Act) involving major reforms to health care.
If an individual qualies for MRMIP but is put on a wait list, what priority will be used as
the basis for which individuals are chosen to become enrolled?
Based on date of completed application.
What is MRMIP?
State program that provides health insurance to individuals with pre-existing conditions.
If an applicant completes the PCIP/MRMIP application and qualies for both the PCIP and
MRMIP programs, but does not indicate a preferred program on the application, which course of
action will be taken?
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the applicant will automatically be enrolled into the PCIP program.
All of the following are under the jurisdiction of the DOI except:
HMOs.
What is the performance of an Equity index annuity based on?
S&P 500.
The California Insurance Code dictates good faith communication in insurance contracts and claims.
The parties to the contract include all of the following, except:
the state.
Creditors have rights to insurance policy proceeds if the beneciary is:
Insureds estate.
According to the California Insurance Code, if a companys Certicate of Authority is revoked,
the Commisioner may do any of the following except:
use Guarantee Association funds to pay salaries.
Vision insurance usually limits in all of the following ways except for:
Specied dollar amount for examinations.
If an insurer must have its rates accepted by the DOI prior to using them, then the insurer would
be under which jurisdiction?
Prior approval.
In a life insurance policy issued after 1988, failure to pass the 7-pay test result in:
Modied endowment contract.
What maximum amount of employer-provided group-term life insurance is tax-free (excluded from
an employees income)?
$ 50,000.00.
What government regulation prevents retirement plans from favoring highly compesated employ-
ees?
Nondiscrimination.
What is the cost of service from the Health Insurance Counseling and Advocacy Program (HI-
CAP)?
No charge.
The initial enrollment period for Medicare Plan B ends how many months after the 65th birthday
month?
3 months.
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Upon notication of a claim, a claimant may have access to the California Fair Claims Settle-
ment Practices Regulations through all of the following means except:
an interview appointment with the agent of record.
Which plan is most likely to pay benets of 90 % for in-network providers and 70 % for out-of
network-providers?
PPO.
Which provision best protects an insurer from adverse selection?
Illness waiver.
Who must submit a signed statement saying that an illustration is used?
Agent and applicant.
In a 5-year vesting schedule what percentage is vested after 4 years?
40 %.
PPACA created the Health Benets Exchange:
that created entities such as the American Health Benet Exchange for the benet of small compa-
nies, employers and individuals who are unable to obtain health insurance in the insurance market.
If an insurance company knowingly allows one if its life agents or brokers to guarantee interest
income to an insurd on one of its policies, the DOI can do all of the following except:
Use the Insurance Guarantee Association to pay the salaries of employees.
all of the following are included in mortality tables, except:
probably of living at the end of the year.
In health insurance, the result of a rise in morbidity rates is:
Increased premiums.
A married couple has a handicapped child that depends on them for caretaking. If one of the
parent dies it will not put a signicant nancial strain on the family. If both parents die, there will
be a signicant nacial problem. Of the following, which is the best insurance product to deal with
this situation:
A survivor policy (second-to-die).
Which organization designs standard insurance policy forms?
Insurance Services Oce (ISO).
How often MUST life insurance surplus be distributed to policyowners?
Annually.
Which contract provides for the systematic liquidation of a fund?
annuity.
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In nancial planning, what is the Human Life Value concept based on?
income.
In nancial planning, what is the Needs Approach concept based on?
familys needs. fUnder the California Code of Regulations, all of the following would be considered
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proof of claim except:
Public Adjusters letter of representation.
When an insured reports a loss, the agent becomes obligated byt the California Code of Regu-
lations to:
notify the insurer immediately.
How much continuing education is an agent who holds the life-only and/or accident & health
license AND property and/or casualty broker-agent license required to complete?
24 hours per license term for either license.
What percentage of employee contributions to a 401(K) plan are vested?100%.
Determination of a workers insured status for Social Security uses:
The number of quarters worked.
The Pregnancy Discrimination Act requires:
Any health insurance provided by an employer must cover expenses for pregnancy-related condi-
tions on the same basis as costs for other medical conditions.
A life settlement broker earns a commission and/or fee for the work he/she does on whose be-
half?
The Owner.
If a life insurance producer who has been licensed as a life agent ( or a licensed nonresident pro-
ducer) in California for one year or longer and wishes to act as life settlement broker, he must do
which of the following?
Notify the Commissioner within 10 days of rst operating as a Life Settlement Broker and submit
the applicable fee to the DOI.
If a life insurance producer who has not held a life license for at least one year wishes to act
as a broker in arranging life settlements, what must she rst do?
Complete 15 hours of required education on life settlement transactions and submit an application
for a Life Settlement Broker license along with the applicable fee.
Which of the following will be automatically deemed qualied as a life settlement broker as if
the person were originally licensed as a life settlement broker or provider?
Anyone licensed as a Viatical Settlement Broker as of Dec, 31st, 2009.
As long as they are representing only the owner and are not being paid directly or indirectly
by the Provider, what must attorneys, CPAs and nancial planners doto be properly licensed to
negotiate life settlement contracts on behalf of owners?
nothing needs to be done as these professionals are allowd by the insurance code to negotiate life
settlement contracts on behalf of owners without having to obtain a license as a broker.
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As it pertains to life settlement transactions, all of the following are acceptable reasons for the
insureds identity and personal nancial and medical information to be disclosed, except:
it is necessary for the issuer of the policy to be settled to determined if they will allow the life
policy to be assigned from the owner to the provider.
Under the ADA, which of the following would not be considered a disability?
obesity.
Which of the following would not be considered a disability under the ADA?
Obesity.
If an employee elects to continue group health coverage under COBRA after a qualifying event, how
long must the employer continue coverage for that employee under COBRA and what percentage
of the premium can be employee be required to pay?
18 months/102%.
How many medicare supplement (Medigap) plans are there?
10.
All of the following health providers are physicians except:
Optometrists.
