Life And Health Insurance License Exam Practice Test

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1. When Workers compensation laws became mandatory, it meant:

Explanation

When workers compensation laws became mandatory, it meant that employers were financially responsible for employees' on-the-job injuries, regardless of fault. This means that if an employee gets injured while performing their job duties, the employer is obligated to provide compensation for medical expenses, lost wages, and other related costs, regardless of who is at fault for the accident. This system was put in place to ensure that employees are protected and provided for in case of work-related injuries or illnesses, without having to go through the process of proving fault or negligence.

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Life And Health Insurance License Exam Practice Test - Quiz

Are you gearing up to conquer the Life and Health Insurance License Exam? Whether you're taking your initial steps into the insurance industry or seeking to advance your... see morecareer, our "Life and Health Insurance License Exam Practice Test" is your key to success!

Navigating the intricacies of life and health insurance is crucial, and this practice test is designed to assess and enhance your knowledge. It's the ultimate preparation tool for aspiring insurance professionals.

In this comprehensive exam, you'll encounter a wide range of questions that cover essential topics such as policy types, insurance regulations, underwriting, and ethical considerations. From understanding different health plans to deciphering life insurance provisions, this quiz has it all.

Don't leave your success to chance. Join countless others who have used our practice test to gain the confidence and expertise needed to excel in the Life and Health Insurance License Exam. Take the first step toward a successful insurance career today! Dive into our "Life and Health Insurance License Exam Practice Test" and get ready to ace your exam with flying colors!
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2. An insured bought a $150,000 non-participating whole life policy many years ago. He is 100 years old today. He has never borrowed from the policy's cash value and has faithfully made all the payments when due. The policy's cash value is:

Explanation

The insured bought a $150,000 non-participating whole life policy many years ago and has faithfully made all the payments when due. Since he has never borrowed from the policy's cash value, the cash value remains the same as the initial amount of the policy, which is $150,000.

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3. Mike drives a truck for a delivery company.  In the course of making a delivery he is involved in a serious accident, and is taken to the hospital.  The hospital and doctors bills will be paid by:

Explanation

The correct answer is the company workers compensation policy. In this scenario, Mike is driving a truck for a delivery company, which implies that he is an employee of the company. When an employee gets injured on the job, the workers compensation policy of the company typically covers their medical bills and expenses related to the accident. Therefore, it is logical to conclude that the company's workers compensation policy will pay for Mike's hospital and doctors bills.

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4. Which type of insurance guarantees the right to renew the policy each year, regardless of health but at an increased premium:

Explanation

Renewable term insurance guarantees the right to renew the policy each year, regardless of health, but at an increased premium. This means that the policyholder can continue the coverage without having to go through the underwriting process again, even if their health condition deteriorates. However, the premium for renewable term insurance increases with each renewal, reflecting the increased risk associated with the policyholder's age.

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5. Hospice care provides services to patients who are:

Explanation

Hospice care provides services to patients who are terminally ill. This means that they have a life-limiting illness and are not expected to recover. Hospice care focuses on providing comfort and support to patients and their families during the end-of-life stage. It aims to improve the quality of life by managing pain and symptoms, addressing emotional and spiritual needs, and offering practical assistance. Hospice care is different from other types of medical care as it prioritizes comfort and dignity rather than curative treatment.

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6. Long-term care policies can be sold in various ways.  Which of the following is one of these ways?

Explanation

Long-term care policies can be sold as part of a life insurance policy through the use of an endorsement. This means that individuals can add a long-term care coverage provision to their existing life insurance policy. By doing so, they can ensure that they have coverage for long-term care expenses in addition to the death benefit provided by the life insurance policy. This option provides a convenient and potentially cost-effective way for individuals to obtain long-term care coverage without purchasing a separate policy.

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7. A health maintenance organization (HMO) plan reduces costs by promoting?

Explanation

An HMO plan contains costs by promoting preventative care. Preventative care refers to measures taken to prevent illness or detect it early, such as regular check-ups, vaccinations, and screenings. By encouraging members to engage in preventative care, HMOs can help identify health issues before they become more serious and costly to treat. This approach can lead to better overall health outcomes and lower healthcare expenses in the long run.

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8. If an insurer is not able to meet financial obligations when due, the insurer would be considered

Explanation

If an insurer is not able to meet their financial obligations when they are due, it means that they do not have enough funds or assets to pay their debts. This situation is called insolvency. Insolvency is a serious financial condition and indicates that the insurer is at risk of being unable to fulfill their contractual obligations to policyholders and other stakeholders.

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9. People commonly purchase an annuity to protect against the risk of:

Explanation

An annuity is a financial product that provides a steady stream of income for a specified period or for the rest of one's life. People commonly purchase annuities to protect against the risk of outliving their financial resources. By investing in an annuity, individuals can ensure a stable income in their retirement years, even if they live longer than expected. This helps to mitigate the fear of running out of money and provides financial security for the future.

