Life & Health - Practice Exam 3

150 Questions  I  By Pchinna
Life & Health - Practice Exam 3

  
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1.  The master policy owner of a group insurance policy is responsible for paying the premiums, submitting information about the employees, forwarding the applications to the insurer and maintaining the policy.
A.
B.
2.  In the life insurance planning process, the "blackout period" is considered:
A.
B.
C.
D.
3.  According to the code, "transact", as it applies to insurance does not include negotiations preliminary to the execution of a contract of insurance.
A.
B.
4.  An exclusion of benefits in health and disability insurance that denies coverage for a stated period of time for conditions that were experienced before the policy became effective is the:
A.
B.
C.
D.
5.  When premiums are paid into a universal life insurance policy insurers must make certain adjustments to the cash value.  The company will add the current premium paid, and:
A.
B.
C.
D.
6.  From the following, identify that which constitutes the "entire contract" in a life insurance policy. The policy:
A.
B.
C.
D.
7.  Oscar owns a whole life policy that he has been paying into for many years.  He would like to continue having life insurance, and can afford to make the premium payments, but needs about 30% of the case value for a couple of years.  What would be the best course of action for Oscar to take ?
A.
B.
C.
D.
8.  Which of the following is required to be included in the writing of an insurance contract ?
A.
B.
C.
D.
9.  From the following, identify that which applies to an applicant's misstatement on an application for insurance. 1. Should the misstatement be made with express intent to mislead the insurer it is considered fraud. 2. Should the misstatement not be material to the Company's decision it may not affect the application.
A.
B.
C.
10.  Choose the correct answer.  The California Insurance Code: 1. includes laws and regulations the Commissioner has issued. 2. is basically the body of laws governing insurance business in this state. 3. is broken into five sections.  They are: life, health, personal lines, commercial property and commercial liability insurance.
A.
B.
C.
D.
11.  Which of the following is correct about the term "transact" as it applies to the field of insurance and the various penalties for insurance transactions in violation of the code ?1. Solicitation is a part of transacting insurance. 2. Negotiations preliminary to the execution of a policy falls within the definition of transacting insurance. 3. Should a person tranact insurance without a valid license he/she is guilty of a misdemeanor. 
A.
B.
C.
D.
12.  Identify the statement that is true about contributory group life insurance.
A.
B.
C.
D.
13.  From the descriptions below, identify which one is a term policy
A.
B.
C.
D.
14.  Disability income insurance offers various riders to supplement benefits from these policies.  The Social Security rider:
A.
B.
C.
D.
15.  In order for insurers to help avoid the problem of over-insurance they include ___ provisions in their policies.
A.
B.
C.
16.  Choose from the following selections the best description of a premium.
A.
B.
C.
D.
17.  Ben is a life agent who would like to do business with the rock Solid Insurance Company but he doesn't have an appointment to sell their policies.  Assuming Rock solid does not require exclusive representation, can Ben submit an application to them from a prospect ?
A.
B.
C.
D.
18.  What does the incontestable clause of a life insurance policy do ?
A.
B.
C.
D.
19.  Frequently, juvenile life policies contain a payor rider.  This rider states that in the event the payor of premiums is disabled or dies, and the juvenile has yet to reach a specific age:
A.
B.
C.
D.
20.  Choose the correct statement about a cost of living rider.  The policy owner:
A.
B.
C.
D.
21.  Insurance companies have several departments handling various responsibilities in the issuance of polices.  Which department is primarily involved with the selection of risks ?
A.
B.
C.
D.
22.  Choose the correct statement about the ten-day free look provision in a life insurance policy: 1. A full refund of premium is required if the policy is returned within 10 days of delivery. 2. The contract is in force during the 10 day period and any claims must be paid even though the insured returns the contract.
A.
B.
C.
D.
23.  An agent mostly sells long-term care insurance to individuals.  He obtained his insurance license (life and health) in January of 1998.  In 1998 he must:
A.
B.
C.
D.