Under the Family & Medicl Leave Act (FMLA), all of the following reasons would entitle an
eligible employee up to 12 weeks of unpaid leave each year except:
A woman deciding to take a leave from her job so she can travel with her husband while hes
overseas on a work assignment.
A life settlement between a policyowner and a provider most closely resembles which of the follow-
ing?
Viatical Settlement.
In a life settlement arrangement between policyowner and a life settlement provider, how would
the policyowner typically be paid?
A lump sum payment.
Which type of beneciary designation gives the policyowner the right to change the beneciary
designation without requiring the beneciarys consent.
A revocable beneciary designation.
Which statement best describes how the Return of Premium (ROP) rider works on a term life
policy?
The policy owner will receive all or a portion of the premium paid in over the life of the policy if
the insured is still living at the end of the policys term.
When a eligible worder dies, all of the following may be entitled to survivors benets through
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social security, except:
The workers 41-year old widow.
If the owner of an annuity makes a withdrawal from it before age 59 1/2, what will the penalty be?
10%.
A distribution made from which of the following plans would be a non-taxable distribution?
Roth IRA.
Which government agency would possible provide coverage if you ran out of coverage under your
own health insurance?
Department of Health Care Services (DHCS).
The insurance term used for an insurer who has not complied with the requirements to obtain
a certicate of authority from the CA Insurance Commissioner is:
Nonadmitted.
A life agent must maintain all of the following information except:
Trust account bank statements, if any.
A commonly used cost containment measure for emergency hospital care under a major medi-
cal expense plan is:
Deductible.
By state law, how many weeks is an employee entitled to for maternity leave after giving birth?
12 weeks.
Under Cal-COBRA all of the following would be considered qualifyng events, except:
Termination, regardless of conduct.
Which of the following would not be considered a qualiyng event under Cal-COBRA?
Termination (regardless of conduct).
How does a Medicare claim get started?
Medical provider contacts Medicare.
Not being able to do any of the following activities would be considered a disability except:
Driving.
What happens to an agents license after all notice of appointments have been terminated?
the license is considered to be inactive.
As it pertains to insurance, which of the following is included in the denition of execution of
a policy?
Signing a binder.
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Which of the following actions would not fall under the denition of execution of a policy?
Advertising.
Under the ADA, all of the following would be considered a disability, except:
Wearing glasses.
What is the rst step in the personal nancial planning process?
Dene objectives.
What happens to an employees group health benets while he is on leave from work under FMLA?
The benets will continue while the employee is on leave.
Doris who is 30 years old, misstates her age on a life insurance application as being 25 years
old so that she could pay $10/$1,000 as opposed to the 30 year old rate of $12/$1,000. Several
years later, whne the insurer catches the misstatement of age, how will the dierence in premium
be adjusted for?
10/12 of the value of the benet.
How do most disability plans categorize their benets?
initially own-occupation, then any-occupation.
What is a typical disability provision for group disability policies?
Own-occupation for a short period, then Any-occupation.
The CLHIGA covers all of the following types of insurance, except:
Plate glass.
What is a seniors age as it pertains to life and annuities?
60.
When an employee has group term life insurance provided by his employer, how will the policy
proceeds paid to the employees beneciary be taxed?
the policy proceeds will generally be tax-free to the beneciary.
Which of the following is true regarding an aleatory contract?
If there were a loss, the insurer would pay out considerably more compared to the insureds premium.
All of the following statements apply to a producer acting as an insurance BROKER ( as dis-
tinguised from an insurance AGENT), except:
A broker acts on behalf of the insurer.
the disease most frequently insured by specied disease insurance is:
cancer.
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the correct statement regarding the federal income tax consequences of an insured corporated
buy-sell agrement is:
When stock is purchased from a deceased stockholder under a cross-purchase plan, there will be an
increase in the purchasing shareholders basis in their stock in the corporation.
As used in the CA Insurance Code, the word may means which of the following?
Permissive.
In a group insurance policy, acts of war and aviation are considered examples of:
exclusions.
collateral assignments on life policies are most often used for:
bank loans.
According to the CA Insurance Code, a binder is a valid insurance policy for the purpose of
providing the insured has insurance coverage specied in the binder for all of the following classes
of insurance except:
life.
Insurance negatively aects society in all of the following ways except:
Takes away capital that could be used for other things.
If a dependent child covered by a group life plan is incapable of self-support, coverage under
the plan may continue up to age:
any age.
The period of time medical benet payment can be received by a disable worker is:
Indenitely.
Disability insurance benets are usually paid:
monthly.
What type of annuity has a minimum xed interest rate and can also achieve stock-market-like
gains?
Equity Indexed annuity.
An agents appointment to sell insurance for an insurer is subject to cancellation if:
the agent fails to renew his license.
Life insurance must included all of the following in the nancial statement except:
Policy summary description.
Hospital indemnity insurance provides money for all of the following except:
Medical expenses.
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When an agent shows a life illustration to a senior, which of the following can be used in the
illustration?
A disciplined current scale interest rate.
Medicare Part A will send a statement to which of the following?
insured.
An insured has a disability insurance policy and he changes to an occupation with less risks than
the previous one. His insurer will:
change the premium to a lesser amount.
Which factor dierentiates a deferred annuity from an immediate annuity?
When the annuity is paid.
A unilateral contract is the insurance agreement that is:
a contract issued by the insurer and accepted by the insured.
How would a pure risk best be describe?
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Losing some pay from work because of an injury.
-insurable interest in a life insurance policy.
does no need to exist at the time of loss, only at the time the policy is written.
As an employer, the sudden death of an employee is considered a: A) Body loss B)Personal
loss C) Personnel loss D) Human loss.
-Regarding an organizational license, what happens when a corporation is dissolved?
B) The license is terminated.
-Which of the following would be considered a morale risk?
C) the insured drives too fast.
-Senior citizens are given a 30 day right to return a life insurance policy:
A) At age 65. B) Under individual or group plans. C) At age 60 or older.
