Life & Health - Practice Exam 3

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  • 1/150 Questions

    Which of the following is not an example of what an insurance policy can provide an insured ?

    • Help protect from the possibility of a loss.
    • Reduce the uncertainity of financial loss
    • Eliminate the risk of sickness
    • Replace a large possible loss with that of a small certain loss (Premium).
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Life And Health Quizzes & Trivia
About This Quiz

This practice exam, titled 'Life & Health - Practice Exam 3', assesses knowledge on insurance policies, risk types, and hazard identification. It aids in preparing for licensing exams by evaluating understanding of risk management and insurance principles relevant to life and health insurance.

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  • 2. 

    Select from the choices below the best description of a speculative risk.

    • Insuring someone over the age of 90

    • Involving the possibility of a gain in addition to the uncertainty of loss

    • Insuring against a situation that offers no possibility of gain

    • The purchase of an insurance policy to protect from gambling losses

    Correct Answer
    A. Involving the possibility of a gain in addition to the uncertainty of loss
    Explanation
    A speculative risk is a type of risk that involves the possibility of both gain and loss. Unlike pure risks, which only involve the possibility of loss, speculative risks offer the potential for a positive outcome or profit. This can include activities such as investing in the stock market or starting a new business venture, where there is a chance of making money but also a risk of losing it.

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  • 3. 

    The best description of a hazard is a/an:

    • Condition that may increase the chance that a loss may occur

    • Cause of a loss

    • Pure risk

    • Uncertainty of a financial loss

    Correct Answer
    A. Condition that may increase the chance that a loss may occur
    Explanation
    A hazard refers to a condition that has the potential to increase the likelihood of a loss occurring. It does not necessarily cause the loss itself, but it creates a higher risk or danger that can lead to a loss. Hazards can be physical, such as slippery floors or faulty equipment, or they can be intangible, such as inadequate safety protocols or employee negligence. By identifying and mitigating hazards, individuals and organizations can minimize the chances of experiencing a loss or damage.

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  • 4. 

    Intentionally submitting false information on a life application is an example of a moral hazard.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Intentionally submitting false information on a life application is considered a moral hazard because it involves dishonesty and deceit. By providing false information, the individual is trying to gain an unfair advantage or benefit, which goes against moral principles. This behavior can lead to negative consequences for both the individual and the insurance company, as it can result in fraudulent claims or inaccurate risk assessments. Therefore, the statement is true.

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  • 5. 

    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.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    The given statement suggests that the owner of an office building recognizes the hazards of the building due to its age and decides to get insurance to protect himself from a possible legal suit. However, this scenario does not represent avoidance of risk. Instead, it signifies risk transfer, as the owner is transferring the potential financial burden of a legal suit to the insurance company. Avoidance of risk would involve taking actions to eliminate or minimize the hazards associated with the building's age, rather than simply obtaining insurance coverage. Therefore, the correct answer is false.

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  • 6. 

    Choose from the following selections the best description of a premium.

    • Funds received by an insured from an insurer to realize the benefits of the policy.

    • Funds received by an insurer from an insured to realize the benefits of the policy.

    • A bonus paid to an agent for high insurance sales production.

    • The amount an insured pays for each unit of coverage. $7 for every $1,000 of coverage is an example.

    Correct Answer
    A. Funds received by an insurer from an insured to realize the benefits of the policy.
    Explanation
    The correct answer is "Funds received by an insurer from an insured to realize the benefits of the policy." This answer accurately describes a premium as the amount of money that the insured pays to the insurer in order to receive the benefits outlined in the insurance policy. It highlights the fact that the insured is making a payment to the insurer, rather than receiving funds from the insurer. The other options are incorrect as they do not accurately describe a premium.

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  • 7. 

    Which of these is the best way to define the concept of "indemnity ?"

    • It's only when concealed facts are material that an insurer can rescind or cancel a policy.

    • Only the insurance company makes a legally enforceable promise.

