Life & Health - Practice Exam 4

150 Questions | Total Attempts: 177

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Life And Health Quizzes & Trivia

Life & Health - Practice Exam 4


Questions and Answers
  • 1. 
    Harold, a variable annuity applicant, does not request the premium be invested in a stock or bond portfolio during the cancellation period.  The policy is returned to the company within the cancellation period.  What is Harold entitled to receive ?
    • A. 

      The entire premium

    • B. 

      The value of the policy on the day it was cancelled

    • C. 

      The premium less the surrender charge

    • D. 

      The value of thepolicy on the day the policy was delivered

  • 2. 
    Any transaction that involves purchasing a life insurance policy and terminating an existing policy is known as:
    • A. 

      Replacement

    • B. 

      Reinsurance

    • C. 

      Reinstatement

    • D. 

      Assignment

  • 3. 
    According to the CA Insurance Code, in which of the following classes of insurance can a binder NOT be issued ?
    • A. 

      Marine

    • B. 

      Auto

    • C. 

      Fire

    • D. 

      Life

  • 4. 
    An organization will cease to exist as an entity eligible to hold a license for all of the following reasons, except:
    • A. 

      Termination of an association

    • B. 

      Termination of a key employee

    • C. 

      Dissolution of a corporation

    • D. 

      Dissolution of a co-partnership

  • 5. 
    What does it mean if an agent's license is inactive ?
    • A. 

      The agent can still transact insurance business in CA, but not in any other states until the license is reactivated

    • B. 

      The agent can transact any insurance business with another agent's approval

    • C. 

      The agent can transact any insurance business for which the agent is licensed

    • D. 

      The agent cannot transact any insurance business for which a license is required.

  • 6. 
    If the Commissioner issues a Notice of Seizure for documents and the individual fails to send those documents what is the penalty?
    • A. 

      1 year in jail

    • B. 

      $1,000 fine

    • C. 

      1 year in jail and/or $1,000 fine

    • D. 

      Each state handles discipline in its own way

  • 7. 
    A disability income policy covers injuries suffered by an insured on or off the job is called?
    • A. 

      An occupational policy

    • B. 

      A non-occupational policy

    • C. 

      A wraparound policy

    • D. 

      Twenty-four-hour policy

  • 8. 
    Which of the following must any person engaged in the business of acting as an insurance agent or broker who receives compensation for arranging or directing sales in connection with a premium financing agreement do ?
    • A. 

      Provide a list of the potential complaints lodged against the broker or agent through past customers

    • B. 

      Provide records of interest payments to the broker agent with respect to interest paid by the insurer

    • C. 

      Maintain a list of accounts in connection with compensation exempted in premium financing payments for three years

    • D. 

      Provide a list of current accounts for any client who wishes to see the records

  • 9. 
    All of the following would be considered one of the three major types of loss exposures, except:
    • A. 

      Liability loss exposure

    • B. 

      Financial loss exposure

    • C. 

      Human and personnel loss exposure

    • D. 

      Property loss exposure

  • 10. 
    Which of hte following statement concerning the usual coordination-of-benefits provision are correct ?
    • A. 

      When the plans both have the provision, coverage as an employee is primary to coverage paid to dependents

    • B. 

      Coverage under COBRA is primary to other coverage paid to the employee

    • C. 

      Medicare coverage is always primary to "medical coverage"

    • D. 

      Coverage under any plan with the provision is primary to coverage under any plan without the provision

  • 11. 
    Which of the following is NOT provided by Hospice Care?
    • A. 

      Pain relief

    • B. 

      Symptom management

    • C. 

      Counseling

    • D. 

      Rehabilitation

  • 12. 
    Tony Brown has a CLU certification.  Which of the following names would be automatically approved for his agency's use ?
    • A. 

      Tony Brown CLU and Company

    • B. 

      Brownies Insurance Services

    • C. 

      Brown Insurance

    • D. 

      None of these would be automatically approved

  • 13. 
    A person has apaid $50,000 into a fixed annuity over 20 years.  When he decides to begin income payments the insurer calculates that he will receive $4,000 per year for life, which means that he will receive a total of $100,000.  In te first 10 years of payments how much is taxable each year ?
    • A. 

      $0

    • B. 

      $800

    • C. 

      $2,000

    • D. 

      $4,000

  • 14. 
    According to the code, all insurers must maintain a department to investigate:
    • A. 

      Possible abuses of rating laws

    • B. 

      Possible arson

    • C. 

      Possible fraudulent claims from insureds

    • D. 

      Possible fraud by insurers

  • 15. 
    Which two are Activities of Daily Living?
    • A. 

      Eating and dressing

    • B. 

      Speaking and Incontinence

    • C. 

      Sleeping and walking

    • D. 

      Bathing and hearing

  • 16. 
    What does the Insurance Commissioner have the right to do if an agent lacks authority from an insurer named on a binder for coverage ?
    • A. 

      Request his certificate of authority

    • B. 

      Authorize agent with a certificate of convenience

    • C. 

      Suspend or revoke the license of the agent

    • D. 

      Fine the insurance company

  • 17. 
    An insured bought an annuity ten years ago.  He will retire in five year.  To determine the value of the annuity, the number of accumulation units is multiplied by the value of the separate account.  What type of annuity was purchased ?
    • A. 

      Variable annuity

    • B. 

      Fixed premium annuity

    • C. 

      Tax sheltered annuity

    • D. 

      Single payment annuity

  • 18. 
    The likelihood of incurring disease or disability at any given time is:
    • A. 

      Risk

    • B. 