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10. In the event of an accidental death, the principal sum in a disability policy will be paid

Explanation

In the event of an accidental death, the principal sum in a disability policy will be paid in one lump sum. This means that the entire amount of the policy will be paid in a single payment, rather than being spread out over a set period, on a sliding schedule, or as a monthly indemnity. This can provide immediate financial support to the beneficiaries and help cover any immediate expenses or financial obligations that may arise due to the accidental death.

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11. A measure of rating an individual's need for long term care benefits is called

Explanation

The correct answer is "Activities of daily living." This measure is used to assess an individual's ability to perform basic self-care tasks such as bathing, dressing, eating, using the toilet, transferring, and maintaining continence. It helps determine the level of assistance or long-term care benefits that an individual may require.

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12. What is the purpose of "key person" insurance?

Explanation

"Key person" insurance is designed to protect a business from financial losses that may occur due to the death of a key employee. If a key employee, such as a key executive or a highly skilled employee, were to pass away, it could have a significant impact on the business's operations and earnings. This insurance policy helps cover the potential loss of income or decreased business earnings that may result from the absence of the key employee. It provides a financial safety net to the business, allowing it to continue operating and compensating for the loss of the key employee's expertise and contributions.

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13. Choose the correct statement about long-term care (LTC) insurance

Explanation

Long-term care insurance is typically purchased by individuals as they approach middle age or during their middle-age years to prepare for potential future long-term care needs. It becomes more important as people age because the risk of needing long-term care services, such as nursing home care or in-home assistance, increases with age. Starting coverage earlier can also help reduce premium costs. The other statements provided are not accurate or are incomplete.

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14. Each of the following terms is an imortant characteristic of a major medical policy, except

Explanation

Capitation fee is not an important characteristic of a major medical policy. A capitation fee is a fixed amount paid per patient to healthcare providers by insurance companies, regardless of the actual services provided. It is commonly used in managed care plans such as Health Maintenance Organizations (HMOs). However, in major medical policies, the focus is on covering a large portion of the costs of major medical expenses, such as hospitalizations and surgeries. Deductible, co-insurance, and maximum amounts are all important characteristics of major medical policies as they determine the cost-sharing between the insured individual and the insurance company.

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15. The passage of worker's compensation legislation meant

Explanation

The correct answer is "Employers would be held responsible for the cost of their employee's work injuries regardless of fault". This means that the passage of worker's compensation legislation made employers accountable for covering the expenses related to their employees' work injuries, regardless of who was at fault for the injury. This implies that employees no longer had to sue their employers to obtain reimbursement for work injuries, and employers were no longer able to escape responsibility for such injuries.

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16. An example of a third party administrator is:

Explanation

The correct answer is an outside organization that processes claims for an employer's self-funded plans. This explanation is supported by the definition of a third-party administrator (TPA), which is an organization that provides administrative services for employee benefit plans. In this case, the TPA processes claims for self-funded plans, meaning that the employer assumes the financial risk for providing healthcare benefits to its employees. This arrangement allows the employer to have more control over the plan and potentially save costs, while the TPA handles the claims processing and other administrative tasks.

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17. Who pays the premiums for a Workers Compensation policy for a retail store ?

Explanation

Workers Compensation policies are typically paid entirely by the employer. This is because it is the employer's responsibility to provide a safe working environment for their employees and to cover any costs related to workplace injuries or illnesses. The premiums for the policy are considered a cost of doing business for the employer.

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18. The Worker's compensation portion (Part I) of the Worker's Compensation policy covers payments the employer (insured) must pay:

Explanation

The correct answer is "Under Worker's compensation law." The Worker's compensation portion of the policy covers the payments that the employer must make in accordance with the laws governing worker's compensation. This includes providing benefits to employees who suffer work-related injuries or illnesses, such as medical expenses, lost wages, and rehabilitation costs. It ensures that the employer fulfills their legal obligations to compensate employees for workplace injuries or illnesses.

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19. Social Security provides protection against the financial consequences of all of the following, except:

Explanation

Social Security provides protection against the financial consequences of premature death, disability, and retirement. However, it does not provide protection against poor investments. This means that if an individual makes bad investment choices and suffers financial losses, Social Security will not compensate for those losses. Social Security is primarily focused on providing income support and financial security for individuals and families in times of need, rather than protecting against investment risks.

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20. Intentional concealment entitles the injured party to which course of action?

Explanation

Intentional concealment refers to the act of deliberately hiding or withholding information. In such cases, the injured party has the right to choose the course of action known as rescission of the contract. Rescission allows the injured party to cancel the contract and be relieved of any obligations or consequences that may have arisen from it. This course of action is justified as intentional concealment undermines the trust and fairness essential for a contractual relationship.

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21. Which provision will pay a portion of the death benefit prior to the insured's death due to a serious illness

Explanation

The accelerated death benefit provision allows the insured to receive a portion of the death benefit before their actual death if they are diagnosed with a serious illness. This provision is designed to provide financial support to the insured during their lifetime, helping them cover medical expenses and other costs associated with their illness. It can provide a valuable source of funds when needed the most, offering peace of mind and financial stability during a difficult time.

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22. The payer rider on a juvenile life policy provides that if the payor dies or becomes disabled before the insured juvenile reaches the age specified on the policy.