    • An insured cannot receive more than an actual economic loss in the event of a claim

    • If there is an unclear statement in a contract of insurance the courts will rule in favor of the insured.

    Correct Answer
    A. An insured cannot receive more than an actual economic loss in the event of a claim
    Explanation
    The concept of "indemnity" refers to the principle that an insured individual cannot receive more than their actual economic loss in the event of a claim. This means that the purpose of insurance is to provide financial compensation to the insured for their actual loss, rather than allowing them to profit from the claim. This principle ensures that insurance remains a tool for risk management and not a means for individuals to gain financially from unfortunate events.

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  • 8. 

    The principle of indemnification is best described below as:

    • Protecting from any past legal situation.

    • A hazard not specifically defnied in the code.

    • A form of insurance that insurance companies buy to decrease exposure from investment losses

    • Restoring an individual to a condition they enjoyed in the past, thus making them whole

    Correct Answer
    A. Restoring an individual to a condition they enjoyed in the past, thus making them whole
    Explanation
    The principle of indemnification refers to the process of restoring an individual to the same financial position they were in before a loss or damage occurred. This means that the person is compensated for their loss in a way that they are returned to the same state they were in prior to the incident. By doing so, they are made whole again and not left at a disadvantage due to the loss.

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  • 9. 

    When is insurable interest required to exist with a life insurance policy ?

    • At the time of death.

    • At the time the policy is written but not at the time of death.

    • At the time the policy is written and at the time of death.

    • At all times during the policy life.

    Correct Answer
    A. At the time the policy is written but not at the time of death.
    Explanation
    Insurable interest is required to exist with a life insurance policy at the time the policy is written but not at the time of death. This means that the policyholder must have a financial interest in the life of the insured when the policy is initially taken out. This requirement ensures that the policy is not taken out solely for the purpose of benefiting from the insured's death. However, once the policy is in effect, the policyholder's insurable interest is no longer necessary for the policy to remain valid.

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  • 10. 

    All the following statements regarding policy dividends are true except:

    • Non-participating policies generally pay large dividends.

    • Dividends cannot be guaranteed

    • Not all dividends are taxable

    Correct Answer
    A. Non-participating policies generally pay large dividends.
    Explanation
    Non-participating policies generally do not pay dividends. This is because non-participating policies do not share in the profits or surplus of the insurance company. On the other hand, participating policies are eligible for dividends as they are entitled to a share in the company's profits. Therefore, the statement that non-participating policies generally pay large dividends is false.

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  • 11. 

    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.

    • Assessment

    • Foreign

    • Stock

    • Mutual

    Correct Answer
    A. Mutual
    Explanation
    The correct answer is "Mutual". This is because a mutual insurer is a type of insurance company that is owned by its policyholders, who are also referred to as shareholders. In this case, since the agent refers to the shareholders of the company as "participating", it indicates that the policyholders have a stake in the company and can receive dividends from the profits. Therefore, the insurance policy that Sam has is from a mutual insurer.

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  • 12. 

    Which of the following would be considered an alien insurer ?

    • An unauthorized company that underwrites undocumented workers.

    • A company located in England and doing business in California

    • A company that is organized in Nevada but maintains branch offices in this state.

    • All the above are alien insurers.

    Correct Answer
    A. A company located in England and doing business in California
    Explanation
    An alien insurer refers to an insurance company that is located outside of the jurisdiction where it conducts business. In this case, a company located in England and doing business in California would be considered an alien insurer because it is operating in a jurisdiction different from its location. The other options do not meet the criteria of being an alien insurer as they either involve unauthorized companies or companies with branch offices in the same jurisdiction.

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  • 13. 

    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.

    • Principal

    • Implied

    • Express

    • All the above

    Correct Answer
    A. Implied
    Explanation
    If Julie performs acts that are not specifically named in the written contract she has with Silver Dollar Insurance Company, she is exercising her implied authority. Implied authority refers to the authority that is not explicitly stated in the contract but is reasonably necessary for the agent to carry out their duties and responsibilities. In this case, Julie's actions that are not specifically mentioned in the contract but are necessary for her role as a licensed insurance salesperson would fall under implied authority.