24.  Which of the following is true in regard to health insurance issued on a group basis ?
A.
B.
C.
D.
25.  Jerry is using a new time management technique in his insurance sales presentation.  In order to cut the amount of time he spends at each appointment he no longer answers questions when they are first asked.  Instead he answers them only if they are asked twice.  He feels this will allow him to get to his next meeting quicker.  Most insurance professionals would consider this:
A.
B.
26.  Which of the following is false regarding the taxation of life insurance ?
A.
B.
C.
D.
1 comment
27.  If the premium on an individual health insurance policy is paid annually, semi-annually, or quarterly what is the minimum grace period required ?
A.
B.
C.
D.
28.  Survivorship life or second-to-die policies: 1. Are effectively used to cover the costs of estate taxes2. Are issued in excess of $1 million in most cases. 3. Reflect substantially lower premiums when compared to buying two separate policies.
A.
B.
C.
D.
29.  All of the following are used in determining life insurance rates, except:
A.
B.
C.
D.
30.  Which of the following is false about dividends paid from life insurance policies ? A dividend is:
A.
B.
C.
31.  Disability insurance contracts often include a provision called an "elimination period".  Which of the following best describes this time period:
A.
B.
C.
D.
32.  Which of the following would be considered an alien insurer ?
A.
B.
C.
D.
33.  An annuity which may be used to help fund retirement in a few years maintains a "separate account".  the owner purchases "accumulation units". This is called a ____ annuity.
A.
B.
C.
D.
34.  Any entity providing coverage for medical expenses is subject to the jurisdiction of the Department of Insurance in California, unless it can show it is subject to the jurisdiction of another government agency
A.
B.
35.  If no other selection is made, which of the following settlement options becomes the default or automatic mode of settlement for the death benefit of a life insurance policy ?
A.
B.
C.
D.
36.  The California Insurance Code contains very specific regulations regarding the ability of a senior citizen to return a life insurance policy or annuity.  The regulation: 1. Applies to group plans and individually issued policies equally. 2. Allows a senior citizen a minimum of 30 days to return a life or annuity contract to the insurer.  They are entitled to a full refund of premium. 3. Specifies a senior citizen as an individual who is at least 65 year of age as of the purchase date.
A.
B.
C.
D.
37.  Settlement options provide a number of choices relating to how death benefits can be paid by the insurer.  These choices: 1. Can be made by the owner of the policy at the time of submission of the application. 2. Can be changed by the owner of the policy at any time before benefit are paid. 3. Can be made by the beneficiary if, at the time of death of the insured, no option was established.
A.
B.
C.
D.
38.  All of the following would be considered an accident as it relates to health insurance, except:
A.
B.
C.
39.  When an insured becomes totally and permanently disabled, her condition triggers a provision that keeps that policy in force even though the insured stops making premium payments.  This is a/an:
A.
B.
C.
D.
40.  Every licensee must indicate on which of the following documents his or her license number ?
A.
B.
C.
D.
41.  Julie is a licensed insurance salesperson who represents the Silver Dollar Insurance Company.  If you were to look at the front of her office you would see a sign that reads: SILVER DOLLAR INSURANCE COMPANYJulie Insurance AgencyIf Julie performs acts that are not specifically named in the written contract she has the Silver Dollar she is exercising her _____________authority.
A.
B.
C.
D.
1 comment
42.  A health insurance contract states that if, during the first 30 days after the policy's effective date, an illness occurs, there will be no benefits paid out of the policy.  What is this period of time called?
A.
B.
C.
D.
1 comment
43.  A disability policy is issued and premiums are paid on an annual basis on the 1st of January.  At the first anniversary, the insured decides they do not want to renew the policy and they do not pay the premium. On the 8th day after the premium due date, the insured submits a claim for medical expenses.  How will the company respond to the claim ?
A.
B.
C.
D.
44.  Sam's insurance policy pays a dividend.  the agent that sold Sam the policy refers to the shareholders of the company as "participating", therefore it is a(n) ______________insurer.