-Subject to the restriction of the CA Insurance Code, any person capable of making a contract
may be considered:
A) An insurer B) A broker C) An agent.
-What is the purpose of the California Life and Health Guarantee Association?
B) To protect life policy holders and/or insureds when any insurer becomes insolvent. C) To guar-
antee that any promises made by any insurers sales or marketing units are fulllled. D) To protect
life and health policy holders and/or insureds when member insurers become insolvent, subject to
certain limitations.
-If an insurance agent or broker receives a commission for arranging a premium nance agree-
ment they must do which of the following?
A) Disclose to the client the amount of all commissions received. B) Disclose to the client the
amount of commission recieved for arranging the nancing agreement. C) Share the commission
with the client.
-Certain healthcare providers are called service type providers. This means:
A) They are more service oriented thatn the average provider. B) Payments for services are made
directly to the insured. D) Payments for service are made directly to the provider.
-Which of the following is not ordinary life insurance?
B) A 30-year decreasing term policy.
-A failure to communicate information which a party to an insurance contract knows and should
communicate, is called an act of:
A) Concealment.
-When a family policy covers children, all of the following are true, except:
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A) The coverage is term insurance for a xed amount. B) Evidence of insurability is required if a
childs coverage is converted to permanent insurance. D) All children living with the family covered
even if born or adopted after the policy is issued.
-Deductibles, coinsurance, and co-payments in a health insurance policy are cost-eective choices
that have the eect of:
A) Cost sharing.
-Which of the following is not one of the common personal uses of life insurance? A) Funding
a bu/sell agreement. C) Creating emergency funds to avoid the need to liquidate assets. D) cre-
ation of an immediate estate.
-Under the Consolidate Omnibus Budget Reconciliation Act (COBRA), a qualifying event insures
that an employee who is covered can:
A) Elect to continue coverage.
-An individual license is considered terminated.
C) On the death of the licensee.
-A movie company concerned about their nancial losses in case of the illness of one of their
actors would purchase:
A ) surety insurance.
-Supplemental insurance used to pay for hospital connement to treat a cancer is also known
as:
C) Dread disease,
-What must an insurer do who accepts an application from an agent who is not speciacally
appointed by that insurer and then issues a policy from that application?
D) Forward to the Insurance Commissioner a Notice of Appointment within 14 days of receipt of
applicaton.
-Which of the following is considered ordinary life insurance?
B) Continuous premium whole life
-Which of the following is a true statement regarding the social security (OASDHI) program?
C) The program provides a minimum oor of income, and is meant to supplement a retirees own
personal program.
-Which party has rights in a life insurance policy only after the death of the insured?
The beneciary.
-Bernie pays 10, 000intoasinglepremiumannuityandanother 10,000 into a CD. Both pays 12%
interest annually. Bernie is in the 31% income tax bracket. For 35 years Bernie makes no with-
20
drawals from his annuity or CD and reinvests all interest earned on the CD back into it at 12%.
Which of the following statements is true?
A) The CD would be worth several hundred thousand more because there is no commission paid on
a CD. B) The annuity would be worth several hundred thousand more because of the tax deferral
of the earnings. C) The CD would be worth several hundred thousand more because of tax deferral.
D) They would be worth apporximately the same amount after the payment of deferred income
taxes.
-Listed below are descriptions of four types of policies. Which is the term policy?
A) The policy premium increases after three years and then it remains the same until the policy
is paid up at age 55. C) The policy premiums must be paid for 20 years. Afterwards, the pol-
icy continues with not additional premiums paid. The policy has non-forfeiture values. D) The
policy has a face amount of $ 100,000. Every ve years, the premium paid increases. After ten
years, the policyholder stops paying premiums and the coverage stops. The policy has no cash value.
-The main master policy owner of a group health insurance contract is the:
A) employer, B) Employee members, C) Plan administrator, D) Agent.
-If one were to receive the principal sum benet of death in a disability policy, the death must
occur:
A) within a specied number of days after injury occurs. B) Anytime during a rehabilitation period.
C) Any time that total dismemberment falls in the period. D) within the policy period for any cause.
-All of the following are true statements concerning the treatment of federal income tax on life
insurance, except:
A) premiums paid for individual life insurance policies are not tax deductible. B) Employers cand
deduct as a business expense the cost of insurance premiums paid to benets employees. C) Annu-
ity death benet proceeds are exempt from all taxation. D) Death benets are generally exempt
from Federal Income Taxation.
-The policy owner, age 50, has been paying the premiums on his whole life policy for 15 years.
He needs the equivalent of 1/3 of the cash value of his policy over the next two years. He wants to
continue to have the policy protection, and can aord to pay the premiums. Which of the following
would appear to be his best course of action?
A) Look elsewhere. The insurer is not obligated to make the cash value available to the policy
owner unless the policy matures. If they did, most policies would lapse. B) Look elsewhere. Whole
life policies do not develop a cash value. C) Surrender the policy and take the cash value. He can
then take the other 2/3 and purchase another policy. D) Use the policy loan provision to borrow
money from the policy, but keep paying the policy premiums to keep the policy in force.
- An insured bought a $ 150,000 non-participating whole life policy many years ago. She is 100
years old today. She has never borrowed from the policy, and has made all premium payments
when due. The policy cash value is:
A) $0, B) $ 75,000; C) $100,000; D) $150,000.
21
-In insurance terms a representation can be considered:
A) an absolute fact, B) An implied warranty, C) An express warranty, D) None of the above.
-In insurance terms a representation can be considered:
A) an absolute fact, B) An implied warranty,C) An express warranty, D) none of the above.
-In life insurance, the loss of a key employee is considered a:
A) Body loss, B) Personnel loss, C) Personal loss, D) Human loss.
-Under the 10-day right to return, the policy will pay proceeds:
A) If premium is not paid, B) If the policy is not returned but premium is paid. D) None of the
above.
-Hospice care is for:
A) Persons needing acute care, B) Family caregivers, C) Persons needing custodial care, D) Ter-
minally ill persons.
