Life & Health - Practice Exam 3
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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.
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True
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False
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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.
Quiz Preview
- 2.
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:
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An unethical practice
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A clever and ethical practice
Correct Answer
A. An unethical practiceExplanation
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.Rate this question:
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- 3.
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 ?
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Life income with period certain
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The purchase of an annuity
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Installment payments
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Lump sum in cash
Correct Answer
A. Lump sum in cashExplanation
The default or automatic mode of settlement for the death benefit of a life insurance policy, if no other selection is made, is the lump sum in cash. This means that the beneficiary will receive the entire death benefit as a one-time payment rather than any other settlement option such as life income with period certain, the purchase of an annuity, or installment payments.Rate this question:
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- 4.
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 ?
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100% of the cash value which is now the same as the face amount.
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None of the cash value, the person has not died.
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About 50% of the cash value as of the date of the birthday.
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None of the above.
Correct Answer
A. 100% of the cash value which is now the same as the face amount.Explanation
The owner of a non-par whole life policy who never misses a payment, never borrows from the policy's cash value, and reaches the age of 100 is entitled to 100% of the cash value, which is now the same as the face amount. This means that the person will receive the full amount of cash value accumulated in the policy, which is equal to the face amount of the policy.Rate this question:
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- 5.
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 ?
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Intimidation
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Rebating
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Boycotting
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Twisting
Correct Answer
A. TwistingExplanation
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.Rate this question:
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- 6.
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.
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True
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False
Correct Answer
A. TrueExplanation
The explanation for the given correct answer is that the master policy owner of a group insurance policy holds the responsibility of various tasks. These tasks include paying the premiums on behalf of the employees, providing necessary information about the employees to the insurer, forwarding the applications to the insurance company, and maintaining the policy. Therefore, it is true that the master policy owner is responsible for these actions.Rate this question:
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- 7.
Why would a business use a key person life insurance policy ?
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To provide the key employee's surviving family members with funds to live on after the death of the employee.
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To help the employee's spouse supplement her Social Security benefits.
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To better allow the employee qualify for a bank loan
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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 presidentExplanation
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.Rate this question:
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- 8.
Insurance companies have several departments handling various responsibilities in the issuance of polices. Which department is primarily involved with the selection of risks ?
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The sales unit
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The claims unit
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The underwriting unit
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The actuarial unit
Correct Answer
A. The underwriting unitExplanation
The underwriting unit is primarily involved with the selection of risks in insurance companies. This department assesses the potential risks associated with insuring a particular individual or entity and determines the appropriate premiums to charge. They evaluate factors such as the applicant's health, occupation, and lifestyle to determine the likelihood of filing a claim. Based on this assessment, they decide whether to accept or reject the application and set the terms and conditions of the policy.Rate this question:
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- 9.
All of the following would be considered an accident as it relates to health insurance, except:
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Sarah gets hurt when she is hit by another car. The driver of the other car was running a red light
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Harry trips on a rock while hiking causing him to sprain his ankle.
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Molly intentionally injures herself by falling off her bike
Correct Answer
A. Molly intentionally injures herself by falling off her bikeExplanation
The given answer, "Molly intentionally injures herself by falling off her bike," would not be considered an accident as it relates to health insurance. Accidents are typically unexpected events that happen unintentionally, resulting in injury or damage. In this scenario, Molly intentionally caused the injury by falling off her bike, which would not be considered an accident.Rate this question:
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- 10.
When the health insurer and the insured participae in the costs of expenses on an agreed percentage basis, it is known as coinsurance.
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True
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False
Correct Answer
A. TrueExplanation
Coinsurance is a term used in health insurance when both the insurer and the insured share the costs of medical expenses on an agreed percentage basis. This means that the insured individual is responsible for paying a certain percentage of the expenses, while the insurer covers the remaining percentage. Therefore, the statement that when the health insurer and the insured participate in the costs of expenses on an agreed percentage basis, it is known as coinsurance is true.Rate this question:
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- 11.
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:
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Make an adjustment to the face amount to properly reflect the premiums that have been paid.
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Send back all collected premiums to the insured and cancel the policy.
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Send back all collected premiums to the insured, pay interest on that amount and cancel the policy.
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Try to establish if there was intent to defraud. If not, the insurer will most likely not pursue legal actions.
Correct Answer
A. Make an adjustment to the face amount to properly reflect the premiums that have been paid.Explanation
If the age of the insured is found to be incorrect but not discovered until later, the insurance company will make an adjustment to the face amount of the policy. This adjustment will ensure that the premiums paid by the insured are properly reflected in the coverage provided by the policy. This means that the insured will not lose out on the premiums they have paid, and the insurance company will adjust the coverage accordingly based on the correct age of the insured.Rate this question:
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- 12.