Explanation

The payor rider on a juvenile life policy provides that if the payor dies or becomes disabled before the insured juvenile reaches the age specified on the policy, the insurer will make the payments until the insured juvenile reaches the specified age. This means that if the person responsible for paying the premiums on the policy (the payor) passes away or becomes disabled, the insurer will step in and continue making the payments until the insured juvenile reaches the specified age. This ensures that the policy remains in force and the benefits are provided as intended.

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23. A provision stating that the insured and the insurer will share covered losses in an agreed proportion is called

Explanation

Co-insurance is a provision where the insured and the insurer agree to share the covered losses in a specified proportion. This means that both parties will contribute a certain percentage towards the cost of the claim. It is a way to distribute the risk between the insured and the insurer, ensuring that both have a financial stake in the policy. This provision encourages the insured to be responsible for a portion of the losses, while the insurer covers the remaining amount.

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24. How do rights of an irrevocable beneficiary differ from those of a revocable beneficiary?

Explanation

The rights of an irrevocable beneficiary differ from those of a revocable beneficiary because an irrevocable beneficiary has a vested right that cannot be impaired by the policy owner or their creditors without the beneficiary's consent. This means that once designated as an irrevocable beneficiary, their right to receive the benefits cannot be taken away without their permission. In contrast, a revocable beneficiary can have their designation changed by the policy owner without their consent.

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25. An individual with a low income and high insurance needs should buy

Explanation

Term insurance is the most suitable option for an individual with a low income and high insurance needs because it provides coverage for a specific term, usually ranging from 10 to 30 years, at a lower premium compared to other types of insurance. Since the individual has high insurance needs, they require a larger coverage amount, which can be obtained at a more affordable rate with term insurance. Additionally, term insurance focuses solely on providing a death benefit and does not accumulate cash value like whole life or universal life insurance, making it a more cost-effective choice for someone with limited financial resources.

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26. The insured is totally and permanently disabled. The insured's policy continues in force without the payment of a premium because the policy contains a:

Explanation

The correct answer is Waiver of premium provision. This provision allows the insured's policy to continue in force without the payment of a premium if the insured becomes totally and permanently disabled. This provision is designed to provide financial relief to the insured during a time of disability, ensuring that their coverage remains in effect without the burden of premium payments.

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27. All of the occurrences listed below are examples of an insurable event as defined by the CA Insurance Code, except:

Explanation

The other three occurrences listed are examples of insurable events because they involve potential risks that can be covered by insurance. In the case of an insured suffering a financial loss in the state lottery, it is not an insurable event because it is a result of a personal choice and not a risk that can be transferred to an insurance company.

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28. Each of the following terms is an important characteristic of a major medical policy, except

Explanation

Capitation is not an important characteristic of a major medical policy. Deductible, co-insurance, and maximum amounts are all key features of a major medical policy. Deductible refers to the amount the insured must pay before the insurance coverage begins. Co-insurance is the percentage of medical costs that the insured is responsible for after meeting the deductible. Maximum amounts represent the maximum limit that the insurance company will pay for covered services. However, capitation is a payment method used by insurance companies to pay healthcare providers a fixed amount per patient, regardless of the services provided.

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29. During the disability elimination period

Explanation

During the disability elimination period, no benefits are payable. The disability elimination period is a waiting period that typically occurs at the beginning of a disability insurance policy. It is the period of time between when the disability begins and when the policy starts paying out benefits. During this time, the policyholder is not eligible to receive any benefits. This period is designed to prevent individuals from making fraudulent claims or seeking coverage for short-term disabilities. Once the elimination period is over, the policyholder becomes eligible for benefits if they meet the policy's requirements.

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30. What is the written instrument called in which the insurance contract is set forth ?

Explanation

The correct answer is "The policy." The policy refers to the written instrument that outlines the terms and conditions of the insurance contract. It includes the coverage provided, the premiums to be paid, and any exclusions or limitations. The policy serves as a legal document that binds the insurer and the insured, and it is essential for both parties to understand its contents before entering into the insurance agreement.

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31. Which of the following requires a reporting company to respond to a consumer's complaint that his file contains inaccurate information about them

Explanation

The Fair Credit Reporting Act requires a reporting company to respond to a consumer's complaint regarding inaccurate information in their file. This act is designed to protect consumers and ensure the accuracy and privacy of their credit information. It establishes guidelines for how credit reporting agencies handle consumer disputes and requires them to investigate and correct any inaccuracies in a timely manner. This helps to maintain the integrity of credit reports and allows individuals to have accurate information when making financial decisions.

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32. Renewable term insurance can be best described as :

Explanation

Renewable term insurance refers to a type of insurance policy where the death benefit remains constant throughout the term of the policy, while the premium increases over time. This means that the policyholder pays a higher premium as they age, reflecting the increased risk of mortality. This type of policy allows individuals to obtain coverage at a lower cost initially and then adjust their premium payments as their financial situation improves. The level death benefit ensures that the policyholder's beneficiaries receive a consistent payout in the event of their death.