-Identify the penalty for each violationfor a person engaging in any unfair method of competi-
tion.
A) No more than $5,000 per agent. C) No more than $5,000 for each act, or no more than $10,000
for each act if the act is judged to be willful. D) $5,000 for each violation up to a total of $10,000.
-In the absence of a coordination of benets clause, all of the folllowing circumstances might result
in the recovery of some or all health care expenses, except:
A) Both spouses are employed and eligible for group medical payments. C) Person working for an
employer with self-insurance. D) Guarantee association laws.
-Unless it is merely a statement of an expectation or a belief, a representation as to the future
is considered which of the following?
A) Promise, B) Provision, C) Liability, D) Description.
-Regarding life insurance coverage for a company, the one responsible for obtaining the cover-
age, maintaining the policy, and paying the premium is:
A) The master policy holder (This is what the master policy holder [employer] does). B) the indi-
viduals who make up the group. C) The insurer that provided the group coverage. D) The agent
who obtained the group coverage.
-The purchase of an insurance policy may not provide one of the following for the insured. Se-
lect the most complete answer:
A) The replacement of a large possible loss for a small certain loss. B) A reduction of uncertainty.
C) Reduction in the worry/greater peace of mind. D) Elimination of the risk.
-Which type of life insurance policy gives the policy owner the right to share in the insurers
surplus?
A) Participating, B) Non-participating, C) Level term, D) Decreasing term.
22
-Which of the following may be oered by insurers providing Medicare supplement policies?
A) The core benet plan without any additional benets. B) Broad plans that exclude the core
benets. C) Plans without a right to return period.
-Which of the following is a correct statement about life insurance policy types?
A) Limited payment whole life policies stay in eect only as long as the premium is paid. B) Group
life insurance policies are oered only to employees who provide proof of insurability. C) The initial
premium for term insurance is lower than the initial premium for whole life insurance (Term is pure
insurance, whereas whole life is insurance plus cash values plus interest).
-Which of the following is true regarding participation in a group health plan?
A) Minimum participation of 15 years is required for a contributory group health plan. B) A non-
contributory group health plan must involve all members. C) A contributory group health plan
must involve all members.
-Terminallly ill persons would need which of the following?
A) skilled nursing care, B) Intermediate care, C) Hospice care, D) Acute care.
-The department responsible for evaluation, selection, and distribution of risks is:
A) The marketing and sales department. B) The underwriting department (the purpose of this
department is to spread the risk among a pool of insureds in a manner that is equitable for the
insureds, and protable for the insurer). C) The claims department. D) The actuarial department.
-Joe receives a large bonus at work and decides to purchase an annuity with it. His monthly
income payments from the annuity will begin the following month. Which of the following has Joe
purchased?
A) A single premium deferred annuity, B) An individual retirement annuity, C) A tax sheltered
annuity, D) A single premium immediate annuity.
-The policy provision which comes into eect when the insured and primary beneciary die in
a simultaneous (common) accident with no evidence as to who died rst is:
A) Common disaster provision( This clause or provision in a life insurance policy is designed to
determine the order of deaths when the insured and the beneciary die in the same accident. Oth-
erwise, the proceeds are payable to the insureds estate). B) Simultaneous death provision. C)
Joint life provision. D) Joint and second to die provision.
-In group insurance the Certicates of Insurance are issued to:
A) The group sponsor. B) The group members. C) The employer. D) The plan administratro.
-A person has a disability policy with the following denition of disability: the inability to per-
form any occupation for which the insured is suited through education, training, experience or prior
economic status. This is an:
A) Own occupation denition and is very restrictive, B) Any occupation denition and is less re-
strictive. C) Own occupation denition and is less restrictive. D) Any occupation denition and is
23
very restrictive.
-Renewable term insurance can best be described as:
A) A level death benet with a raising premium. B) A decreasing death benet with a level pre-
mium. C) A level death benet with a decreasing premium. D) An increasing death benet with
a level premium.
-The Common Disaster provision is designed to protect the interests of which of the following?
A) The primary beneciary, B) The insurer and insured, C) The contingent or secondary bene-
ciary, D) none of the above.
-How much continuing education is an agent who holds the life-only or accident & health license
And property and/or casualty broker-agent license required to complete?
A) 25 hours per license term for each license. B) 24 hours per license term for either license. C) 25
hours per license term for either license.
-In order to deal with the nancial consequences of the death of a senior sales manager, a cor-
poration could purchase:
A) Group life insurance, B) Key person insurance, C) Business overhead expense insurance, D)
Ordinary life insurance.
-What would a person be guilty of who refuses to submit books and records to the Commis-
sioner?
A) Misrepresentation, B) Contempt or court, C) Felony, D) Misdemeanor.
-Which of the following requires a reporting company to respond to a consumers complaint that
his le contains inaccurate information?
A) Unfair Practice Act, B) Medical Information Act, C) COBRA, D) Fair Credit Reporting.
-Which of the following statements about policy dividends is true?
A) Dividends can be guaranteed. B) The insured usually selects the dividend option at the time
of policy purchase. C) Dividends are only issued with non-participating policies.
-In accidental death and dismemberment insurance, which of the following would not be considered
accidental?
A) Employee loses sight in one eye from falling object in the shop. B) Employee severs hand while
installing sheet rock at a building site. C) Employee requires abdominal surgery after good poison-
ing in the lunch room ( This choice is from natural causes. Accidental Death and Dismemberment
Insurance must have accidental means such as is found in the other answer choices).
-A health insurance co-payment is:
A) A percentage of the probable cost of services provided to the insured. C) A payment paid by
the insured to the provider for the service. D) A percentage of the cost of service shared between
the insured and the insurer.
24
-An insurance company pays claims after a self-injured, specied limit has been reached. This
is:
A) Stop-loss coverage. B) Multiple employer welfare arrangement. C) A coverage delay provision.
D) Gap insurance.