      Morbidity

    • C. 

      Mortality

    • D. 

      Hazard

  • 19. 
    The class beneficiary designation which means that the beneficiaries will receive equal shares fo the death benefit divided among the surviving members of the class is:
    • A. 

      Class beneficiaries, equal shares

    • B. 

      Per capita

    • C. 

      Per stirpes

    • D. 

      Per diem

  • 20. 
    Twelve months ago, a man slipped and fell down a flight of stairs at his workplace.  As a result he has a paralysis for which he is not expected to recover.  This 46 year old person will probably be able to collect disability income benefits from:
    • A. 

      Medicare

    • B. 

      Workers Compensation

    • C. 

      Medicaid

    • D. 

      Social security

  • 21. 
    In order to be qualified to sell LTC insurance in the state of CA, agents must comply with all of the following, except:
    • A. 

      All licensees are required to pass a LTC knowledge exam every 10 years

    • B. 

      For licenses issued after January 1, 1992, 8 hours of training for the first four 12-month periods from date of license issuance, then 8 hours prior to each renewal

    • C. 

      Non-resident licensees file with the Insurance Commissioner and have Commissioner approve education requirement

    • D. 

      8 hours prior to renewal for licenses issued prior to January 1, 1992

  • 22. 
    The mathematical rule that says that as the number of individual but similar exposure units increases the easier it is to predict losses is which of the following ?
    • A. 

      Insurable interest standard

    • B. 

      Contract law

    • C. 

      The law of large numbers

    • D. 

      Materiality

  • 23. 
    Which of the following is a description of a Life and Disability Analyst ?
    • A. 

      A broker paid fees for service

    • B. 

      A person licensed to assist an agent in soliciting life insurance

    • C. 

      A person licensed to advise clients about life and disability insurance for a fee

    • D. 

      Any agent

  • 24. 
    What happens to a license after the death of a natural person who holds a valid insurance license?
    • A. 

      It always terminates

    • B. 

      It may be transferred to another person

    • C. 

      The license becomes inactive until the expiration date

    • D. 

      The license must be returned to the Commisioner to cancel the license

  • 25. 
    If the financial loss on a certain group of people occurring over a certain period of time defines the pricing of a disability policy, it is the pricing principle known as:
    • A. 

      Rapidity

    • B. 

      Security

    • C. 

      Risk

    • D. 

      Frequency

  • 26. 
    Which of the following are common insurance policy provisions?
    • A. 

      Reinstatement, suicide, pre-existing conditions

    • B. 

      Entire contract, grace period, reinstatement

    • C. 

      Entire contract, incontestability, pre-existing conditions

    • D. 

      Grace period, suicide right to return

  • 27. 
    With the cost of living rider, the life insurance policy holder:
    • A. 

      Must increase or decrease the face value of the policy as the index increases or decreases

    • B. 

      Gets the automatic increase in the face value if there is an increase in the cost of living index. There is an additional premium for the additional coverage

    • C. 

      Gets the automatic increase in the face value if the index goes up. There is no charge except for the flat charge for the rider

    • D. 

      All of the above are flase

  • 28. 
    Which of the following is not a standard level of care for a LTC policy ?
    • A. 

      Intermediate care

    • B. 

      Custodial care

    • C. 

      Skilled nursing care

    • D. 

      Convalescent care

  • 29. 
    All of the following is required on a life insurance application, except:
    • A. 

      Health history

    • B. 

      Amount of other life insurance in force

    • C. 

      Age of the inured

    • D. 

      The amount of disability income insurance in force

  • 30. 
    All of the following statements regarding survivorship life insurance are true, except:
    • A. 

      It is particularly well situated to provide cash to cover estate taxes

    • B. 

      The policy face amounts are usually for more than $1,000,000

    • C. 

      It offers premiums that are quite low compared to what you would be charged for separate policies

    • D. 

      The policy face amount is made out based only on the death of the first to die

  • 31. 
    Which of the following is not an option for the use of the policy dividends ?
    • A. 

      Fund the distribution of monthly income payment

    • B. 

      Purchase paid-up additions

    • C. 

      Reduce the current premium

    • D. 

      Purchase one year term insurance

  • 32. 
    What information can a party to a contract of insurance be allowed NOT to communicate according to California law ?
    • A. 

      Information which the other party already knows

    • B. 

      Information not specifically asked by an agent and company, even if it's considered relevant

    • C. 

      Information which is material to the contract

    • D. 

      Information which cannot be proven but is material

  • 33. 
    Which of the following (recall) provisions of a disability contract is likely to change the contract least and cost the most ?
    • A. 

      Continuous indemnity contract

    • B. 

      Non-cancelable contract

    • C. 

      Guaranteed renewable contract

    • D. 

      Expense arrangement contract

  • 34. 
    According to the CA insurance Code, a judgment against an applicant who entered a plea of "nolo contendere" is considered to be:
    • A. 

      Innocent by code, but guilty by law

    • B. 

      Innocent

    • C. 

      Referred to the Insurance Commissioner for opinion

    • D. 

      Convicted

  • 35. 
    The policy provision which prevents an insurer from voiding a policy for misstatements after 2 years is:
    • A. 

      Incontestability

    • B. 

      Indemnity

    • C. 

      Misrepresentation

    • D. 

      There is no such provision

  • 36. 
    The clause that protects the proceeds of a life insurance policy from attachment by creditors after the death of the insured is:
    • A. 

      Common disaster clause

    • B. 

      Spendthrift trust clause

    • C. 

      Incontestability clause

    • D. 