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

Explanation

The Insurance Commissioner has the right to suspend or revoke the license of an agent if they lack authority from an insurer named on a binder for coverage. This means that if the agent does not have the proper authorization from the insurer to provide coverage, their license can be temporarily suspended or permanently revoked. This action is taken to ensure that agents are operating within the legal boundaries and have the necessary authority to sell insurance policies.

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34. A measure for rating an individual's need for LTC benefits is called:

Explanation

Activities of daily living (ADLs) refers to the basic self-care tasks that individuals typically perform on a daily basis, such as bathing, dressing, eating, toileting, transferring, and continence. ADLs are used as a measure to assess an individual's functional ability and determine their need for long-term care (LTC) benefits. The ability or inability to perform ADLs independently can indicate the level of assistance and support required for an individual to maintain their daily activities and quality of life. Therefore, ADLs serve as a rating measure for an individual's need for LTC benefits.

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35. According to the CA insurance code, an insured's policy must specify all the of the following, except:

Explanation

The correct answer is "The financial rating of the insurer." The CA insurance code requires an insured's policy to specify the risks insured against, the property or life being insured, and the policy period. However, it does not require the policy to include the financial rating of the insurer. This information may be important for the insured to consider, but it is not a legal requirement for the policy.

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36. In California, the minimum participation requirement for a contributory large group health insurance plan is

Explanation

In California, the minimum participation requirement for a contributory large group health insurance plan is 75% of eligible employees. This means that at least 75% of the employees who are eligible for the health insurance plan must participate in it. This requirement ensures that a significant portion of the eligible employees are covered by the insurance plan, spreading the risk and ensuring the stability of the plan. It also encourages a higher level of participation and helps to maintain the affordability and sustainability of the plan for both the employer and the employees.

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37. A disability policy, described as "guaranteed renewable" is one where the insurance company

Explanation

In a disability policy described as "guaranteed renewable," the insurance company reserves the right to change the premiums, which means they can increase the cost of the policy over time. However, they are not allowed to change any of the other terms of the policy, such as coverage limits or benefits. This ensures that the policyholder can rely on the same level of coverage and benefits throughout the policy's term, even if the premiums increase.

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38. A form of rest or relief offered to family members who are caring for a person who requires continual care is

Explanation

Respite care refers to a type of rest or relief provided to family members who are responsible for the ongoing care of an individual. This form of care allows family caregivers to take a break from their caregiving responsibilities, enabling them to recharge and attend to their own needs. Respite care can be provided in various settings, such as in-home care or at a specialized facility, and it offers temporary relief to family caregivers while ensuring that the person receiving care is still looked after.

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39. Why is having a large number of similar exposure units important to insurers ?

Explanation

Having a large number of similar exposure units is important to insurers because it allows them to more accurately predict losses and set appropriate premiums. When there is a larger pool of insured individuals, insurers can gather more data and statistics on potential risks and losses. This enables them to better understand the likelihood and severity of potential claims, which in turn allows them to set premiums that align with the level of risk. With a larger number insured, insurers have a more reliable basis for calculating premiums and can ensure that they are charging an appropriate amount to cover potential losses.

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40. While an insurer is paying the premium for a life insurance policy under the waiver of premium rider

Explanation

While an insurer is paying the premium for a life insurance policy under the waiver of premium rider, the policy remains in full force in every respect. This means that the policy continues to provide coverage and all its terms and conditions remain valid. The insurer's payment of the premium ensures that the policy remains active and the insured individual is protected. The other options, such as the insurer being named as the primary beneficiary, the cash value not increasing, and dividend payments ceasing, may or may not be true in this scenario, but the key point is that the policy itself remains in force.

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41. There is a type of benefit that pays for the cost of relief given to the caregiver of a person who requires constant care and supervision.  What is this type of care called ?

Explanation

Respite care is a type of benefit that pays for the cost of relief given to the caregiver of a person who requires constant care and supervision. Respite care provides temporary relief to caregivers, allowing them to take a break from their caregiving responsibilities and recharge. This type of care is crucial for caregivers to prevent burnout and ensure the well-being of both the caregiver and the person receiving care.

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42. What provision prevents a family from receiving benefits from two separate group policies with the same medical expense ?

Explanation

Coordination of benefits is a provision that prevents a family from receiving benefits from two separate group policies with the same medical expense. This provision ensures that the total amount reimbursed to the insured does not exceed the actual cost of the medical expense. It helps avoid duplicate payments and ensures that the insurance coverage is used efficiently and fairly.

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43. Which of the following are commonly covered by medical expense policies ?

Explanation

Medical expense policies commonly cover accidental injuries. These policies are designed to provide coverage for medical expenses incurred due to unexpected accidents or injuries. This can include emergency room visits, hospital stays, surgeries, and other necessary medical treatments. Accidental injuries are typically covered regardless of whether they occur at home, at work, or in other locations. However, it is important to note that coverage may vary depending on the specific policy and any exclusions or limitations that may apply.

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44. A provision stating that health insured's and their insurers will share covered losses in an agreed proportion is called

Explanation

Co-insurance is a provision in health insurance policies where the insured individual and the insurer agree to share the covered losses in a specific proportion. This means that the insured person will be responsible for paying a certain percentage of the covered expenses, while the insurance company will cover the remaining portion. Co-insurance helps to distribute the financial burden between the insured individual and the insurer, ensuring that both parties contribute to the cost of healthcare services.