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  • 14. 

    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.

    • Assuring a claim form is forwarded to the insurer in a timely manner.

    • Reviewing the insurance needs and coverage for a client periodically.

    • Quickly sending an insured's premium to the home office.

    • Assisting a client to choose the best policy for their situation

    Correct Answer
    A. Quickly sending an insured's premium to the home office.
  • 15. 

    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.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The Fair Credit Reporting Act requires credit reporting companies to address consumer complaints if their credit reports contain inaccurate information about the consumer. This means that if a consumer finds errors in their credit report, they have the right to file a complaint with the credit reporting company, who is then obligated to investigate and correct any inaccuracies. This ensures that consumers have a way to dispute and correct any incorrect information that could potentially harm their creditworthiness.

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  • 16. 

    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.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The given statement is true. According to the code, insurance companies are allowed to ask applicants questions that are not directly related to underwriting but are meant to gather marketing information. However, it is important that the applicant is informed about such practices. This allows insurance companies to collect data for marketing purposes while ensuring transparency and consent from the applicant.

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  • 17. 

    The term "consideration" applies to the issuance of an insurance policy.  Choose the best description of this term from the choices below.

    • The amount of death benefit.

    • The time the underwriting department gives the application.

    • The face amount of the policy one year from the date of issue.

    • None of the above

    Correct Answer
    A. None of the above
    Explanation
    The term "consideration" in the context of issuing an insurance policy refers to the payment made by the policyholder in exchange for the coverage provided by the insurer. It is the premium paid by the policyholder to obtain the insurance policy. Therefore, none of the options provided in the question accurately describe the term "consideration".

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  • 18. 

    The doctrine of "utmost good faith" applies to the business of transacting insurance.  Which of the following is an example of its application ?

    • Each party is entitled to rely upon the representations of the other party.

    • Answers to application questions are provided to the best of one's knowledge.

    • Each party to a contract must give valuable consideration.

    • Any unclear or ambiguous statement in a contract of insurance is decided in favor of the insured.

    Correct Answer
    A. Each party is entitled to rely upon the representations of the other party.
    Explanation
    The doctrine of "utmost good faith" in insurance means that both parties involved in the transaction are expected to provide accurate and complete information. Each party is entitled to rely upon the representations of the other party means that both the insurer and the insured can trust the information provided by each other and make decisions based on that information. This principle promotes transparency and trust in the insurance business.

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  • 19. 

    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.

    • 1 only

    • 2 only

    • Both 1 and 2

    • Neither 1 nor 2

    Correct Answer
    A. 1 only
    Explanation
    Fraud in the process of applying for insurance would be described as intentionally distorting the truth to obtain an insurance policy. This involves deliberately providing false information or misrepresenting facts in order to deceive the insurance company and obtain coverage under false pretenses.

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  • 20. 

    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.

    • 1 only

    • 2 only

    • 1 and 3

    • 1, 2 and 3

    Correct Answer
    A. 2 only
    Explanation
    The California Insurance Code is basically the body of laws governing insurance business in this state. This means that it includes all the laws and regulations that are applicable to the insurance industry in California. The statement that it is broken into five sections is not mentioned in the given information. Therefore, the correct answer is 2 only.

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  • 21. 

    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.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    The statement is false because the Commissioner does not have the authority to rewrite certain sections of the California Insurance Code. While the Commissioner does have numerous responsibilities and wide-ranging authority concerning the code, rewriting sections is not one of them. The Commissioner can enforce and interpret the code, but any changes or amendments to the code would require legislative action.

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  • 22. 

    Which of the following is required to be included in the writing of an insurance contract ?