      Beneficiary clause

  • 37. 
    An association of industry specific employers who are joined together in order to qualify for, or gain premium advantages, in group insurance is:
    • A. 

      MEWA

    • B. 

      MEC

    • C. 

      MET

    • D. 

      MIB

  • 38. 
    Which of the following gives individuals the right to purchase additional life insurance regardless of their insurability ?
    • A. 

      Incontestability

    • B. 

      Accelerated death benefit

    • C. 

      Guaranteed insurability

    • D. 

      Waiver of premium

  • 39. 
    Under a disability insurance policy, an insured is eligible for a waiver of premium benefit:
    • A. 

      Under the age 65

    • B. 

      After the first six months of disability

    • C. 

      During maternity leave

    • D. 

      During delayed retirement

  • 40. 
    Which is NOT part of transacting insurance ?
    • A. 

      Solicitation

    • B. 

      Establishing a list of clients

    • C. 

      Negotiation

    • D. 

      Execution of a contract

  • 41. 
    An insurer organized under the laws of the State of California is a:
    • A. 

      Domestic insurer

    • B. 

      Foreign insurer

    • C. 

      Non-alien insurer

    • D. 

      Non-admitted insurer

  • 42. 
    An insured and beneficiary die in a car accident and it is impossible to determine who died first.  Who will receive the life insurance proceeds ?
    • A. 

      The insured's estate

    • B. 

      The insurance company retains the proceeds

    • C. 

      The beneficiary's estate

    • D. 

      Both the insured's and beneficiary estate will share

  • 43. 
    A beneficiary wants to receive $2,000 per month until the principal and interest are exhausted.  Which settlement option should be chosen ?
    • A. 

      Fixed amount option

    • B. 

      Cash option

    • C. 

      Fixed period option

    • D. 

      Interest option

  • 44. 
    Which of the following applies to the social insurance program known as social security ?
    • A. 

      Contributions are compulsory for most workers

    • B. 

      Benefits are based upon a contract with the insured

    • C. 

      Benefits are paid to each individual matching their contributions

    • D. 

      All insured workers begin to receive benefits at age 65

  • 45. 
    Any person who diverts or misappropriates fiduciary funds is guilty of:
    • A. 

      Misrepresentation

    • B. 

      Forgery

    • C. 

      Fraud

    • D. 

      Theft

  • 46. 
    A probationary period in a group health poliy is intended for people:
    • A. 

      Who decline to join the group during the eligibility period

    • B. 

      With other coverage after a qualifying event

    • C. 

      With a pre-existing condition when they joined the group

    • D. 

      Who joined the group after the effective date

  • 47. 
    An insurer owned by policyholders is:
    • A. 

      Fraternal insurer

    • B. 

      Capital stock insurer

    • C. 

      Mutual insurer

    • D. 

      Reciprocal exchange

  • 48. 
    Physicians and surgeons services, whether provided in a hospital, or elsewhere:
    • A. 

      Are covered by Medicare Part B. There is a charge for the coverage

    • B. 

      Are covered by Medicare Part A. There is no charge for the coverage

    • C. 

      Are covered by Medicare Part A. There is a charge for the coverage

    • D. 

      Are covered by Medicare Part B. There is no charge for the coverage

  • 49. 
    COBRA applies to employers with at least:
    • A. 

      80 employees

    • B. 

      20 employees

    • C. 

      40 employees

    • D. 

      60 employees

  • 50. 
    All of the following are valid reasons for the Insurance Commissioner to deny the applicant for an insurance license, except:
    • A. 

      Applicant does not have a good business reputation

    • B. 

      Applicant is not properly qualified to perform duties

    • C. 

      Applicant does not have a California business address

    • D. 

      Applicant lacks integrity

  • 51. 
    An agent who replaces an existing life insurance contract, must do all of the following, except:
    • A. 

      Submit copy of the replacement notice to the applicant

    • B. 

      Submit a copy of the replacement notice to the existing insurer

    • C. 

      Submit a copy of the replacement notice to the replacing insurer

    • D. 

      Obtain a signed statement from the applicant as to whether insurance is to be replaced

  • 52. 
    Why should a contingent beneficiary be named in a life insurance policy?
    • A. 

      To determine who receives the policy benefits if the primary beneficiary is deceased

    • B. 

      To become the policy owner if the primary beneficiary is deceased

    • C. 

      To allow creditors to receive policy proceeds

    • D. 

      To share the proceeds with the primary beneficiary

  • 53. 
    Which statement best describes a life insurance policy divident ?
    • A. 

      It is a stockholders right

    • B. 

      It is found in a non-participating whole life policy and in a comparable participating policy

    • C. 

      It is a distribution of excess funds accumulated by the insurer on participating policies

    • D. 

      It is the interest paid to the policy holder from the cash value of a permanent insurance policy

  • 54. 
    In order for an entity to be eligible to hold a license, a co-partnership who membership has changed must do all of the following, except:
    • A. 

      Obtain the signature of the general partner on the application for registration

    • B. 

      At least one person who will exercise the agency powers of the partnership must remain with the co-partnership

    • C. 

      Return the old license with signatures of the original partners to the Commissioner with an explanation

    • D. 

      Submit a new application to the Commissioner within 30 days of change of partners with the names of the new members of the partnership

  • 55. 
    The Federal Act that is designed to protect group plan participants, establish pension equality, and mandates strict reporting and disclosure requirements is:
    • A. 

      COBRA

    • B. 

      DEFRA

    • C. 

      TEFRA

    • D. 