A.
B.
C.
D.
45.  The dividends and cash value continue, and all features of the policy remain in force, even though the insurance company, not the owner, is making the premiums.  This is a description of a _____ rider.
A.
B.
C.
D.
46.  The license of an agent is considered inactive when:
A.
B.
C.
D.
47.  The owner of an office building recognizes the hazards of the building because of its age.  He decides to finally get insurance to protect him from a possible legal suit.  this would be an example of avoidance of risk.
A.
B.
48.  Of the items listed below, which are requirements for a life and disability insurance analyst license ?
A.
B.
C.
D.
1 comment
49.  According to the terms of the suicide clause found in a life insurance policy, if an insured commits suicide 6 months after the policy is issued, what will the insurer do ?
A.
B.
C.
D.
50.  Jennifer has reached a time in her life where she wishes to begin receiving payments from her tax-deferred annuity.  Her agent has suggested she take the money by means of the "life income with 10 years certain" option. When she does, the insurer will make payments:
A.
B.
C.
D.
51.  In life insurance policies, naming beneficiaries is an important part of the application process.  Choose from below the best description of a contingent beneficiary.
A.
B.
C.
D.
1 comment
52.  Which of the following is not correct regarding the disability benefits provided by Social Security ?
A.
B.
C.
D.
53.  An irrevocable beneficiary has certain rights to policy proceeds not shared by revocable beneficiaries.  For example, an irrevocable beneficiary must grant permission for the policyowner to borrow from the cash value
A.
B.
54.  Choose the payments from an insurance policy which are not subject to federal income taxes:
A.
B.
C.
D.
55.  Charles received a large inheritance from his uncle's estate.  Because he can use the income, he buys an annuity with the full amount of his inheritance that will begin paying him monthly payments starting the following month.  Charles has purchased a/an _____ annuity.
A.
B.
C.
D.
56.  Which of the following is not an example of what an insurance policy can provide an insured ?
A.
B.
C.
D.
57.  Fran is comparing life insurance available through her employer and an independent life agent.  Her employer provides automatic coverage and requires ______ medical information than the life agent.
A.
B.
C.
58.  If the owner of a life insurance policy elects to pay an annual premium, she will:
A.
B.
C.
D.
59.  A binding receipt issued on the sale of a life insurance policy becomes effective from the date the receipt is given --no matter what the insurability of the applicant.
A.
B.
60.  Arnold and Bertha are married and work for different firms.  Arnold has group health insurance through his company that also insures Bertha.  Likewise Bertha has group health insurance also covering Arnold.  Select the correct statement below about how benefits are affected by the coordination of benefits provision in both plans.
A.
B.
C.
D.
61.  Which of the following is not legal when determining premium rates for life or disability insurance ?
A.
B.
C.
D.
62.  When applying for insurance, there is usually the owner of the contract, the insured and the applicant.  They may be: 1. Three different individuals2. The same person
A.
B.
C.
D.
63.  If a service provider is paid a fixed monthly fee in an HMO, what is this called ?
A.
B.
C.
D.
64.  Health Maintenance Organizations are required by law to provide prescription drugs as part of their services.
A.
B.
65.  Bill holds two jobs.  If Bill were to apply for an insurance policy and the insurer reviews the risk exposure based on his occupation, which of the following would the insurer most likely use to classify him ?  The job:
A.
B.
C.
D.
66.  All of the following statements are correct regarding a "warranty" except:
A.
B.
C.
D.
1 comment
67.  The doctrine of "utmost good faith" applies to the business of transacting insurance.  Which of the following is an example of its application ?
A.
B.
C.
D.
68.  All of the following are true regarding a policy owner that ceases making premium payments on a 10-pay life policy and selects the extended term insurance option, except:
A.
B.
C.
D.
69.  Many insurance policies issued contain a common disaster provision.  The provision is designed to protect:
A.
B.
C.
D.