    • The parties between whom the contract is made

    • The risks insured against

    • The period in which the insurance is to continue

    • All the above

    Correct Answer
    A. All the above
    Explanation
    In order to have a comprehensive insurance contract, all of the mentioned elements are required to be included. The parties involved in the contract need to be clearly identified, as well as the specific risks that are being insured against. Additionally, the duration or period for which the insurance coverage will be in effect must be specified. Therefore, including all of the above elements is essential for a complete and valid insurance contract.

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  • 23. 

    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:

    • Concealment

    • Material information

    • Boycotting

    • None of the above

    Correct Answer
    A. Concealment
    Explanation
    Concealment refers to the act of deliberately withholding or not disclosing important information that one party is aware of and should communicate to the other party. This lack of communication prevents the other party from making an informed decision. It is a form of deception where material information is intentionally hidden, potentially leading to negative consequences for the party who is not aware of the concealed information.

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  • 24. 

    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.

    • 1 only

    • 2 only

    • 1 and 2

    Correct Answer
    A. 1 and 2
    Explanation
    If an applicant makes a misstatement on an insurance application with the express intent to mislead the insurer, it is considered fraud. This means that the applicant intentionally provided false information in order to deceive the insurer. On the other hand, if the misstatement is not material to the company's decision, it may not affect the application. This means that if the false information provided by the applicant does not have a significant impact on the insurer's decision-making process, it may not be considered as a factor in the application. Therefore, both statements 1 and 2 are correct.

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  • 25. 

    All of the following statements are correct regarding a "warranty" except:

    • It is a statement merely made to the best of one's knowledge, and can only be express.

    • Should either party violate a warranty it entitles the other party to cancel the contract.

    • Warranties can be made about events in the past, present or future.

    • Warranties made at or during the execution of a policy must be contained in the policy, signed by the insured and attached to the contract

    Correct Answer
    A. It is a statement merely made to the best of one's knowledge, and can only be express.
    Explanation
    The given answer is incorrect because a warranty is not merely a statement made to the best of one's knowledge. A warranty is a promise or guarantee made by one party to another party in a contract, and it can be either express or implied. It is a legally binding statement that assures the other party that certain facts or conditions are true or will be fulfilled. Therefore, the correct answer should be "Warranties can be made about events in the past, present or future."

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  • 26. 

    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. 

    • 1 and 2

    • 2 and 3

    • 1 and 3

    • 1, 2 and 3

    Correct Answer
    A. 1, 2 and 3
    Explanation
    The term "transact" as it applies to the field of insurance includes solicitation, which means that it is a part of the process of selling insurance. Additionally, negotiations that happen before a policy is executed are also considered as transacting insurance. Finally, if a person transacts insurance without a valid license, they are guilty of a misdemeanor. Therefore, all three statements are correct, making the correct answer 1, 2, and 3.

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  • 27. 

    According to the code, "transact", as it applies to insurance does not include negotiations preliminary to the execution of a contract of insurance.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    The statement in the code suggests that "transact" in the context of insurance does include negotiations preliminary to the execution of a contract of insurance. Therefore, the correct answer is False.

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  • 28. 

    The California Insurance Code cites a specific definition for a "life agent".  A life agent is:

    • An insurance broker

    • An insurance agent

    • A person authorized to aid an insurance agent to solicit life insurance

    • A, b and c are false

    Correct Answer
    A. A, b and c are false
    Explanation
    The correct answer is a, b, and c are false. The California Insurance Code provides a specific definition for a "life agent," which is none of the options given. Therefore, all of the options are false.

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  • 29. 

    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 :

    • An insurance broker paid on a fee-for-service

    • A solicitor

    • A life and disability analyst

    Correct Answer
    A. A life and disability analyst
    Explanation
    The given correct answer is "A life and disability analyst." This is because the definition provided in the California Insurance Code states that a life and disability analyst is a person who, for a fee, offers advice to any insured with an interest in life or disability insurance contracts. Therefore, this definition aligns with the role and responsibilities of a life and disability analyst as described in the question.