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:
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Concealment
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Material information
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Boycotting
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None of the above
Correct Answer
A. ConcealmentExplanation
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.Rate this question:
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- 13.
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:
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Which would constitute the highest premium
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That Bill has worked at the longest.
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That represents the highest hazard.
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That Bill devotes the most time to every week.
Correct Answer
A. That represents the highest hazard.Explanation
The insurer would most likely use the job that represents the highest hazard to classify Bill. This means that they would look at the job that poses the greatest risk or danger, which would typically result in a higher premium for the insurance policy.Rate this question:
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- 14.
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 ?
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A calendar year deductible
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A per cause deductible
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A co-payment
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Family deductible
Correct Answer
A. Family deductibleExplanation
A family deductible is a type of single deductible that applies to all family members. Once this deductible is met, it overrides any remaining individual deductibles for the family members. This means that once the total amount of medical expenses for the family reaches the family deductible, the insurance coverage kicks in for all family members, regardless of whether their individual deductibles have been met or not. This is different from other types of deductibles like a calendar year deductible or a per cause deductible, which do not have the same overriding effect on individual deductibles.Rate this question:
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- 15.
Which of the following would be considered an alien insurer ?
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An unauthorized company that underwrites undocumented workers.
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A company located in England and doing business in California
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A company that is organized in Nevada but maintains branch offices in this state.
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All the above are alien insurers.
Correct Answer
A. A company located in England and doing business in CaliforniaExplanation
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.Rate this question:
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- 16.
From the following, identify that which constitutes the "entire contract" in a life insurance policy. The policy:
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And any oral statements along with the application
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And a copy of the application when attached.
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And a brochure on the insurer including code-approved financial information.
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But not the application
Correct Answer
A. And a copy of the application when attached.Explanation
The "entire contract" in a life insurance policy is constituted by a copy of the application when attached. This means that the complete contract includes the policy itself and any attached copies of the application. The other options mentioned, such as oral statements, a brochure on the insurer, and the application itself, are not considered part of the entire contract.Rate this question:
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- 17.
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:
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The insurance firm will lend (with interest) funds to make the premium payments.
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The premiums will be paid by the insurer until the child reaches the age of 21 or 25.
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The deceased parent's estate will pay the premiums.
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The insurer will completely waive all future premiums
Correct Answer
A. The premiums will be paid by the insurer until the child reaches the age of 21 or 25.Explanation
The correct answer is that the premiums will be paid by the insurer until the child reaches the age of 21 or 25. This means that if the payor of premiums becomes disabled or dies, the insurance firm will step in and continue to make the premium payments until the child reaches a certain age. This ensures that the policy remains in force and the child is still covered under the insurance policy.Rate this question:
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- 18.
When the public purchases annuities, they are attempting to address the risk of:
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Dying before the age reflected on mortality tables.
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Getting too old to qualify for life insurance.
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Having to pay any taxes on their savings.
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Outliving the money they have saved for retirement
Correct Answer
A. Outliving the money they have saved for retirementExplanation
When the public purchases annuities, they are addressing the risk of outliving the money they have saved for retirement. Annuities provide a guaranteed stream of income for a specific period or for life, ensuring that individuals have a consistent income even if they live longer than expected. This helps to mitigate the risk of running out of savings during retirement and provides financial security for the future.Rate this question:
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- 19.
The best description of a hazard is a/an:
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Condition that may increase the chance that a loss may occur
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Cause of a loss
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Pure risk
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Uncertainty of a financial loss
Correct Answer
A. Condition that may increase the chance that a loss may occurExplanation
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.Rate this question:
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- 20.
Of the items listed below, which are requirements for a life and disability insurance analyst license ?
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The applicant must have a good general reputation and good business reputation
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The applicant must be 18 years of age, minimum.
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The applicant must have a thorough knowledge of life and disability insurances.
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These are all required
Correct Answer
A. These are all requiredExplanation
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.Rate this question:
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- 21.
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:
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An annuity
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Term insurance policy
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Disability insurance policy
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All the above
Correct Answer
A. An annuityExplanation
An annuity is a type of contract that serves as a savings instrument for accumulating investment funds. It allows individuals to systematically withdraw the accumulated funds over time. An annuity provides a way to save and invest money for the purpose of receiving a regular income stream in the future. It is commonly used for retirement planning or to provide a steady income during a specific period. Annuities can be purchased from insurance companies and come in various forms, such as fixed annuities, variable annuities, or indexed annuities.Rate this question:
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- 22.