-Insurers make an adjustment to the cash value of an account of an universal life policy each
time a payment is made. They add the premium pad and:
B) A general expense charge, C) Current interest; adjusted for mortality and a general expense
charge, D) Mortality and general expense charges.
-Relevant to health insurance, morbidity includes all of the following except:
A) intelligence.
-To be classied as accidental under a disability income insurance policy, the following criteria
must be used:
A) Only the cause need be accidental. B) The cause may be intentional, but the result must be acci-
dental. C) Both the cause and the result must be accidental. D) Only the result need be accidental.
-After a life insurance policy has been in eect for two years, what keeps it from being rescinded
by the insurer?
A) The grace period provision. B) The right to return provision. C) The incontestability clause.
D) The reinstatement clause.
-The type of healthcare provider that provides both the healthcare services and healthcare coverage
is called:
A) EPO, B) Major Medical Organization, C) Health Maintenance Organization. D) Preferred
Provider Organization.
-A single deductible amount for all members of the same family and a right to single family member
deductibles is known as:
A) Corridor deductible, B) Flat deductible, C) Family deductible, D) Stop-loss revenue.
-Insurer and the insured share covered losses. This is called:
A) Coinsurance, B) Sharing, C) Stop-loss provision, D) Co-payment.
-In managed care, the members choice of providers is most restrictive in which of the follow-
ing type of plan?
A) Indemnity, B) HMO, C) Point of Service.
-Each of the following terms is an important characteristic of a major medical policy, except:
A) Deductible, B) Capitation (Major medical provides benets for a serious, prolonged, or catas-
trophic illness or hospitalization, whereas capitation is a rate paid, usually monthly, to a health
care provider. In return, the provider agrees to deliver health services agreed upon to any covered
person), C) Setting maximum amounts, D) Coinsurance.
25
-When a claimant is covered by more than one plan the situation is resolved through:
A) Maximum benet, B) Coinsurance, C) Integration, D) Coordination of benets.
-The home care coverage of a LTC policy provides for:
A) Part-time home health care for the elderly, B) Full-time home health care for persons of any
age, C) Part-time nursing at home for a custodial care patient, D) Full-time nursing at home for a
convalescent patient.
-Usually, in order to join a group insurance plan without proving insurability, an employee must:
A) Join the plan during the enrollment period. B) Join the plan while eligible but after the en-
rollment period. C) Join the plan during the probationary period. D) Join the plan during the
elimination period.
-Which of the following is true about life insurance beneciary designations?
A) the primary and secondary beneciary share proceeds equally, B) If the primary beneciary dies
before the insured, the benets are paid to the estate of the insured even if there is a contingent
beneciary. C) when the insured dies the death benet is paid to the secondary beneciary even if
there is a primary beneciary. D) if there is no surviving beneciary, the death benets is paid to
the insureds estate.
-A disability income policy social insurance supplement (SIS) benet rider:
A) Pays benets only if it turns out the insured is eligible for benets from social insurance. B)
Pays a benet if the insured is injured on the job and qualies for workers compensation benets.
C) Proces a payment only when the insured is totally disabled, but not receiving any social in-
surance benet plans.
-A health maintenance organization (HMO) plan contains costs by promoting:
A) After-hours care, B) Generic care, C) Preventative care, D) Fee for service care.
-Renewable term insurance can be best described as:
A) A level death benet with an increase in premium. B) A level death benet with a decrease
in premium. B)A decreasing death benet with a level premium. D) An increasing death benet
with a level premium.
-The basic feature of an indemnity plan is that the participants:
A) Select a provider and submit claims to the insurance company. B) Select a provider at work
and claims processor. D) Pre-select a clinic and submit claims to the insurance company.
-How do rights of an irrevocable beneciary dier from those of a revocable beneciary?
B) An irrevocable beneciary has a vested right that neither the policy owner nor his creditors
can impair without the beneciarys consent. C) A revocable beneciary can become the policy
owner at any time by paying the premiums. D) An irrevocable beneciary has the right to name
a contingent beneciary for the policy.
-What recourse does an insurer have if a violation of a material warranty on the part of the
26
insured is discovered?
C) Rescission of the policy.
-Which of the following describes an insurer who has enough nancial resources only to provide for
all its liabilities and for all reinsurance of all outstanding risks?
A) Guaranteed, B) Insolvent, D) Non-participating.
-All of the following statements about the election of a life insurance policys settlement options
are true, except:
A) The election is made by the policy owner at the time the application is submitted. B) When no
settlement option is chosen, the proceeds are automatically paid to the policy owners estate. D)
The election may be made by the beneciary if no settlement option is in force when the insured dies.
-What is the purpose of key person insurance?
A) To provide health insurance benets to key employees. B) To give a key employee the ability
to purchase the business. C) To give retirement benets to key employees. D) To cover decreased
business earnings due to the death of a key employee.
-What would be the Insurance Commissioners most likely course of action if an applicant for
an insurance license had a previous application for a professional license denied for cause by any
licensing authority within ve years of the date of the ling?
A) Deny the application probably after a hearing, B) As long as it was not insurance related, the
application will be granted. C) Approve only after a review by a panel of insurance professionals.
D) Deny the application without a hearing.
-An insured bought a $150,000 whole life policy many years ago. He is 100 years old today.
He has never borrowed from the policys cash value and has faithfully made all payments when
due. The policys cash value is:
A)$150,000. B) $100,000. C) $0. D) $50,000.
-An unintentional concealment entitles the injured party to which course of action?
A) None, due to the fact that the concealment was unintentional. B) $250 ne to be paid to the
injured party. C) Possible imprisonment to the party who concealed the information. D) Rescission
of the contract.
-Loss retention is an eective risk management technique when all of the following conditions
exist, except:
A) The probability of loss is unknown. B) The losses are highly predictable. C) The insured chooses
to assume the losses involved. D) The worst possible loss is not serious.