70.  One of the provisions commonly found in life insurance is the "misstatement of age" clause.  If the age of the insured is in error but not discovered until much later, the insurance company will:
A.
B.
C.
D.
71.  All of the following are reasons for an individual to purchase personal life insurance, except:
A.
B.
C.
D.
72.  Fraud is an intentional act to deceive and induce another to part with something of value.  Which of the following would describe fraud in the process of applying for insurance ?1. intentionally distorting the truth to get an insurance policy 2. making a misrepresentation that has no material effect and displays no intent to lie.
A.
B.
C.
D.
73.  Which of the following is true about a service provider as it relates to health insurance ?
A.
B.
C.
D.
74.  The principle of indemnification is best described below as:
A.
B.
C.
D.
75.  A type of contract, which is considered a savings instrument used for accumulating investment funds for the purpose of eventually receiving those through a systematic program of withdrawl is a/an:
A.
B.
C.
D.
76.  Why would a business use a key person life insurance policy ?
A.
B.
C.
D.
77.  When the health insurer and the insured participae in the costs of expenses on an agreed percentage basis, it is known as coinsurance.
A.
B.
78.  Which of the following is not legal activity in this state ?
A.
B.
C.
D.
79.  Which of the following provides statistical data relating to the probability of a disability occurring ?
A.
B.
C.
D.
1 comment
80.  Assume two people apply for life insurance with exactly the same monthly premiums.  One individual buys a whole life policy, and the other, a 10-year renewable term plan.  Both are standard risks with no difference in their age or health rating.  Select the statement from below which is false.
A.
B.
C.
D.
81.  Choose the provision(s) listed below in the Uniform Policy Provisions law that regulates health insurance sales in California.
A.
B.
C.
D.
82.  Teresa is injured while woking at her company's plant.  She is taken to a hospital and receives several weeks of care.  She has a non-occupational group health plan at work.  The hospital will not be paid by the non-occupational policy because:
A.
B.
C.
D.
83.  Health Maintenance Organizations (HMOs) provide which of the following ?
A.
B.
C.
84.  Generally, it is unfair to discriminate against any one class of individuals in the business of insurance.  However, the code does permit the charging of a higher premium if such such premiums can be supported by mortality tables segregated by sex (gender)
A.
B.
85.  Which of these is the best way to define the concept of "indemnity ?"
A.
B.
C.
D.
86.  In the process of applying for insurance an applicant is asked questions that do not relate to underwriting but are clearly meant for attaining marketing information.  Under the code this practice is allowable assuming the person aplying for coverage is informed of such practices.
A.
B.
87.  Disability income insurers carefully consider a potential insured's occupation as an underwriting factor because of the:
A.
B.
C.
D.
88.  Preferred Provider Organizations (PPOs) were an offshoot of the HMO system.  Which of the following statements is false about PPOs ?
A.
B.
C.
D.
89.  Select the statement that best describes a Multiple Employer Trust:
A.
B.
C.
D.
90.  The best description of a hazard is a/an:
A.
B.
C.
D.
91.  Neglecting to communicate that which a party knows, and ought to communicate, so that the other party may make a sound decision is known as:
A.
B.
C.
D.
92.  Assuming CE requirements have been met, how is the life agent's license renewed ?
A.
B.
C.
D.
93.  The term "consideration" applies to the issuance of an insurance policy.  Choose the best description of this term from the choices below.
A.
B.
C.
D.
94.  Select the policy riders frequently found in life insurance polices:
A.
B.
C.
D.
95.  In an overall comparison of a savings account and a tax-deferred annuity, where the savings account and annuity both pay the same interest, on the same principal amount, and for the same period of time, which will generate the highest return on investment dollars?
A.
B.
C.
D.
96.  A policy owner makes the last premium payment on his $250,000 non-par whole life policy today.  The owner is 70 years of age.  When will the cash value reach $250,000.
A.
B.
C.
D.
97.  Which of the following is not a feature of a major medical insurance policy ?
A.
B.
C.
D.