If the premium on an individual health insurance policy is paid annually, semi-annually, or quarterly what is the minimum grace period required ?
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10 days
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20 days
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30 or 31 days
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None of the above
Correct Answer
A. 30 or 31 daysExplanation
The minimum grace period required for an individual health insurance policy depends on the frequency of premium payments. If the premium is paid annually, semi-annually, or quarterly, the minimum grace period required is 30 or 31 days. This means that the policyholder has 30 or 31 days after the due date to make the premium payment without facing any penalties or cancellation of the policy.Rate this question:
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- 23.
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.
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Assessment
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Foreign
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Stock
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Mutual
Correct Answer
A. MutualExplanation
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.Rate this question:
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- 24.
When any change in residence address occurs, every licensee and every applicant for a license must notify the Commissioner _______________. (Select the most correct response)
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Within 6 months after the move has taken place
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Within 6 months before the license is to expire
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30 days before submitting a continuing education certificate.
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Immediately
Correct Answer
A. ImmediatelyExplanation
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.Rate this question:
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- 25.
Which of the following is not legal when determining premium rates for life or disability insurance ?
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Gender
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Age
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Nationality
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All the above may not be used
Correct Answer
A. NationalityExplanation
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.Rate this question:
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- 26.
From the descriptions below, identify which one is a term policy
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The policy contains a provision that provides non-forfeiture options. The owner pays premiums for 25 years after which payments are no longer required yet coverage is still in force.
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The policy states premiums are to be paid every year. At the end of 15 years the cash value represents about 25% of the total face amount.
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Each year the premium increases as the insured grows older. After several years the coverage and premiums end simultaneously. Cash value is not created.
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The premium increases after 5 years then remains the same until it is paid up at age 65.
Correct Answer
A. Each year the premium increases as the insured grows older. After several years the coverage and premiums end simultaneously. Cash value is not created.Explanation
The correct answer is the option that states "Each year the premium increases as the insured grows older. After several years the coverage and premiums end simultaneously. Cash value is not created." This is a characteristic of a term policy, as it does not accumulate cash value and the coverage and premiums typically end at a certain age or after a certain period of time.Rate this question:
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- 27.
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?
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The savings account and annuity will be about the same, even after the taxes
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The savings account will pay more because of commissions paid on the annuity
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The annuity will pay more because of the tax deferral qualities it has
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The savings account will pay more because of the FDIC
Correct Answer
A. The annuity will pay more because of the tax deferral qualities it hasExplanation
The tax deferral qualities of the annuity allow for the investment to grow without being taxed until withdrawals are made. This means that the investment can compound over time without being reduced by taxes, resulting in a higher return on investment dollars compared to a savings account where taxes are paid on the interest earned.Rate this question:
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- 28.
Which of the following is required to be included in the writing of an insurance contract ?
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The parties between whom the contract is made
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The risks insured against
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The period in which the insurance is to continue
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All the above
Correct Answer
A. All the aboveExplanation
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.Rate this question:
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- 29.
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 ?
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Continue making the premium payments to keep the contract in force and borrow from cash value
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Since he must surrender the policy to get any money out he can do so, then buy another policy with the other 70% of the funds he received from the cash value.
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Find another source of funds. He has no access to cash value until the age of 100.
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Find another source of funds. Whole life policies do not build cash value.
Correct Answer
A. Continue making the premium payments to keep the contract in force and borrow from cash valueExplanation
Oscar should continue making the premium payments to keep the contract in force and borrow from the cash value. This allows him to maintain his life insurance coverage while also accessing a portion of the cash value to meet his financial needs. By borrowing from the cash value, Oscar can use the funds without surrendering the policy or buying a new one. This option provides him with the necessary flexibility and financial security.Rate this question:
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- 30.
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.
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Flexible premium deferred
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Single premium immediate
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Annual premium deferred
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None of the above
Correct Answer
A. Single premium immediateExplanation
Charles has purchased a single premium immediate annuity because he used the full amount of his inheritance to buy it and the annuity will begin paying him monthly payments starting the following month. A single premium immediate annuity is a type of annuity where a lump sum payment is made upfront and the annuity payments start immediately.Rate this question:
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- 31.