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45. A life insurance policy's cash value can be used as collateral for a loan.

Explanation

Many permanent life insurance policies build cash value over time. This cash value can be borrowed against, providing the policyholder with access to funds while the policy remains in force. The loan, however, will typically accrue interest and reduce the death benefit if not repaid.

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46. The complete ransfer by the existing owner of all rights in an insurance policy to another person is

Explanation

Absolute assignment refers to the complete transfer of all rights and ownership of an insurance policy from the existing owner to another person. This means that the new owner becomes the sole beneficiary and has full control over the policy, including the right to make changes, receive benefits, and even surrender or cancel the policy if desired. Absolute assignment is a legal and permanent transfer that cannot be reversed or changed without the consent of the new owner.

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47. The guaranteed insurability option provides the ability to:

Explanation

The guaranteed insurability option allows the policyholder to purchase additional insurance without having to provide evidence of insurability. This means that even if the policyholder's health or other factors have changed since they originally purchased the policy, they can still buy more coverage. This can be useful if the policyholder's needs have increased over time or if they want to ensure they have enough coverage for the future.

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48. A health insurance deductible is:

Explanation

A health insurance deductible refers to the amount of covered expenses that the insured individual is responsible for paying out of pocket before the insurance company starts covering the costs. This means that the insured must meet the deductible amount before the insurer begins to contribute towards the expenses. Once the deductible is met, the insurance company will then start paying their portion of the covered expenses.

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49. Unintentional concealment entitles the injured party to which course of action ?

Explanation

Unintentional concealment entitles the injured party to the course of action of rescission of the contract. This means that the injured party has the right to cancel or terminate the contract due to the unintentional concealment of information by the other party. Rescission allows the injured party to be released from their obligations under the contract and potentially seek compensation for any damages incurred as a result of the concealment.

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50. An agent who acts as an insurance agent, broker, solicitor, life agent, or bail agent, acts in which capacity when handling premiums or return premiums for an insured ?

Explanation

An agent who acts as an insurance agent, broker, solicitor, life agent, or bail agent acts in a fiduciary capacity when handling premiums or return premiums for an insured. This means that the agent is legally obligated to act in the best interests of the insured and must handle the funds with utmost care and honesty. As a fiduciary, the agent must prioritize the insured's interests over their own and ensure that the premiums are properly managed and accounted for.

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51. The basic feature of a managed care indemnity plan is that the participants:

Explanation

In a managed care indemnity plan, participants have the freedom to select a healthcare provider of their choice. They can then receive services from this provider and later submit claims for reimbursement to the insurance company. This means that participants have the flexibility to choose their preferred healthcare provider and have their claims processed by the insurance company.

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52. What recourse does an insurer have if a violation of a material warranty on the part of the insured is discovered:

Explanation

If a violation of a material warranty on the part of the insured is discovered, the insurer has the option to rescind the policy. Rescission means that the insurer can cancel the policy from its inception and treat it as if it never existed. This allows the insurer to avoid any obligations or liabilities under the policy. Rescission is a common recourse for insurers when there has been a misrepresentation or breach of warranty by the insured.

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53. Which of the following categories of benefits are not covered in a long-term care policy ?

Explanation

Acute care coverage in a hospital is not covered in a long-term care policy. Long-term care policies typically cover benefits such as home care, custodial care, and community-based care. Acute care, which refers to the treatment of short-term and severe medical conditions in a hospital setting, is usually covered by health insurance policies rather than long-term care policies.

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54. In a 7 year vesting schedule, what percentage of employer contributions must be vested after 7 years of service ?

Explanation

In a 7 year vesting schedule, after 7 years of service, 100% of the employer contributions must be vested. This means that the employee is entitled to the full amount of the employer's contributions to their retirement or investment account. Vesting refers to the process by which an employee earns the right to receive the employer's contributions over time, and in this case, after 7 years, the employee has fully earned and is entitled to the entire amount.

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55. Which of the following is a hazard ?

Explanation

A hazard is defined as a condition that increases the likelihood of a loss occurring. This means that it poses a potential danger or risk that could lead to a loss or harm. The other options listed in the question do not fit this definition. A large number of similar exposure units refers to a situation where there are many similar entities or individuals being exposed to a risk, but it does not necessarily indicate a hazard. A peril refers to a specific cause of loss, such as a fire or flood, rather than a condition that increases the likelihood of a loss. Lastly, a speculative risk involves the possibility of gain or loss, rather than a specific condition that increases the likelihood of a loss occurring.

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56. All of the following statements about social security disability benefits are true, except

Explanation

Social Security Disability benefits are designed to provide financial assistance to individuals who are disabled and unable to work. However, these benefits are not intended to replace the entirety of a worker's previous earnings. The benefit amount is calculated based on the individual's work history and earnings up to the time of the disability, but it typically replaces only a portion of the worker's earnings, not the entire amount.