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  • 30. 

    Of the items listed below, which are requirements for a life and disability insurance analyst license ?

    • The applicant must have a good general reputation and good business reputation

    • The applicant must be 18 years of age, minimum.

    • The applicant must have a thorough knowledge of life and disability insurances.

    • These are all required

    Correct Answer
    A. These are all required
    Explanation
    The requirements for a life and disability insurance analyst license include having a good general reputation and good business reputation, being at least 18 years of age, and having a thorough knowledge of life and disability insurances.

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  • 31. 

    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:

    • Medi-Cal

    • The California Life and Health Insurance Guarantee Association

    • OBRA

    • None of the above

    Correct Answer
    A. The California Life and Health Insurance Guarantee Association
    Explanation
    The California Life and Health Insurance Guarantee Association is described as a protection mechanism for owners and insured individuals in the event of impairment or insolvency of a member insurer. It ensures that policyholders are safeguarded and their life and health insurance needs are met, subject to statutory limitations.

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  • 32. 

    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:

    • Complete 25 hours of life and health continuing education only

    • Complete 25 hours of life and health continuing education and, in addition, complete 8 hours of LTC specific continuing education, a total of 33 hours

    • Complete 25 hours of life and health continuing education, 8 of which are LTC specific

    • None of the above

    Correct Answer
    A. Complete 25 hours of life and health continuing education, 8 of which are LTC specific
    Explanation
    In 1998, the agent must complete 25 hours of life and health continuing education, 8 of which are specifically focused on long-term care (LTC). This is because the agent primarily sells LTC insurance to individuals, so it is necessary for him to have a solid understanding of the topic. By completing the required hours of continuing education, including the specific LTC education, the agent can stay updated on industry trends, regulations, and best practices, ensuring that he can provide the best service to his clients.

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  • 33. 

    The license of an agent is considered inactive when:

    • All renewal fees are paid but there is a termination of all appointments

    • The license has not been renewed

    • Transactions of insurance are no longer executed following a 1 year period.

    • None of the above

    Correct Answer
    A. All renewal fees are paid but there is a termination of all appointments
    Explanation
    When an agent's license is considered inactive, it means that all renewal fees have been paid, but there is a termination of all appointments. This means that even though the agent has fulfilled the financial obligations for license renewal, they no longer have any active appointments or affiliations with insurance companies. This could be due to various reasons such as retirement, resignation, or termination of contracts. It is important to note that the other options mentioned in the question, such as license not being renewed or no longer executing insurance transactions, do not necessarily result in an inactive license.

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  • 34. 

    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 ?

    • No, appointments are always required to be filed prior to submitting applications.

    • Yes, and the application need not be approved by the underwriting department.

    • Yes, and if the insurer approves the application they must appoint Ben within 14 days.

    • All the above are false.

    Correct Answer
    A. Yes, and if the insurer approves the application they must appoint Ben within 14 days.
    Explanation
    Ben can submit an application to Rock Solid Insurance Company from a prospect even without having an appointment. If the insurer approves the application, they are required to appoint Ben within 14 days.

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  • 35. 

    Assuming CE requirements have been met, how is the life agent's license renewed ?

    • Pay the renewal billing notice the Department sends out about 60 days before the renewal date.

    • Pay the renewal billing notice the Department sends out 90 days before the renewal date.

    • Pay the renewal fee, at which time the Department will send the renewal notice.

    • Licenses are automatically renewed assuming no disciplinary action has been taken.

    Correct Answer
    A. Pay the renewal billing notice the Department sends out 90 days before the renewal date.
    Explanation
    The correct answer is to pay the renewal billing notice the Department sends out 90 days before the renewal date. This suggests that the Department sends out a billing notice 90 days prior to the renewal date, indicating that the renewal process involves a payment. This implies that the life agent's license needs to be renewed by paying the renewal fee mentioned in the billing notice.

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  • 36. 