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
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True
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False
Correct Answer
A. TrueExplanation
This statement is true because in California, any entity that provides coverage for medical expenses falls under the jurisdiction of the Department of Insurance, unless it can demonstrate that it is subject to the jurisdiction of another government agency. This means that the Department of Insurance has the authority to regulate and oversee these entities to ensure they comply with the state's laws and regulations regarding medical coverage.Rate this question:
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- 32.
Which of the following provides statistical data relating to the probability of a disability occurring ?
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Mortality table
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Morbidity table
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Both A and B
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Neither A nor B
Correct Answer
A. Morbidity tableExplanation
A morbidity table provides statistical data relating to the probability of a disability occurring. This table is used in insurance and actuarial science to estimate the likelihood of an individual becoming disabled or experiencing a specific health condition. It helps insurers determine premiums and assess the risk associated with providing disability coverage. The table includes data on various disabilities, their occurrence rates, and other relevant factors that can help in making informed decisions regarding disability insurance.Rate this question:
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- 33.
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:
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Do nothing at all, he is automatically entitled by being an eligible employee
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Pay the annual premium for the first anniversary year
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Submit the files the doctor has on Frank's past medical history along with certificates of insurance.
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Enroll for insurance during the eligibility period
Correct Answer
A. Enroll for insurance during the eligibility periodExplanation
Frank is an eligible employee who wishes to participate in group insurance. The correct answer is to enroll for insurance during the eligibility period. This means that Frank needs to actively sign up for the insurance coverage within the designated timeframe. By doing so, he can secure the coverage without having to provide evidence of insurability, such as past medical history or certificates of insurance. Simply being an eligible employee does not automatically grant him the coverage; he must take the necessary steps to enroll during the eligibility period.Rate this question:
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- 34.
A hospital confinement indemnity insurance policy pays:
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A daily dollar benefit for each day the insured is confined to a hospital
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All the medical expenses less coinsurance and deductibles
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The actual amount of hospital expenses
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None of the above
Correct Answer
A. A daily dollar benefit for each day the insured is confined to a hospitalExplanation
The correct answer is that a hospital confinement indemnity insurance policy pays a daily dollar benefit for each day the insured is confined to a hospital. This means that the policy provides a fixed amount of money for each day the insured person spends in the hospital, regardless of the actual medical expenses incurred. This benefit is meant to help cover additional costs or loss of income that may arise during the hospital stay.Rate this question:
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- 35.
Intentionally submitting false information on a life application is an example of a moral hazard.
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True
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False
Correct Answer
A. TrueExplanation
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.Rate this question:
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- 36.
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)
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True
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False
Correct Answer
A. TrueExplanation
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.Rate this question:
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- 37.
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.
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Medi-Cal
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Medicare
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Workers Compensation
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Social Security
Correct Answer
A. Social SecurityExplanation
Jamie will be able to collect disability income benefits from Social Security. Social Security provides disability benefits for individuals who are unable to work due to a severe medical condition that is expected to last for at least one year or result in death. Since Jamie is completely paralyzed and the doctors believe she will not recover from her injuries, she meets the criteria for disability benefits under Social Security.Rate this question:
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- 38.
Choose the payments from an insurance policy which are not subject to federal income taxes:
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Any part of the death benefit paid as the result of choosing the "life income" settlement option
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The death benefit paid to a beneficiary in a lump sum .
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Any cash value received upon the surrender of a life insurance policy
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None of the above.
Correct Answer
A. The death benefit paid to a beneficiary in a lump sum .Explanation
The death benefit paid to a beneficiary in a lump sum is not subject to federal income taxes. This is because the death benefit is typically considered a tax-free transfer of wealth and is not considered as income for the beneficiary. However, any part of the death benefit paid as the result of choosing the "life income" settlement option may be subject to federal income taxes. Similarly, any cash value received upon the surrender of a life insurance policy may also be subject to taxes. Therefore, the correct answer is the death benefit paid to a beneficiary in a lump sum.Rate this question:
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- 39.
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.
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More
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Less
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Neither A nor B, the medical information required would be the same.
Correct Answer
A. LessExplanation
When comparing life insurance available through her employer and an independent life agent, Fran finds that her employer provides automatic coverage and requires less medical information than the life agent. This means that Fran's employer likely has a simplified underwriting process for their life insurance, where minimal or basic medical information is needed to qualify for coverage. On the other hand, the independent life agent may require more extensive medical information to assess the risk and determine the premium rates for the policy.Rate this question:
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- 40.
Decreasing term insurance is frequently used to pay the unpaid balance of a mortgage upon death of the mortgage holder.