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57. According to the CA Insurance Code, all insurers must maintain a department to investigate:

Explanation

According to the CA Insurance Code, all insurers are required to maintain a department to investigate possible fraudulent claims from insureds. This means that insurance companies must have a dedicated department to look into any suspicious or potentially fraudulent claims made by their policyholders. This is important to ensure that insurance fraud is detected and prevented, protecting both the insurers and the honest policyholders from financial losses.

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58. Any long-term care policy sold in California must provide for certain benefits.  Select the most correct answer describing these benefits from the choices below.

Explanation

Long-term care policies sold in California must provide benefits for both institutional care and home care. This means that the policy should cover expenses related to care received in a nursing home or assisted living facility, as well as expenses for in-home care services. This requirement ensures that individuals have options and flexibility in choosing the type of care that best suits their needs and preferences.

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59. Which of the following coverages is NOT one of the three traditional benefits of a group basic medical expense plan ?

Explanation

Private nursing expense is not one of the three traditional benefits of a group basic medical expense plan. The three traditional benefits are surgical expense, physicians visit expense, and hospital expense. Private nursing expense refers to the cost of hiring a private nurse to provide care at home, which is typically not included in a basic medical expense plan.

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60. Wellness benefits under a Health Maintenance Organization (HMO) typically include all of the following, except:

Explanation

Wellness benefits under a Health Maintenance Organization (HMO) typically include routine physicals, immunizations, and vision checks. However, fluoride treatments are not typically included in the wellness benefits provided by an HMO.

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61. Term insurance is typically characterized by

Explanation

Term insurance is a type of life insurance that provides coverage for a specific term or period of time. It is typically characterized by low premiums because it only provides coverage for a specific period and does not accumulate cash value over time. This means that if the insured person survives the term, there is no payout or cash value associated with the policy. The low premiums make term insurance an affordable option for individuals who want temporary coverage without the need for cash value accumulation.

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62. All of the following statement about contingent beneficiaries are true, except

Explanation

The correct answer is that the contingent beneficiary shares death proceeds equally with the primary beneficiary. This statement is false because contingent beneficiaries only receive the death proceeds if the primary beneficiary is deceased at the time of the insured's death. They do not share the proceeds equally with the primary beneficiary.

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63. Under an individual health guaranteed renewal contract, the insurer has the right to

Explanation

Under an individual health guaranteed renewal contract, the insurer has the right to change premiums for the same class insured. This means that the insurer can adjust the amount of money that the insured individual needs to pay for their health insurance coverage. This can be done based on factors such as the overall cost of healthcare, the individual's age, or any other relevant factors that may impact the risk associated with providing coverage. This allows the insurer to adjust the premiums to reflect the changing circumstances and costs associated with providing healthcare coverage.

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64. Which of the following is a correct statement about life insurance policy types ?

Explanation

The initial premium for term insurance is lower than the initial premium for whole life insurance because term insurance provides coverage for a specific period of time, typically 10, 20, or 30 years, while whole life insurance provides coverage for the entire lifetime of the insured. Since term insurance has a limited coverage period, the risk for the insurance company is lower compared to whole life insurance, resulting in a lower initial premium.

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65. The Health Insurance Counseling Advocacy Program (HICAP) provides assistance to the public on a fee basis if the person requiring assistance is financially able to pay

Explanation

The statement is false because the Health Insurance Counseling Advocacy Program (HICAP) provides assistance to the public regardless of their financial ability to pay. HICAP offers free counseling and advocacy services to help individuals understand and navigate health insurance options, coverage, and claims. They aim to provide unbiased and objective information to empower individuals to make informed decisions about their healthcare.

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66. What kind of insurance pays medical benefits only in the event the insured suffers from one stipulated disease ?

Explanation

Specified disease insurance is a type of insurance that pays medical benefits only if the insured person is diagnosed with a specific disease that is stipulated in the policy. This type of insurance is designed to provide coverage for the treatment and expenses associated with a particular illness or disease, such as cancer or heart disease. It is different from other types of insurance, such as group or individual medical expense insurance, which provide coverage for a wider range of medical conditions and expenses.

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67. In order to obtain group insurance without providing evidence of insurability, what do eligible individuals generally have to do ?

Explanation

To obtain group insurance without providing evidence of insurability, eligible individuals generally have to enroll within a specified eligibility period. This means that they need to sign up for the insurance coverage within a specific timeframe determined by the insurance provider. By doing so, they can bypass the requirement of submitting an attending physician's statement or paying the first year premium in advance.

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68. What is the purpose of the rehabilitation provision in a disability income policy ?

Explanation

The purpose of the rehabilitation provision in a disability income policy is to encourage disabled insured individuals to return to their original occupations. This provision may include various forms of assistance, such as vocational training, job placement services, or financial support for education or retraining. By offering support and resources for rehabilitation, the policy aims to help disabled individuals regain their independence and return to work in their previous occupations.

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69. What makes up the entire contract in a life insurance policy ?

Explanation

The entire contract in a life insurance policy consists of the policy itself and the application. The application is considered a part of the contract when it is attached to the policy. This means that both the policy and the attached application form a legally binding agreement between the insurance company and the policyholder. Any verbal understandings or sales literature presented by the agent may provide additional information but do not make up the entire contract.