    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:

    • Harris Insurance Services

    • Chuck Harris, CLU and Company

    • Chuck Harris, Insurance Company

    • All the above are acceptable

    Correct Answer
    A. Harris Insurance Services
    Explanation
    The California Insurance Code would find the name "Harris Insurance Services" acceptable when publishing Chuck Harris's name because it does not include any misleading or false information about the nature of the business or the individual's qualifications. It accurately represents the type of services provided by the company without making any claims about Chuck Harris's professional designation.

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  • 37. 

    Every licensee must indicate on which of the following documents his or her license number ?

    • Print advertisements

    • Business cards

    • Written price quotations

    • All the above

    Correct Answer
    A. All the above
    Explanation
    Every licensee is required to indicate their license number on print advertisements, business cards, and written price quotations. This is important in order to provide transparency and allow potential clients or customers to verify the license status of the licensee. By including the license number on these documents, it ensures that the licensee is operating legally and can be held accountable for their actions.

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  • 38. 

    When any change in residence address occurs, every licensee and every applicant for a license must notify the Commissioner _______________.  (Select the most correct response)

    • Within 6 months after the move has taken place

    • Within 6 months before the license is to expire

    • 30 days before submitting a continuing education certificate.

    • Immediately

    Correct Answer
    A. Immediately
    Explanation
    When any change in residence address occurs, both licensees and applicants for a license are required to notify the Commissioner immediately. This means that as soon as the change in address happens, the individual must inform the Commissioner without delay. This is important for maintaining accurate records and ensuring that the Commissioner has up-to-date information on the licensee or applicant's current address.

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  • 39. 

    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 ?

    • Intimidation

    • Rebating

    • Boycotting

    • Twisting

    Correct Answer
    A. Twisting
    Explanation
    Twisting is when an insurance agent intentionally misrepresents or distorts the terms and conditions of an insurance policy to persuade a customer to cancel their existing policy and purchase a new one. In this scenario, the agent is making a misleading comparison of the policies to convince the prospect to lapse their old insurance policy, which is a clear example of twisting.

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  • 40. 

    Which of the following is not legal when determining premium rates for life or disability insurance ?

    • Gender

    • Age

    • Nationality

    • All the above may not be used

    Correct Answer
    A. Nationality
    Explanation
    When determining premium rates for life or disability insurance, it is not legal to consider nationality as a factor. Insurance companies are prohibited from discriminating against individuals based on their nationality. However, factors such as gender and age may be taken into account when determining premium rates, as long as they are actuarially justified and not discriminatory.

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  • 41. 

    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)

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The statement is true because while it is generally unfair to discriminate against any one class of individuals in insurance, the code does allow for higher premiums to be charged based on mortality tables segregated by sex. This means that if there is statistical evidence showing that one gender has a higher mortality rate than the other, insurance companies can charge higher premiums for that gender. This is considered an exception to the general rule of non-discrimination in insurance.

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  • 42. 

    Which of the following is not legal activity in this state ?

    • Participating in a plan to offer free insurance if a person buys some form of service.

    • Disregarding age in the determination of insurance rates.

    • Refusing to apply the practice of twisting in sales.

    • All the above are legal in the state of California

    Correct Answer
    A. Participating in a plan to offer free insurance if a person buys some form of service.
    Explanation
    Participating in a plan to offer free insurance if a person buys some form of service is not a legal activity in the state of California.

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  • 43. 

    Employees that have group life or health policies covering them are required to be issued a/an ______.

    • Estimate of employers premiums

    • Certificate of insurance

    • Master policy

    • Monthly premium notification on a non-participating plan

    Correct Answer
    A. Certificate of insurance
    Explanation
    When employees have group life or health policies, they are typically provided with a certificate of insurance. This document serves as proof of coverage and outlines the details of the policy, including the benefits, limitations, and terms. It is important for employees to have a certificate of insurance to understand their coverage and to present it as needed for medical services or claims.

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  • 44. 