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True
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False
Correct Answer
A. TrueExplanation
Decreasing term insurance is a type of life insurance where the death benefit decreases over time. It is commonly used to cover the unpaid balance of a mortgage upon the death of the mortgage holder. As the mortgage balance decreases over time, the death benefit of the insurance policy also decreases, ensuring that the remaining mortgage balance can be paid off in the event of the mortgage holder's death. Therefore, the statement is true.Rate this question:
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- 41.
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.
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Qualified
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Fixed
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Flexible
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Variable
Correct Answer
A. VariableExplanation
A variable annuity is a type of annuity that allows the owner to invest their funds in separate accounts, typically consisting of stocks, bonds, or mutual funds. The owner purchases accumulation units, which represent their share of the separate account's investments. The value of the accumulation units fluctuates based on the performance of the underlying investments. This type of annuity offers the potential for higher returns but also comes with higher risk compared to other types of annuities. It is commonly used to help fund retirement as it allows for potential growth of the investment over time.Rate this question:
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- 42.
Which of the following is true about a service provider as it relates to health insurance ?
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Blue Cross and Blue Shield are legally prevented from having service providers in their network
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Service type doctors usually provide better service compared to other health care providers
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Payments are made directly to the insureds.
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Payments are made directly to the provider.
Correct Answer
A. Payments are made directly to the provider.Explanation
In health insurance, payments are made directly to the provider. This means that when a person receives medical services, the insurance company pays the healthcare provider directly for those services. This is different from making payments directly to the insured, where the person would have to pay for the services out of pocket and then seek reimbursement from the insurance company.Rate this question:
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- 43.
Which of the following is not a feature of a major medical insurance policy ?
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Maximum benefit limits
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Coinsurance
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Deductibles
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Capitation
Correct Answer
A. CapitationExplanation
Capitation is not a feature of a major medical insurance policy. Capitation is a payment method in healthcare where providers receive a fixed amount per patient, regardless of the services provided. In major medical insurance policies, the focus is on covering a portion of the costs for medical services through features such as maximum benefit limits, coinsurance, and deductibles. Capitation is more commonly associated with managed care plans, where providers receive a set payment per patient regardless of the actual services rendered.Rate this question:
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- 44.
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.
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Principal
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Implied
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Express
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All the above
Correct Answer
A. ImpliedExplanation
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.Rate this question:
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- 45.
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:
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Medi-Cal
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The California Life and Health Insurance Guarantee Association
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OBRA
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None of the above
Correct Answer
A. The California Life and Health Insurance Guarantee AssociationExplanation
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.Rate this question:
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- 46.
Identify the statement that is true about contributory group life insurance.
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The employer will make a cash contribution to the estate of a deceased employee.
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The employer will contribute the full amount of the premium
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The employee will contribute to the premium payments.
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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.Rate this question:
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- 47.
Health Maintenance Organizations (HMOs) provide which of the following ?
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Health care coverage
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Health care services
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Both A and B above
Correct Answer
A. Both A and B aboveExplanation
HMOs provide both health care coverage and health care services. Health care coverage refers to the insurance plan that covers the cost of medical services, while health care services refer to the actual medical care provided by doctors, hospitals, and other healthcare providers. HMOs typically offer a network of healthcare providers that members can access for their healthcare needs. Members pay a monthly premium and may have to pay copayments or deductibles for certain services. Overall, HMOs aim to provide comprehensive healthcare coverage and services to their members.Rate this question:
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- 48.
Choose the provision(s) listed below in the Uniform Policy Provisions law that regulates health insurance sales in California.
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Reinstatement
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Payment of claims
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Grace period
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All the above
Correct Answer
A. All the aboveExplanation
The correct answer is "All the above" because all three provisions - reinstatement, payment of claims, and grace period - are listed in the Uniform Policy Provisions law that regulates health insurance sales in California. Reinstatement allows a policyholder to reinstate their policy after it has lapsed, payment of claims ensures that the insurance company pays valid claims promptly, and the grace period provides a specified period of time after the premium due date during which the policy remains in force.Rate this question:
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- 49.
In the life insurance planning process, the "blackout period" is considered:
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The period of time after a life insurance application is written and the date the coverage takes effect.
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The period of time when there is not enough income agailable as required by the insured's beneficiaries
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The period of time when a surviving spouse does not receive any Social Security benefits
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None of the above
Correct Answer
A. The period of time when a surviving spouse does not receive any Social Security benefits -
Quiz Review Timeline (Updated): Mar 21, 2023 +
Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.
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Current Version
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Mar 21, 2023Quiz Edited by
ProProfs Editorial Team -
Dec 02, 2015Quiz Created by
Charles.shaw88
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