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70. How long must a life agent maintain records regarding policies sold in this state ?

Explanation

A life agent must maintain records regarding policies sold in this state for 5 years. This is important for various reasons, such as ensuring compliance with regulations, resolving any disputes or claims that may arise in the future, and providing a reference for any necessary audits or investigations. By keeping these records for 5 years, the life agent can demonstrate transparency and accountability in their business practices.

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71. What rights do individuals have if they disagree with the decision on the amount Medicare will pay ?

Explanation

Individuals have the right to ask a Medicare carrier to review the decision if they disagree with the amount Medicare will pay. This means that they can submit a request for a reconsideration of the decision, providing any additional information or evidence that may support their case. The Medicare carrier will then review the decision and determine if any changes should be made. This allows individuals to have their case reevaluated and potentially receive a different outcome.

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72. An agent's appointment with an insurer will be discontinued if all of the following circumstances exist, except:

Explanation

If another insurer submits an employment application, it does not necessarily mean that the agent's appointment with the current insurer will be discontinued. The agent may have the option to work for both insurers simultaneously or may choose to decline the new employment offer. Therefore, this circumstance does not automatically lead to the discontinuation of the agent's appointment with the current insurer.

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73. The insured, aged 65, owns a $100,000 non-participating whole life policy.  The policy is paid-up as of today.  When would the cash value reach $100,000?

Explanation

The cash value of a whole life policy typically increases over time as the policyholder pays premiums and accumulates interest. In this case, the insured's policy is already paid-up, meaning they have finished making premium payments. Therefore, the cash value will continue to grow based on the interest rate specified in the policy until the insured reaches age 100, at which point it will reach $100,000.

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74. Traditional comprehensive major medical plans include all of the following, except:

Explanation

Traditional comprehensive major medical plans typically include deductibles, out-of-pocket maximums, and coinsurance. These components require individuals to pay a certain amount of money out of pocket before the insurance coverage kicks in. However, first-dollar coverage is not included in these plans. First-dollar coverage refers to insurance plans that cover all medical expenses from the first dollar, without any out-of-pocket costs. In traditional comprehensive major medical plans, individuals are typically responsible for paying a portion of their medical expenses before the insurance coverage begins.

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

Explanation

The disability income policy social insurance supplement (SIS) benefit rider provides a payment only when the insured is totally disabled, but not receiving any social insurance benefit plans. This means that the rider will only pay benefits if the insured is unable to work due to a disability and does not qualify for any other social insurance benefits. It is designed to provide additional financial support to individuals who are disabled and do not have any other sources of income from social insurance programs.

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76. A hospital confinement indemnity insurance policy pays

Explanation

The correct answer is "the daily benefit coverage amount stated in the policy for each day the insured is confined in the hospital." This means that the insurance policy will provide a fixed daily amount to the insured for each day they are confined in the hospital. This amount is predetermined and specified in the policy. It does not cover all the expenses incurred or the actual hospital expenses, but rather provides a set daily benefit.

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77. From the list of descriptions below, select the one that is not eligible for Medicare

Explanation

All of the descriptions listed in the options are eligible for Medicare. A person who has been entitled to Social Security disability benefits for 24 months is eligible for Medicare. A person who has reached 65 and is willing to pay a premium but is not eligible for Social Security is also eligible for Medicare. Finally, a person who has reached 65 and is eligible for Social Security is eligible for Medicare as well. Therefore, all of the above options are eligible for Medicare.

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78. What would be the Insurance Commissioner's most likely course of action if an applicant for an insurance license had a previous application for a professional license denied for cause by any licensing authority within five years of the date of the filing?

Explanation

If an applicant for an insurance license had a previous application for a professional license denied for cause by any licensing authority within five years of the date of the filing, the Insurance Commissioner's most likely course of action would be to deny the application without a hearing. This means that the applicant would not have the opportunity to present their case or provide any additional information to support their application. The previous denial of a professional license suggests that there may be issues or concerns with the applicant's qualifications or suitability for holding a license, which would lead to the denial of the insurance license application without further investigation or review.

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79. Which definition of disability is the most difficult for an injured worker to satisfy?

Explanation

The total disability definition used by the Social Security Administration is the most difficult for an injured worker to satisfy because it requires the worker to be completely unable to perform any type of work, not just their own occupation. This means that even if the worker is unable to perform their previous job, they may still be considered able to work in a different capacity, which may make it harder for them to qualify for disability benefits.

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80. In order to receive the principal sum benefit for death from a disability policy, the death must occur

Explanation

The correct answer is "Within a specified number of days after injury." This means that in order for the beneficiary to receive the principal sum benefit for death from a disability policy, the death must occur within a certain timeframe after the injury. This indicates that there is a specific window of time during which the death must occur in order for the benefit to be paid out.