      ERISA

  • 56. 
    The person whose life is the object of a life insurance policy is:
    • A. 

      Applicant

    • B. 

      Policy owner

    • C. 

      Insured

    • D. 

      Beneficiary

  • 57. 
    FYI Company's employee is injured while driving in the employ of the company.  Coverage for the employee comes from:
    • A. 

      Employee's auto medical payments

    • B. 

      FYI's Workers Compensation

    • C. 

      FYI's Genral Liability

    • D. 

      The employee's health policy

  • 58. 
    An individual might purchase LTC protection out of concern for all the following, except:
    • A. 

      Ineligibility for Medigap coverage

    • B. 

      Inevitable cost of health care

    • C. 

      Increasing probability of needed services

    • D. 

      Existing medical coverage

  • 59. 
    How is the Insurance Commissioner selected ?
    • A. 

      An annual meeting of insurance professionals in the state

    • B. 

      Appointed by the governor

    • C. 

      A group of qualified applicants voted on by the legislature

    • D. 

      An election by the people

  • 60. 
    A policy is returned to the insurer within 10 days of the date the policy is delivered.  How much of the premium is returned to the applicant ?
    • A. 

      None

    • B. 

      50%

    • C. 

      80%

    • D. 

      100%

  • 61. 
    The SEC is involved in the regulation of:
    • A. 

      Universal life policies

    • B. 

      Interest-sensitive life policies

    • C. 

      Variable life policies

    • D. 

      All annuities

  • 62. 
    A disability income policy social insurance supplement (SIS) benefit rider:
    • A. 

      Pays a benefit if the insured is qualified for workers compensation benefits

    • B. 

      Pays benefits regardless of any social insurance benefits provided

    • C. 

      Provides benefit if the insured does not qualify for social insurance benefits

    • D. 

      Provides a benefit only if the insured is totally disabled and qualifies for social insurance plan benefits

  • 63. 
    HMOs are involved in all of the following, except:
    • A. 

      Controlling costs by encouraging preventative care

    • B. 

      Emphasizing the use of specialty physicians

    • C. 

      Providing health care services

    • D. 

      Providing health care financial coverage

  • 64. 
    The guarantee insurability rider provides that the policy holder can purchase more insurance:
    • A. 

      Any time during the policy owner's life, on his own life, without proof of insurability

    • B. 

      On the lives of his dependants at certain specified ages

    • C. 

      On his own life at specified ages provided the policy owner is insurable

    • D. 

      On his own life at certain specified ages without proof of insurability

  • 65. 
    The purpose of laws regarding the replacement of life and annuity contracts includes all of the following, except:
    • A. 

      To establish the penalties for failure to comply with replacement requirements

    • B. 

      To reduce the opportunity for misrepresentation and incomplete disclosures

    • C. 

      To protect the interests of life insurers and their agent

    • D. 

      To assure the purchaser receives information to make an informed decision

  • 66. 
    Who has the right to change life insurance policy beneficiaries ?
    • A. 

      The insurer

    • B. 

      The beneficiary

    • C. 

      The policyholder

    • D. 

      The insured

  • 67. 
    Which is the most expensive LTC policy ?
    • A. 

      14 day elimination period, 3 year benefit period

    • B. 

      14 day elimination period, 5 year benefit period

    • C. 

      180 day elimination period, 5 year benefit period

    • D. 

      90 day elimination period, 5 year benefit period

  • 68. 
    A person who acts in a capacity that requires an active license without having a valid license, is guilty of a:
    • A. 

      Fraud

    • B. 

      Misdemeanor

    • C. 

      Felony

    • D. 

      Misrepresentation

  • 69. 
    Any attempt by an existing insurer or their agent to dissuade a policy owner from replacing an existing life insurance or annuity contract is known as:
    • A. 

      Replacement

    • B. 

      Reinstatement

    • C. 

      Assignment

    • D. 

      Conservation

  • 70. 
    Unless the applicant indicates otherwise during the right-to-return period in an individual annuity, the premium for a variable annuity would be invested only in:
    • A. 

      Fixed income investments and money market funds

    • B. 

      The mutual funds underlying the variable annuity contract

    • C. 

      The insurer's general fund

    • D. 

      The insurer's separate account

  • 71. 
    Which of the following is not an example of cost sharing in a health insurance policy ?
    • A. 

      Coinsurance

    • B. 

      Co-payment

    • C. 

      Coordination

    • D. 

      Deductible

  • 72. 
    Under the Consolidated Omnibus Budget Reconsolidation Act (COBRA), which of the folowing is a qualifying event ?
    • A. 

      Promotion

    • B. 

      Divorce

    • C. 

      Marriage

    • D. 

      Relocation

  • 73. 
    Along with having enough assets to provide for its liabilities and for reinsurance for all outstanding risks, in order to remain solvent, the insurer must also meet minimum requirements equal to what amount required by the California Code ?
    • A. 

      Paid-in capital

    • B. 

      $1,000,000

    • C. 

      25% of policy holders deposits

    • D. 

      There are no minimum requirements

  • 74. 
    All of the following would be considered unfair trade practices, except:
    • A. 

      Making a statement to the public about a person in the insurance business that is untrue or misleading

    • B. 

      Committing an act of descrimination whether it be fair or unfair

    • C. 

      Filing with any public official a false statement of financial condition concerning an insurer

    • D. 

      Making any statement misrepresenting terms of any policy

  • 75. 
    All of the following would be considered unfair claim practices, except:
    • A. 

      Failing to acknowledge communications regarding claims arising from an insurance policy

    • B. 