    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:

    • An unethical practice

    • A clever and ethical practice

    Correct Answer
    A. An unethical practice
    Explanation
    Jerry's new time management technique of only answering questions if they are asked twice is considered an unethical practice. By intentionally ignoring the first instance of a question, Jerry is not providing the necessary information and support to his clients. This behavior is dishonest and manipulative, as he is prioritizing his own time over the needs and concerns of his clients. In the insurance industry, maintaining ethical standards is crucial for building trust and maintaining long-term relationships with clients.

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  • 45. 

    In the life insurance planning process, the "blackout period" is considered:

    • The period of time after a life insurance application is written and the date the coverage takes effect.

    • The period of time when there is not enough income agailable as required by the insured's beneficiaries

    • The period of time when a surviving spouse does not receive any Social Security benefits

    • None of the above

    Correct Answer
    A. The period of time when a surviving spouse does not receive any Social Security benefits
  • 46. 

    All of the following are reasons for an individual to purchase personal life insurance, except:

    • To have funds that can supplement Social Security at retirement

    • To cover a buy/sell agreement.

    • For the creation of an immediate estate

    • To have cash available for emergencies.

    Correct Answer
    A. To cover a buy/sell agreement.
    Explanation
    Personal life insurance is typically purchased to provide financial protection for the policyholder and their loved ones in the event of their death. It can help to replace lost income, cover funeral expenses, pay off debts, and provide for the future financial needs of dependents. However, covering a buy/sell agreement is not a reason for an individual to purchase personal life insurance. A buy/sell agreement is a legal agreement between business partners or co-owners that determines what will happen to the business if one of them dies or leaves the company. In this case, life insurance would be purchased specifically to fund the buyout of the deceased or departing partner's share of the business.

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  • 47. 

    Why would a business use a key person life insurance policy ?

    • To provide the key employee's surviving family members with funds to live on after the death of the employee.

    • To help the employee's spouse supplement her Social Security benefits.

    • To better allow the employee qualify for a bank loan

    • To protect the company from the financial consequences of the death of a vice president

    Correct Answer
    A. To protect the company from the financial consequences of the death of a vice president
    Explanation
    A business would use a key person life insurance policy to protect the company from the financial consequences of the death of a vice president. This type of policy provides the company with funds to cover any financial losses or expenses that may arise due to the sudden death of a key employee. It ensures that the company can continue its operations smoothly without facing any financial hardships or disruptions.

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  • 48. 

    Identify the statement that is true about contributory group life insurance.

    • The employer will make a cash contribution to the estate of a deceased employee.

    • The employer will contribute the full amount of the premium

    • The employee will contribute to the premium payments.

    • None of the above

    Correct Answer
    A. The employee will contribute to the premium payments.
    Explanation
    Contributory group life insurance is a type of insurance where both the employer and the employee contribute to the premium payments. This means that the employee will contribute a portion of the premium, usually deducted from their paycheck, while the employer also contributes a portion. This type of insurance is often offered as a benefit to employees and helps provide financial protection to the employee's beneficiaries in the event of their death.

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  • 49. 

    Select the correct statement about the Social Security system

    • If is, for the most part, a voluntary program.

    • It is only meant to be a supplement to an individual's major income; it only supplies a minimum floor of income

    • The system is completely and fully funded.

    • The amount each person gets out is nearly exactly what they put in.

    Correct Answer
    A. It is only meant to be a supplement to an individual's major income; it only supplies a minimum floor of income
    Explanation
    The correct answer is that the Social Security system is only meant to be a supplement to an individual's major income; it only supplies a minimum floor of income. This means that the system is not designed to provide a person's entire income, but rather to provide a basic level of support. It is intended to supplement other sources of income, such as pensions or savings.

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Quiz Review Timeline (Updated): Mar 21, 2023 +

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  • Current Version
  • Mar 21, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Dec 02, 2015
    Quiz Created by
    Charles.shaw88

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