-A disability policy, described as guaranteed renewable in one where the insurance company:
B) Reserves the right to change any of its terms. C) Reserves the right to change the premiums,
but may not change any of its items. D) May not renew the policy if the insured ceases to comply
with certain conditions such as continued employment.
27
-When are parties to a contract required to communicate information solely based on personal
judgment for a matter in question?
B) Only when the policy terms require it. C) Only when relevant. D) never.
-Which statement is true regarding Medicare Supplement Insurance plans?
A) Insurers may oer only broad coverage plans that contains both core benets and additional
benets. B) Insurers may freely oer whatever supplemental coverages they prefer to market. C)
Insurers may oer policies that contain only the core benets. D) Insurers may create insurance
policies for approval by the CA DOI.
-The guaranteed insurability option provides the ability to:
A) Waive premium payments in the event of disability. B) Access a portion of the death benet in
the event of serious illness. C) Double the amount of the death benet in the event of accidental
death. D) Purchase additional insurance regardless of insurability.
-Which type of insurance guarantees the right to renew the policy each year, regardless of health,
but at an increased premium?
D) Renewable term ( Also, known as Annual Renewable Term (ART)).
-The passage of workers compensation legislation meant:
A) Employees no longer had any legal means of obtaining reimbursement for work injuries. B)
Employees would have to sue their employers to obtain reimbursement for work injuries. C) Em-
ployers would be held responsible for the cost of their employees work injuries regardless of fault.
D) Employers were no longer responsible for work injuries to employees.
-RW and Associates is an agency which represents BLG Insurance Corporation. RW and As-
sociates may leave the name BLG Insurance Corporation in its advertisements by clearly stating
the relationship between the two business in any of the following ways, except:
A) RW and Associates who represents BLG Insurance Corporation. B) RW and Associates un-
derwriting for BLG Insurance Corporation. C) RW and Associates placing business through BLG
Insurance Corporation. D) RW and Associates using the services of BLG Insurance Corporation.
-The probationary period in a group health policy is intended for people:
A) Who joined the group after the policy eective date. B) Without health coverage after a quali-
fying agent. D) With a pre-existing condition when they joined the group.
-Which provision will pay a portion of the death benet prior to the insureds death due to a
serious illness?
B) Accel, C) Cost of living, D) disab.
-An individual with a low income and high insurance needs should buy:
A) whole life insurance, B) Universal life insurance, C) Endowment insurance, D) Term insurance.
-An example of a third party administrator is:
A) An agents supervisor who takes part of his commision. B) An employee who handles self-
28
insurance claims. C) An employee who is responsible for evaluating for relative quality of competing
group health and welfare benets oered to his employer by insurers. D) An outside organization
that processes claims for an employers self-funded plans.
-A form of rest or relief oered to family members who are caring for a person who requires
continual care is:
C) Respite
-All of the following statements about contingent beneciaries are true, except:
A) They receive remaining payments to be made under a settlement agreement upon the primary
beneciarys death. B) The contingent beneciary shares death proceeds equally with the primary
beneciary. C) they receive the death proceeds if the primary beneciary is deceased at the time
of the insureds death. D) More than one contingent beneciary may be named.
-The payor rider on a juvenile life policy provides that if the payor dies or becomes disabled
before the insured juvenile reaches the age specied on the policy:
A) The insurer will make the payments until the insured juvenile reaches the specied age. B)
The insurer will lend money to keep the policy in force. D) The insurer will make all of the policy
payments.
-The insured is totally and permanently disabled. The insureds policy continues in force with-
out the payment of a premium because the policy contains a:
A) Grace period provision. B) Guaranteed insurability provision. C) Reistatement provision. D)
Waiver of premium provision.
-All of the following statements about survivorship life insurance are true, except:
B) The policy face amount is paid out only upon the death of the rst insured to die. C) It oers
premiums that are quite low compared to what is charged on separate policies. D) It is particularly
well suited to meet the needs of estate taxes.
-If an insurer is not able to meet nancial obligations when due, the insurer would be consid-
ered:
A) Insolvent, B) Unauthorized, C) Impaired, D) Non-admitted.
-What does the Insurance Commissioner have ther right to do if an agent lacks authority from
an insurer named on binder for coverage?
A) Fine the insurance company for non-compliance. B) Suspend or revoke the license of the agent.
C) Authorize the agent with a certicate of convenience.
-Which denition of disability is the most dicult for an injured worker to satisfy?
A) The own-occupation denition used by the Social Security Administration. B) The typical
denition of partial disability used by disability income policies. C) The total disability denition
used by the SSA. D) The typical denition of temporary disabilty used by disability income policies.
-People commonly purchase an annuity to protect against the risk of:
29
C) Outliving their nancial resources.
-In the event of an accidental death, the principal sum in a disability policy will be paid:
A) Over the course of a set period. B) On a sliding schedule. C) In one lump sum. D) As a
monthly indemnity.
-Which of the following statements about the HICAP program is false? HICAP:
D) Provides assistance for a fee based upon ability to pay.
-Why is having a large number of similar exposure units important to insurers?
D) The greater the number insured, the more accurately the insurer can predict losses and set
appropriate premiums.
-The insured, age 65, owns a $100,000 whole life policy. The policy is paid-up as of today. When
would the cash value reach $100,000?
D) Age 100.
-A measure for rating an individuals need for LTC benets is called:
A) case management B) Activities of daily living, C) The gatekeeper mechanism, D) Co-Insurance.
-In order to receive the principal sum benet for death from a disability policy, the death must
occur:
A) Within a specied number of days after injury. B) Anytime during rehabilitation period. C)
Anytime during a total dismemberment period. D) Within the policy period from any cause.
-Which of the following are commonly covered by medical expense policies
A) Elective cosmetic surgeries.B) Pre-existing conditions. C) Expenses covered by a workers com-
pensation policy. D) Accidental injuries.
-A health insurance deductible is:
A) The insureds payment for healthcare that is not considered a covered expense. C) The portion
of insurance premium paid for coverage by the insured. D) the amount of covered expense that the
insured pays before the insures pays.