      Misrepresenting to a claimant policy provisions relating to a claim

    • C. 

      Directly advising a claimant to obtain the services of an attorney

    • D. 

      Failure to affirm or deny coverage of claims within a reasonable time frame after proof of loss requirements have been met and submitted by the insured

  • 76. 
    A distinct feature of the alternative funding method known as self-funding is :
    • A. 

      It only applies to large companies

    • B. 

      It is designed for entrepreneurs

    • C. 

      No evidence of insurability is required

    • D. 

      The benefits are tailored to the needs of the participants

  • 77. 
    A variable annuity applicant requests that the premium be immediately invested in a stock portfolio.  The policy is returned to the insurer within the cancellation period.  What is the applicant entitled to receive ?
    • A. 

      The policy amount value on the date the policy was received by the insurer

    • B. 

      A refund of the premium minus the surrender charge

    • C. 

      A refund of the entire premium

    • D. 

      The policy amount value on the date the policy was delivered to the insured

  • 78. 
    If a person gives an erroneous statement on an application unintentionarlly, this is:
    • A. 

      Fraud

    • B. 

      False

    • C. 

      Frivolous

    • D. 

      Fair

  • 79. 
    As an employer, the sudden death of an employee is considered a:
    • A. 

      Body loss

    • B. 

      Personnel loss

    • C. 

      Personal loss

    • D. 

      Human loss

  • 80. 
    Regarding an organization license, what happens when a corporation is dissolved ?
    • A. 

      The license is continued if an original partner (stockholder) remains with the new corporation

    • B. 

      The license is terminated

    • C. 

      The license is passed on to the beneficiary

    • D. 

      The license is renewed provided that fees are paid

  • 81. 
    Which of the following would be considered a morale risk ?
    • A. 

      Misstatement by an applicant

    • B. 

      The insured is blind

    • C. 

      The insured drives too fast

    • D. 

      All of the above

  • 82. 
    Senior citizens are given a 30 day right to return a life insurance policy:
    • A. 

      At age 65

    • B. 

      Under individual or group plans

    • C. 

      At age 60 or older

    • D. 

      All of the above

  • 83. 
    Subject to the restrictions of the CA Insurance Code, any person capable of making a contract may be considered:
    • A. 

      An insurer

    • B. 

      A broker

    • C. 

      An agent

    • D. 

      A solicitor

  • 84. 
    In which of the following plans are claim forms typically completed and submitted by the participant?
    • A. 

      Indemnity

    • B. 

      Preferred Provider Organizations

    • C. 

      Point of Service

    • D. 

      Health Maintenance organizations

  • 85. 
    Medicare Part A, begins automatically at age:
    • A. 

      55

    • B. 

      60

    • C. 

      62

    • D. 

      65

  • 86. 
    The purpose of the California Life and Health guarantee Association is:
    • A. 

      It helps small insurers with less capital to compete with larger insurers

    • B. 

      To protect life policy holders and/or insureds when any insurer becomes insolvent

    • C. 

      To guarantee that any promises made by any insurer's sales or marketing units are fulfilled

    • D. 

      (Subject to certain limitations) to protect life and helath policy holders and/or insureds when member insurers become insolvent

  • 87. 
    If an insurance agent or broker receives a commission for arranging a premium finance agreement they must do which of the following ?
    • A. 

      Disclose to the client the amount of all commissions received

    • B. 

      Disclose to the client the amount of commission received for arranging the financing agreement

    • C. 

      Share the commission with the client

    • D. 

      None of the above

  • 88. 
    Certain healthcare providers are called "service type providers".  This means:
    • A. 

      They are more service oriented than the average provider

    • B. 

      Payments for services are made directly to the insured

    • C. 

      They provide broader services to their insureds

    • D. 

      Payments for services are made directly to the provider

  • 89. 
    Which of the following is not ordinary life insurance ?
    • A. 

      A life paid up to 65 policy

    • B. 

      A 30-year decreasing term policy

    • C. 

      A group life insurance policy

    • D. 

      A 20-year endowment policy

  • 90. 
    A failure to communicate information which a party to an insurance contract knows and should communicate, is called an act of:
    • A. 

      Concealment

    • B. 

      Intimidation

    • C. 

      Warranty

    • D. 

      Coercion

  • 91. 
    When a family policy covers children, all of the following are true, except:
    • A. 

      The coverage is term insurance for a fixed amount

    • B. 

      Evidence of insurability is required if coverage for children is permanent insurance

    • C. 

      There is no additional charge for covering new additions to the family

    • D. 

      All children living with the family are covered even if born or adopted after the policy is issued

  • 92. 
    Deductibles, coinsurance, and co-payments in a health insurance policy are cost-effective choices that have the effect of:
    • A. 

      Cost sharing

    • B. 

      Cost avoidance

    • C. 

      Cost containment

    • D. 

      Cost evasion

  • 93. 
    Which of the following is not one of the common personal uses of life insurance ?
    • A. 

      Funding a buy/sell agreement

    • B. 

      Helping to fund a person's retirement

    • C. 

      Creating emergency funds to avoid the need to liquidate assets

    • D. 

      Creation of an immediate estate

  • 94. 
    Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), a qualifying event insures that an employee who is covered can:
    • A. 

      Elect to continue coverage

    • B. 

      Request a waiver of premium

    • C. 

      Convert to an interim policy

    • D. 

      Transfer coverage to another group

  • 95. 
    An individual license is considered terminated:
    • A. 

      When transferred to another person

    • B. 

      When transferred to another licensee

    • C. 

      On the death of the licensee

    • D. 