98.  From the examples below, choose the one that gives the best description of a reduced paid-up non-forfeiture option
A.
B.
C.
D.
99.  Which of the following is correct about a third-party Administrator ?
A.
B.
C.
100.  Inflation can have a tremendous eroding effect on the purchasing power of benefits that are received from a disability income policy.  What type of supplementary benefit rider can be used by the insured to offset the effects of inflation ?
A.
B.
C.
D.
101.  An additional amount of premium used to pay for an accidental death benefit provision does not increase the cash value of the policy.
A.
B.
102.  All of the following are examples of the dividend options available on a whole life insurance policy, except:
A.
B.
C.
D.
103.  Choose the best beneficiary designation for the following case: The children are to receive equal shares of the benefit.  If any of the children die before the insured does, the insured wishes the remaining children receive the deceased child's share equally divided among them.
A.
B.
C.
D.
104.  Beth wants to purchase more life insurance through her current policy.  She calls you, the agent, and asks your opinion.  You know Beth has a guaranteed insurability rider on the policy.  She can buy more insurance:
A.
B.
C.
D.
1 comment
105.  Agents must act on behalf of their clients in such a way that uphold their "fiduciary duty".  Select the best emple of this duty from the choices below.
A.
B.
C.
D.
1 comment
106.  When the public purchases annuities, they are attempting to address the risk of:
A.
B.
C.
D.
107.  The Fair Credit Reporting Act mandates that a credit reporting company responds to a consumer complaint when that company's credit report inaccurately reflects information about the consumer.
A.
B.
108.  Select from the choices below the best description of a speculative risk.
A.
B.
C.
D.
109.  Variable life insurance policies and variable annuities are primarily governed by which agency ?
A.
B.
C.
D.
110.  Health Maintenance Organizations (HMS) provide a number of benefits including: 1. Basic health care services2. Health care financial coverage
A.
B.
C.
D.
111.  Medical expense insurance policies have various ways of determining the amount that will be paid in benefits.  One approach is to pay on the basis that costs are affected by like services provided by health care professionals in the same local geographical area.  What is this concept called ?
A.
B.
C.
D.
112.  All the following statements regarding policy dividends are true except:
A.
B.
C.
113.  The California Insurance Code cites a specific definition for a "life agent".  A life agent is:
A.
B.
C.
D.
114.  From the items listed below, choose the characteristics not found in the HMO's "gatekeeper" system.
A.
B.
C.
115.  Decreasing term insurance is frequently used to pay the unpaid balance of a mortgage upon death of the mortgage holder.
A.
B.
116.  Can the applications for disability insurance be altered--and if so, by whom?
A.
B.
C.
D.
117.  A hospital confinement indemnity insurance policy pays:
A.
B.
C.
D.
118.  The owner of a non-par whole life policy never misses a payment, never borrows from the policy's cash value, and finally reaches the age of 100.  What cash value is this person entitled to in comparison to the face amount ?
A.
B.
C.
D.
119.  In disability insurance, several riders are available for insureds to purchase.  The "return of premium" rider:
A.
B.
C.
D.
120.  Juan has been named as an irrevocable beneficiary in a life insurance policy. Juan, therefore:
A.
B.
C.
D.
121.  To protect (subject to statutory limitations) life and health owners and insureds in the event of impairment or insolvency of a member insurer.  This is a description of:
A.
B.
C.
D.
122.  Intentionally submitting false information on a life application is an example of a moral hazard.
A.
B.
123.  "the inability to perform the duties of any occupation for which one is suited by reason of education, training, experience, or prior economic status".  This definition of total disability income policy is considered: 1. An "any occupation" definition2. An "own occupation" definition3. More restrictive4. Less restirctive
A.
B.
C.
D.
124.  By law, a health insurance carrier selling policies in this state may reword the provisions in its contracts, assuming the new wording is no less favorable to insureds and beneficiaries than those found in the mandatory provisions.
A.
B.