-According to the CA insurance Code, an insureds policy must specify all of the following ex-
cept:
A) The risk insured against. B) The nancial rating of the insurer. C) The property or life being
insured. D) The policy period.
-Which of the following expenses is never covered by a LTC insurance policy?
A) Home health care, B) Adult day care, C) Hospital acute care unit, D) Alzheimers disease.
-Which of the following is a hazards?
A) A large number of similar exposure units. B) A peril. C) A condition that might increase the
likelihood of a loss occuring D) A speculative risk.
30
-A hospital connement indemnity insurance policy pays:
A) An indemnity to the insured for all expenses incurred when the insured is conned to a hospital.
B) the daily benet coverage amount stated in the policy for each day the insured is conned in the
hospital. C) 100% of the covered medical expenses less the deductible and co-insurance percentage.
D) The amount of the actual hospital expenses.
-When a licensed agent submits a renewal application with applicable fee on or before the ex-
piration date:
A) The agent will be able to operate if a receipt for a payment is returned prior to the license
expiration date. B)The agent will be able to operate for up to 60 days after the specied expiration
date. C) The agent will be able to operate if the agent goes in person to the insurance department
to receive a temporary extension of the license.
-A provision stating that health insureds and their insurers will share covered losses in an agreed
proportion is called:
A) The stop-loss provision. B) Comprehensive insurance. C) Percentage insurance. D) Co-
insurance.
-Common life insurance policy riders include all of the following, except:
A) Extend term, B) Guaranteed insurability, D) Waiver of premium.
-Term insurance is typically characterized by:
A) Low premiums and high cash value, B) High premiums and no cash value, C) High premiums
and high cash value, D) Low premium and no cash value.
-A $50,000 whole life policy with a cash value of $10,000 has been in force for 11 years. The
policy owner is unable to continue the premium payments. Which of the following describes the
reduced paid-up on=forfeiture option?
A) The policy owner begins to receive $200 monthly payments from the insurer that will continue
for life. B) The policy is surrender and the policy owner is paid $10,000 by the insurer. C) The
cash value is used to purchase $50.000 term policy that is paid-up for 10 years. D) The cash value
is used to purchase a $20,000 paid-up policy.
-What would we call a representation which fails to correspond with its stipulations or assertions?
A) Fatal, C) Frivolous, D) False.
- In the State of California
A) Twisting is an approved practic. B) Providing free insurance coverage in connection with the
sale of services as an inducement for completing the transaction is not legal. C) Life and health
insurance rates may not be related to the age of the insured. D) A life solicitors license has the
same licensing requirements as a life agents license.
-The adjustment that an insurer makes in a cash value account in a universal life policy each
time a payment is made includes all of the following, except:
31
B) Add the current interest. C) Subtract the policy surrender charges. D) Add the current pre-
mium paid.
-The Employee Retirement Income Security Act of 1974 (ERISA) mandates requiring plan sponsors
to provide participants with:
A) Plan descriptions and benets statements. B) Report of tax qualication fulllment. D) Annual
nancial statements.
-Which of the following requires a reporting company to respond to a consumers complaint that
his le contains inaccurate information about them:
A) Unfair Practices Act. B) Fair Credit Reporting Act. C) COBRA. D) Medical Information Act.
-Under an individual health guaranteed renewable contract, the insurer has the right to:
Discountinue coverage on the basis of employment. B) Cancel the policy for health reasons. C)
Make unilateral benet changes. D) Change premiums for the same class of insureds.
-All of the following statements about social security disability benets are true, except:
A) Benets are based on the level of a workers earnings up to the time of the disability. B) Benets
will continue only while the worker cannot work at all. C) Benets are designed to replace the
entire amount of a workers earnings. D) Workers must be totally and permanently disabled for at
least ve months to be eligible for benets.
-Under COBRA, a qualifying event ensures that an employee who loses coverage can:
A) Transfer coverage to another group. B) Convert to an individual policy. C) Elect to continue
converage. D) Request a waiver of premium.
-Under social security, the denition of disability is the inability to engage in:
A) An approved occupation. B) An activity with a given level of compensation. C) Any substantial
gainful activity. D) The persons chosen career.
-Which of the following statements about LTC is correct?
B) The need for LTC coverage can arise only after age 50. C) Medi-Cal is one of the most commonly
sold LTC policies. It is designed to protect the assets of middle-class Californians. D) The very
poor and the very rich probably do not need LTC coverage.
-Which of the following is a true stetement regarding the SS (OASDHI) program?
A) The program provides only a minimum oor of income. Individuals are expected to supplement
this with their own personal programs.
-The insureds policy has a deductible that is applied between the exhaustion of basic plan limits
and the commencement of excess coverage. This is called a:
A) Family deductible. B) Per cause deductible. C) Corridor deductible(This is a type of major
medical deductible amount which acts as a corridor between benets under a basic health insurance
plan and benets uder a major medical insurance plan). D) Stop-loss limit.
32
-What makes up the entire contract in a life insurance policy?
A) The policy, and when attached, the application. B) The policy, and any sales literature presented
by the agent of the policy holder. C) The policy, the application, and any verbal understandings.
D) The policy by itself, but never the application.
-Each of the following terms is an important characteristic of a major medical policy, except:
A) Deductible, B) Co-insurance, C) Maximum amounts, D) Capitation.
-In California, the minimum participation requirement for a contributory group health insurance
plan is:
A) 50% of eligible employees, B) 25% of eligible employees. C) 75% of eligible employees. D) 40%
of eligible employees.
-During the disability elimination period:
A) Residual benets payable. B) Occupational claims are payable. C) No benets are payable. D)
All claims are payable.
-A provision stating that the insured and the insurer will share covered losses in an agreed propor-
tion is called:
Percentage sharing, B) Co-insurance, C) Stop-loss provision, D) Comprehensive insurance.