      When transferred to a beneficiary

  • 96. 
    A movie company concerned about their financial losses in case of the illness of one of their actors would purchase:
    • A. 

      Surety insurance

    • B. 

      Worker's Compensation

    • C. 

      Miscellaneous insurance

    • D. 

      Credit insurance

  • 97. 
    Supplemental insurance used to pay for hospital confinement to treat a cancer is also known as:
    • A. 

      Specified medical

    • B. 

      Urgent stay

    • C. 

      Dread disease

    • D. 

      Temporary major

  • 98. 
    What must an insurer do who accepts an application from an agent who is not specifically appointed by that insurer and then issues a policy from that application ?
    • A. 

      The agent must become an employee of that company within 30 days or re-submit the application

    • B. 

      Add the agent's name on the company's list of approved agents

    • C. 

      Send the agent an employment approval notice within 30 days of policy issuance

    • D. 

      Forward to the Insurance Commissioner a Notice of Appointment within 14 days of receipt of application

  • 99. 
    Which of the following is considered ordinary life insurance ?
    • A. 

      Mortgage insurance

    • B. 

      Continuous premium whole life

    • C. 

      Group insurance

    • D. 

      30-year decreasing term insurance

  • 100. 
    Which of the following is a true statement regarding the social security (OASDHI) program ?
    • A. 

      The program is fully funded

    • B. 

      Except for a few exemptions, it is a voluntary program

    • C. 

      The program provides a minimum floor of income, and is meant to supplement a retirees own personal program

    • D. 

      The actuarial value of each person's contribution is equal to the actual value of each persons benefit

  • 101. 
    Which part has rights in a life insurance policy only after the death of the insured ?
    • A. 

      The policy owner

    • B. 

      The beneficiary

    • C. 

      The applicant

    • D. 

      The insured

  • 102. 
    A person who spends $10,000 in a single premium annuity, and another $10,000 in a Certificate of Deposit (CD).  Both pay 10% interest annually.  the person is in a 31% income tax bracket.  For 40 years, this person does not touch his annuity, and reinvests all income from the CD at 10%.  Which of the following statements is true ?
    • A. 

      The CD would be worth several hundred thousand more because there is no commission paid on a CD

    • B. 

      The annuity would be worth several hundred thousand more because of the tax deferral of the earnings

    • C. 

      The CD would be worth several hundred thousand more because of tax deferral

    • D. 

      They would be worth approximately the same amount after the payment of deferred income taxes

  • 103. 
    Listed below are descriptions of four types of policies.  Which is the term policy ?
    • A. 

      The policy premium increases after three years and then it remains the same until the policy is paid up at age 55

    • B. 

      The policy has a face amount of $100,000. The policy holder pays premiums annually. At the end of 10 years the case value is $25,000

    • C. 

      The policy premiums must be paid for 20 years. Afterwards, the policy continues with no additional premiums paid. The policy has non-forfeiture values.

    • D. 

      The policy has a face amount of $100,000. Every five years, the premium paid increases. After ten years, the policy holder stops paying premiums and the coverage stops. The policy has no cash value.

  • 104. 
    The main master policy owner of a group health insurance contract is the:
    • A. 

      Employer

    • B. 

      Employee members

    • C. 

      Plan administrator

    • D. 

      Agent

  • 105. 
    If one were to receive the principal sum benefit of death in a disability policy, the death must occur:
    • A. 

      Within a specified number of days after injury occurs

    • B. 

      Anytime during a rehabilitation period

    • C. 

      Anytime that total dismemberment falls in the period

    • D. 

      Within the policy period for any cause

  • 106. 
    All of the following are true statements concerning the treatment of federal income tax on life insurance, except:
    • A. 

      Premiums paid for individual life insurance policies are not tax deductible

    • B. 

      Employers can deduct as a business expense the cost of insurance premiums paid t benefit employees

    • C. 

      Annuity death benefit proceeds are exempt from all taxation

    • D. 

      Death benefits are generally exempt from Federal Income Taxation

  • 107. 
    The policy owner, age 50, has been paying the premiums on his whole life policy for 15 years.  He needs the equivalent of 1/3 of the cash value of his policy over the next two years.  He wants to continue to have the policy protection, and can afford to pay the premiums.  Which of the following would appear to be his best curse of action ?
    • A. 

      Look elsewhere. The insurer is not obligated to make the cash value available to the policy owner unless the policy matures. If they did, most policies would lapse.

    • B. 

      Look elsewhere. Whole life policies do not develop a cash value

    • C. 

      Surrender the policy and take the cash value. He can then take the other 2/3 and purchase another policy.

    • D. 

      Use the policy loan provision to borrow money from the policy, but keep paying the policy premiums to keep the policy in force.

  • 108. 
    An insured bought a $150,000 non-participating whole life policy many years ago.  She is 100 years old today.  She has never borrowed from the policy, and has made all premium payments when due.  The policy cash value is:
    • A. 

      $0

    • B. 

      $75,000

    • C. 

      $100,000

    • D. 

      $150,000

  • 109. 
    In insurance terms a representation can be considered:
    • A. 

      An absolute fact

    • B. 

      An implied warranty

    • C. 

      An express warranty

    • D. 

      None of the above

  • 110. 
    In life insurance, the loss of a key family member is considered a:
    • A. 

      Body loss

    • B. 

      Personnel loss

    • C. 

      Personal loss

    • D. 

      Human loss

  • 111. 
    Under the 10-day right to return, the policy will pay proceeds:
    • A. 

      If premium is not paid

    • B. 