1 comment
125.  Chuck Harris has earned a Chartered Life Underwriter designation.  From the selections below choose the one that the California Insurance Code would find acceptable when publishing his name:
A.
B.
C.
D.
126.  Select the correct statement about the Social Security system
A.
B.
C.
D.
127.  Disability income insurance pays a weekly or monthly income to replace a portion of the one's lost salary due to an inability to work.  When a disability income insurance application is submitted, what reason might the underwritting department use to reject it ?
A.
B.
C.
D.
128.  The Commissioner has numerous responsibilities and wide-ranging authority concerning the California Insurance Code.  Should he deem it necessary, he can rewrite certain sections of the code to better serve the insuring public.
A.
B.
129.  An agent makes a misleading comparison of a policy he is selling in order to convince a prospect to lapse an old insurance policy.  What is this called ?
A.
B.
C.
D.
130.  Which of the following supports the Medical Information Bureau ?
A.
B.
C.
D.
131.  When is insurable interest required to exist with a life insurance policy ?
A.
B.
C.
D.
132.  What does a standard coinsurance clause found in a health insurance policy require ?
A.
B.
C.
133.  There are four basic classes of life insurance.  All of the selections listed below are regarded as ordinary insurance, except:
A.
B.
C.
D.
1 comment
134.  Jose is covered by an insurance plan that will pay him disability income benefits if he is injured either while working or at home.  The type of plan he has is a/an:
A.
B.
C.
D.
135.  Which of the following is not an acceptable risk to the underwriting department of an insurance company ?
A.
B.
C.
D.
136.  Frank is an eligible employee who wishes to participate in group insurance.  To get this coverage without having to provide the insurer with evidence of insurability, Frank must:
A.
B.
C.
D.
137.  Jamie, who is under 65 years of age, fell off a horse while visiting her mother on a vacation.  This rendered her completely paralyzed.  Now after a year the doctors feel she will not recover from her injuries.  Choose from the selections below the program from which Jamie will be able to collect disability income benefits.
A.
B.
C.
D.
138.  Which of the following is a type of single deductible for all family members that, when satisfied, overrides any remaining family member's individual deductibles ?
A.
B.
C.
D.
139.  When the insured of a non-participating paid-up-at-age-65 life insurance policy attains the age of 65, the cash value will equal the face amount.
A.
B.
1 comment
140.  Select the incorrect statement from the choices below concerning insurance applications.
A.
B.
C.
D.
141.  In the California Insurance Code there is a definition that reads, in short, "....a person who, for a fee, offers to advise any insured having any interest in life or disability insurance contracts..."  This is the definition of :
A.
B.
C.
142.  When any change in residence address occurs, every licensee and every applicant for a license must notify the Commissioner _______________.  (Select the most correct response)
A.
B.
C.
D.
143.  Employees that have group life or health policies covering them are required to be issued a/an ______.
A.
B.
C.
D.
144.  All the following are factors in determining premiums charged for group disability income insurance, except:
A.
B.
C.
D.
145.  What type of life insurance policy gives the owner the right to share in the insurer's profits in the form of a dividend ?
A.
B.
C.
D.
146.  A family life insurance policy that provides coverage for children may be converted to permanent insurance for the children, but evidence of insurability is required.
A.
B.
147.  Which of these statements with regard to the tax treatment of life insurance is true ?
A.
B.
C.
D.
148.  Which of the following is true regarding the government's social insurance program known as Social Security ?
A.
B.
C.
D.
149.  The insurer can change the premium assuming it is changed for all insureds in a class. However, the company cannot refuse to renew the policy, or cancel it.  This is a/an ____ policy
A.
B.
C.
D.
150.  Patrick has been diligent in investing money for his retirement.  He has managed t put $100,000 of after-tax money into a tax-deferred annuity.  Now he is ready to take it out, and the insurance company that issued the annuity says his guaranteed payment is $8,000 a year for the remainder of his life.  This means he can expect a total amount of $200,000 back over his life.  How much each year's annuity payment is taxable ?
A.
B.
C.
D.
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