-While an insurer is paying the premium for a life insurance policy under the waiver of premium
rider:
A) The insurer is named as the primary beneciary. B) The cash value does not increase. C) The
dividend payments cease. D) The policy remains in full force in every respect ( This rider becomes
eective after six months of disability).
-Medicare Part A provides coverage for all of the following, except:
A) Home health care, B) Hospice, C) Hospitalization, D) Physicians services.
-Which of the following is a type of deductible that charges the insured after basic medical benets
have been paid, and before other medical coverage begins?
B) Calendar deductible, C) Carry-over provision, D) Corridor deductible.
-Which of these statements concerning Medicare is not true?
A) Part A provides hospital care. B) Part B provides doctors and physicians services. C) Part C
provides long-term care benets.
-Concerning Part B of Medicare, which of the following is incorrect?
B) It is paid entirely by FICA (social security) payroll taxes. C) An individual must sign a form
rejecting Part B or they will be enrolled in it. D) It provides some coverage and benets for most
medical expenses not covered by Part A.
-From the list of descriptions below, select the one that is not eligible for Medicare. A) A per-
son who has been entitled to Social Security disability benets for 24 months. B) A person who
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has reached 65, is willing to pay a premium but is not eligible for Social Security. C) A person who
has reached 65 and is eligible for Social Security. D) All of the above.
-Hospice care provides services to patients who are:
A) In a hospital and expected to recover. B) Terminally ill. C) Receiving respite care through
Medicare. D) None of the above.
-In the Medicare system, the services provided by doctors and surgeons are covered by:
1.-Part A
2.-Part B
3.-There is no charge for coverage
4.-There is a charge for coverage.
A) 1& 3 B) 1&4 C) 2&3 D) 2&4.
-A person reaches the age of 65 and is currently covered under her employers health plan. She
elects to take Medicare coverage by rejecting her employers plan. This still keeps the company
plan primary. A) True
B) False.
-Which of these statements is not true with regard to insurers and policies that provide Medi-
care supplement coverage?
B) If the policy has been in force for at least 6 months, the insurer is prohibited from excluding
any preexisting conditions. C) The insurers are prohibited from any exclusion for all preexisting
conditions.
-Which of the following is not allowed by code in connection with the sale of Medicare supple-
ment policies?
A) Oer only core benets. B) Oer only broader plans( The phrase broader plans means more
comprehensive. If only the most comprehensive plans were oered, then only the most expensive
plans would be oered. Some inexpensive plans must be made available for the public to purchase).
C) Oer core plans as a stand-alone or oer core plans along with broader plans. D) Both A and
B are not allowed.
-Medicare covers which of the following in order to provide long-term care for the elderly:
B) A wide range of custodial care coverage. C) Very limited nursing home coverage. D) Medicare
provides none of the above.
-Choose the correct statement about long-term care LTC insurance:
A) Those who are very rich or very poor probably are not in need of long term care coverage. B)
The annual cost of nursing home care was about $10,000 in 19990. C) One of the best-structured
plans for long term care for those in the middle class in Medi-Cal.
-There is a type of benet that pays for the cost of relief given to the caregiver of a person who
requires constant care and supervision. What is this type of care called?
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D) Respite care.
-Long-term care policies can be sold in various ways. Which of the following is one of these
ways?
A) As part of an auto policy. B) As a part of a comprehensive homeowner umbrella policy. C) As
part of a life insurance policy through the use of an endorsement.
-Pick from the following choices the features of a long-term care policy that would have the highest
premium:
1.- Long benet period
2.- Short benet period
3.- Long elimination period.
4.- Short elimination period.
B) 2&3 C) 1&4 D) 2&4.
- Which of the following categories of benets are not covered in a long-term care policy?
A) Home care benets, B) Custodial care benets, C) Acute care coverage in a hospital ( acute
care in the hospital is covered under a medical expense policy), D) Community based care benets.
-Any long-term care policy sold in California must provide for certain benets. Select the most
correct answer describing these benets from the choices below:
A) Home care only, B) Medicare supplement, C) Institutional care only, D) Institutional care and
home care.
-Long-term care policies that deliver benets for community based or home care services must
include which of the following:
1.- Respite care
2.- Hospice care
3.- Home health care services.
A) 1,2,&3 B) 1&2 D) None of the above.
-Which of the following is false about the marketing of long-term care insurance according to
the code?
A) They can exclude degenerative conditions like Alzheimers. B) They may require hospital stays
of certain lengths be satised before benets are provided. C) Inaction guard is a non-legal
provision in LTC policies. D) All of the above false.
-The Health Insurance Counseling & Advocacy Program (HICAP) provides assistance to the public
on a fee basis if the person requiring assistance is nancially able to pay.
A) True
B) False.
-When Workers Compensation laws became mandatory, it meant:
35
A) HMOs were required to provide medical services to all employees. B) Employers could use com-
mon law defenses more to their advantage. C) Employers were nancially responsible for employees
on-the-job injuries, regardless of fault.D) Employees were required to prove their employers fault
to le legal action.
-who pays the premium for a WC policy for a retail store?
C) It is always paid entirely by the employer.
-Mike drives a truck for a delivery company. In the course of making a delivery he is involved
in a serious accident, and is taken to the hospital. The hospital and doctors bill will be paid by:
A) The company WC policy. B) Medi-Cal, assuming he qualies for coverage. C) Mikes private
auto insurance policy. D) None ofthe above.
-Benets will be paid from a WC Subsequent Injury Fund only if both the rst and second in-
jury are the result of an on-the-job-accident.
A) True
B) False
-The WC portion (Part I) of the WC policy covers payments the employer (insured) must pay:
A) Under WC law. B) To bring the work environment up to state safety codes. D) To coordinate
with HMO coverage.
-the seamless delivery of medical and indemnity benets for both occupational and non-occupational
injuries and illnesses is the denition of:
24-hour coverage.
-In California after Jan, 1st 2002, the denition of health insurance includes all of the follow-
ing types of coverage except:
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