      If the policy is not returned buy premium is paid

    • C. 

      If the policy is returned but premium is paid

    • D. 

      None of the above

  • 112. 
    Hospice care is for:
    • A. 

      Persons needing acute care

    • B. 

      Family caregivers

    • C. 

      Persons needing custodial care

    • D. 

      Terminally ill persons

  • 113. 
    Identify the penalty for each violation for a person engaging in any unfair method of competition
    • A. 

      No more than $5,000 per agent

    • B. 

      Non more than $10,000 total no matter how many violations or type of violation

    • C. 

      No more than $5,000 for each act, or no more than $10,000 for each act if the act is judged to be willful

    • D. 

      $5,000 for each violation up to a total of $10,000

  • 114. 
    In the absence of a coordination of benefits clause, all of the following circumstances might result in the recovery of some or all health care expenses, except:
    • A. 

      Both spouses are employed and eligible for group medical payments

    • B. 

      Worker's medical plan

    • C. 

      Person working for an employer with self-insurance

    • D. 

      Guarantee association laws

  • 115. 
    Unless it is merely a statement of an expectation or a belief, a representation as to the future is considered which of the following ?
    • A. 

      Promise

    • B. 

      Provision

    • C. 

      Liability

    • D. 

      Description

  • 116. 
    Regarding life insurance coverage for a company, the one responsible for obtaining the coverage, maintaining the policy, and paying the premium is:
    • A. 

      The master policy holder

    • B. 

      The individuals who make up the group

    • C. 

      The insurer that provided the group coverage

    • D. 

      The agent who obtained the group coverage

  • 117. 
    The purchase of an insurance policy may not provide one of the following for the insured.  Select the most complete answer:
    • A. 

      The replacement of a large possible loss for small certain loss

    • B. 

      A reduction of uncertainty

    • C. 

      Reduction in the worry/greater peace of mind

    • D. 

      Elimination of the Risk

  • 118. 
    Which type of life insurance policy gives the policy owner the right to share in the insurer's surplus ?
    • A. 

      Participating

    • B. 

      Non-participating

    • C. 

      Level term

    • D. 

      Decreasing term

  • 119. 
    Which of the following may be offered by insurers providing Medicare supplement policies ?
    • A. 

      The core benefit plan without any additional benefits

    • B. 

      Broad plans that exclude the core benefits

    • C. 

      Plans that duplicate the benefits offered by Medicare

    • D. 

      Plans without a right to return period

  • 120. 
    Which of the following is a correct statement about life insurance policy types ?
    • A. 

      Limited payment whole life policies stay in effect only as long as the premium is paid

    • B. 

      Group life insurance policies are offered only to employees who provide proof of insurability

    • C. 

      The initial premium for term insurance is lower than the initial premium for whole life insurance

    • D. 

      Universal life insurance has a structured premium payment schedule that must be followed for the entire contract period

  • 121. 
    Which of the following is true regarding participation in a group health plan
    • A. 

      Minimum participation of 15 years is required for a contributory group health plan

    • B. 

      A non-contributory group health plan must involve all members

    • C. 

      A contributory group health plan must involve all members

    • D. 

      A minimum of 79% of all members is required for a non-contributory group health plan

  • 122. 
    Terminally ill persons would need which of the following ?
    • A. 

      Skilled nursing care

    • B. 

      Intermediate care

    • C. 

      Hospice care

    • D. 

      Acute care

  • 123. 
    The department responsible for evaluation, selection and distribution of risks is:
    • A. 

      The marketing and sales department

    • B. 

      The underwriting department

    • C. 

      The claims department

    • D. 

      The actuarial department

  • 124. 
    Joe receives a large bonus at wok and decides to purchase an annuity with it.  His monthly income payments from the annuity will begin the following month.  Which of the following has Joe purchased ?
    • A. 

      A single premium deferred annuity

    • B. 

      An individual retirement annuity

    • C. 

      A tax sheltered annuity

    • D. 

      A single premium immediate annuity

  • 125. 
    The policy provision which comes into effect when the insured and primary beneficiary die in a simultaneous (common) accident with no evidence as to who died first is:
    • A. 

      Common disaster provision

    • B. 

      Simultaneous death provision

    • C. 

      Joint life provision

    • D. 

      Joint and second to die provision

  • 126. 
    In group insurance the Certificates of Insurance are issued to:
    • A. 

      The group sponsor

    • B. 

      The group members

    • C. 

      The employer

    • D. 

      The plan administrator

  • 127. 
    A person has a disability policy with the following definition of disability: "the inability to perform any occupation for which the insured is suited through education, training, experience or prior economic status". 
    • A. 

      Own occupation definition and is very restrictive

    • B. 

      Any occupation definition and is less restrictive

    • C. 

      Own occupation definition and is less restrictive

    • D. 

      Any occupation definition and is very restrictive

  • 128. 
    Renewable term insurance can best be described as:
    • A. 

      A level death benefit with a raising premium

    • B. 

      A decreasing death benefit with a level premium

    • C. 

      A level death benefit with a decreasing premium

    • D. 

      An increasing death benefit with a level premium

  • 129. 
    The Common Disaster provision is designed to protect the interests of which of the following ?
    • A. 

      The primary beneficiary

    • B. 

      The insurer and insured

    • C. 

      The contingent or secondary beneficiary

    • D. 

      None of the above

  • 130. 
    How much continuing education is anew agent who is both life and fire & casualty licensed is required to complete ?
    • A. 

      25 hours per year for each license

    • B. 

      15 hours per year for either license

    • C. 

      25 hours per year for either license

    • D. 

      15 hours per year for each license

  • 131. 
    In order to deal with the financial consequences of the death of a senior sales manager, a corporation could purchase:
    • A. 

      Group life insurance

    • B. 

      Key person insurance

    • C. 

      Business overhead expense insurance

    • D. 

      Ordinary life insurance

  • 132. 
    What would a person be guilty of who refuses to submit books and records to the commissioner ?
    • A. 

      Misrepresentation

    • B. 

      Contempt of court

    • C. 

      Felony

    • D. 

      Misdemeanor

  • 133. 
    Which of the following requires a reporting company to respond to a consumer's complaint that his file contains inaccurate information ?
    • A. 

      Unfair Practices Act

    • B. 

      Medical Information Act

    • C. 

      COBRA

    • D. 

      Fair Credit Reporting Act

  • 134. 
    Which of the following statements about policy dividends is true ?
    • A. 

      Dividends can be guaranteed

    • B. 

      The insured usually selects the dividend option at the time of policy purchase

    • C. 

      Dividends are only issued with non-participating policies

    • D. 

      All dividends are taxable

  • 135. 
    In accidental death and dismemberment insurance, which of the following would not be considered accidental ?
    • A. 

      Employee loses sight in one eye from falling object in the shop

    • B. 

      Employee severs hand while installing sheet rock at a building site

    • C. 

      Employee requires abdominal surgery after food poisoning in the lunch room

    • D. 

      Employee dies while falling from a ceiling hoise

  • 136. 
    A health insurance co-payment is:
    • A. 

      A percentage of the probable costs of services provided to the insured

    • B. 

      A portion of the deductible that the insured pays for the service

    • C. 

      A payment paid by the insured to the provider for the service

    • D. 

      A percentage of the cost of service shared between the insured and the insurer

  • 137. 
    An insurance company pays claims after a self-insured, specified limit has been reached.  This is:
    • A. 

      Stop-loss coverage

    • B. 

      Multiple employer welfare arrangement

    • C. 

      A coverage delay provision

    • D. 

      Gap Insurance

  • 138. 
    Insurers make an adjustment to the cash value of an account of a universal life policy each time a payment is made. They add the premium paid and:
    • A. 

      Current interest

    • B. 

      A general expense charge

    • C. 

      Current interest; adjusted for mortality and a general expense charge

    • D. 

      Mortality and general expense charges

  • 139. 
    Relevant to health insurance, morbidity includes all of the following except:
    • A. 

      Intelligence

    • B. 

      Income

    • C. 

      Sex

    • D. 

      Age

  • 140. 
    To be classified as accidental under a disability income insurance policy, the following criteria must be used:
    • A. 

      Only the cause need be accidental

    • B. 

      The cause may be intentional, but the result must be accidental

    • C. 

      Both the cause and the result must be accidental

    • D. 

      Only the result need be accidental

  • 141. 
    After a life insurance policy has been in effect for two years, what keeps it from being rescinded by the insurer ?
    • A. 

      The grace period provision

    • B. 

      The right to return provision

    • C. 

      The incontestability clause

    • D. 

      The reinstatement clause

  • 142. 
    The type of healthcare provider that provides both the healthcare services and healthcare coverage is called:
    • A. 

      EPO

    • B. 

      Major Medical Organization

    • C. 

      Health Maintenance Organization

    • D. 

      Preferred Provider Organization

  • 143. 
    A single deductible amount for all members of the same family and a right to single family member deductibles is known as:
    • A. 

      Corridor deductible

    • B. 

      Flat deductible

    • C. 

      Family deductible

    • D. 

      Stop-loss revenue

  • 144. 
    Insurer and the insured share covered losses.  This is called:
    • A. 

      Coinsurance

    • B. 

      Sharing

    • C. 

      Stop-loss provision

    • D. 

      Co-payment

  • 145. 
    In managed care, the members' choice of providers is most restrictive in which of he following type of plan ?
    • A. 

      Indemnity

    • B. 

      HMO

    • C. 

      Point of Service

    • D. 

      PPO

  • 146. 
    Each of the following terms is an important characteristic of a major medical policy, except:
    • A. 

      Deductible

    • B. 

      Capitation

    • C. 

      Setting maximum amounts

    • D. 

      Coinsurance

  • 147. 
    When a claimant is covered by more than one plan the situation is resolved through:
    • A. 

      Maximum benefit

    • B. 

      Coinsurance

    • C. 

      Integration

    • D. 

      Coordination of benefits

  • 148. 
    The home care coverage of a LTC policy provides for:
    • A. 

      Part-time home health care for the elderly

    • B. 

      Full-time home health care for persons of any age

    • C. 

      Part-time nursing at home for a custodial care patient

    • D. 

      Full-time nursing at home for a convalescent patient

  • 149. 
    Usually, in order to join a group insurance plan without proving insurability, an employee must:
    • A. 

      Join the plan during the enrollment period

    • B. 

      Join the plan while eligible but after the enrollment period

    • C. 

      Join the plan during the probationary period

    • D. 

      Join the plan during the elimination period

  • 150. 
    Which of the following is true about life insurance beneficiary designations ?
    • A. 

      The primary and secondary beneficiary share proceeds equally

    • B. 

      If the primary beneficiary dies before the insured, the benefits are paid to the estate of the insured even if there is a contingent beneficiary

    • C. 

      When the insured dies the death benefit is paid to the secondary beneficiary even if there is a primary beneficiary

    • D. 

      If there is no surviving beneficiary, the death benefit is paid to the Insured's estate