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81. Long-term care policies that deliver benefits for community based or home care services must include which of the following:
1. Respite care
2 Hospice Care
3. Home health care services

Explanation

Long-term care policies that deliver benefits for community based or home care services must include respite care, hospice care, and home health care services. These services are essential for individuals who require long-term care and wish to receive it in the comfort of their own homes or within their community. Respite care provides temporary relief for caregivers, hospice care focuses on providing comfort and support for individuals with terminal illnesses, and home health care services offer medical assistance and support at home. Therefore, including all three options in the long-term care policy ensures comprehensive coverage and support for individuals in need.

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82. The social security normal retirement age depends upon

Explanation

The social security normal retirement age depends upon the worker's year of birth. The year of birth determines the specific age at which an individual becomes eligible for full retirement benefits. The Social Security Administration has set different retirement ages based on birth year, with later birth years requiring individuals to wait longer before receiving full benefits.

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83. Which retirement plan was designed for employees of public school systems ?

Explanation

A TSA (Tax-Sheltered Annuity) is a retirement plan specifically designed for employees of public school systems. It allows these employees to contribute a portion of their salary to a tax-deferred account, which can then be used to fund their retirement. This plan is tailored to meet the needs of individuals working in the education sector and provides them with a way to save for their future.

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84. The commonly used 30, 60, 90, and 180 disability terminology refers to the

Explanation

The commonly used 30, 60, 90, and 180 disability terminology refers to the number of days for which no benefits are payable. This means that if a person becomes disabled, they will not receive any benefits for the specified number of days after the disability occurs. After this waiting period, the benefits will start to be payable.

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85. RW and Associates is an agency which represents BLG Insurance Corporation. RW and Associates may leave the name BLG Insurance Corporation in its advertisements by clearly stating the relationship between the two businesses in any of the following ways, except:

Explanation

The correct answer is "RW and Associates underwriting for BLG Insurance Corporation." This statement implies that RW and Associates is directly involved in the underwriting process for BLG Insurance Corporation, which may not be accurate. The other options correctly state the relationship between RW and Associates and BLG Insurance Corporation, such as representing, placing business through, or using the services of BLG Insurance Corporation.

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86. Pick from the following choices the features of a long-term care policy that would have the highest premium.
1. Long benefit period
2. Short benefit period
3. Long elimination period
4. Short elimination period

Explanation

A long benefit period and a short elimination period are the features of a long-term care policy that would have the highest premium. A long benefit period means that the policy will provide coverage for a longer duration, which increases the risk for the insurance company and thus leads to a higher premium. On the other hand, a short elimination period refers to the waiting period before the policy starts providing benefits. A shorter elimination period reduces the waiting time for the policyholder to start receiving benefits, increasing the likelihood of a claim and therefore resulting in a higher premium.

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87. The conversion privilege allows a person to change coverage from

Explanation

The conversion privilege allows a person to change their coverage from a group policy to an individual policy. This means that if someone is covered under a group insurance policy, they have the option to switch to an individual policy if they want more personalized coverage or if they are no longer eligible for the group policy. This conversion privilege provides flexibility and allows individuals to tailor their insurance coverage to better suit their needs.

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88. Which retirement plan utilizes non-deductible contributions?

Explanation

Roth IRAs are a retirement plan that utilizes non-deductible contributions. Unlike traditional IRAs, contributions to a Roth IRA are made with after-tax dollars, meaning they are not tax-deductible. However, the earnings and withdrawals from a Roth IRA are tax-free, making it an attractive option for individuals who anticipate being in a higher tax bracket in retirement.

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89. When are parties to a contract required to communicate information solely based on personal judgment for a matter in question:

Explanation

Parties to a contract are never required to communicate information solely based on personal judgment for a matter in question. This means that personal opinions or subjective beliefs are not considered necessary or relevant when it comes to providing information in a contract. Instead, parties are expected to provide factual and objective information that is necessary and relevant to the matter at hand. Personal judgment may introduce biases or inaccuracies, which can undermine the integrity and effectiveness of the contract. Therefore, it is best to rely on objective and verifiable information rather than personal judgment.

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90. Which of the following expenses is never covered by a LTC insurance policy ?

Explanation

LTC insurance policies typically cover expenses related to long-term care, such as home health care and adult day care. However, a hospital acute care unit is not considered long-term care and is therefore not covered by LTC insurance. This type of care is usually provided for a short duration in a hospital setting and is typically covered by health insurance or Medicare. Therefore, the correct answer is Hospital acute care unit.

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91. The insured's policy has deductible that is applied between the exhaustion of basic plan limits and the commencement of excess coverage.  This is called a:

Explanation

A corridor deductible is a type of deductible that is applied between the exhaustion of basic plan limits and the commencement of excess coverage. It serves as a threshold that must be met before the excess coverage kicks in. This type of deductible helps to limit the insurer's liability by ensuring that the insured bears a portion of the costs before the insurance coverage fully takes effect.

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92. The probationary period in a group health policy is intended for people

Explanation

The probationary period in a group health policy is intended for people who joined the group after the policy effective date. During this period, these individuals may have limited or no coverage for certain pre-existing conditions. This allows the insurance company to assess the health status of new members and determine the level of risk they pose. It also helps prevent adverse selection, where individuals only join the group when they need expensive medical treatments. By imposing a probationary period, the insurance company can ensure the stability and affordability of the group health policy for all members.

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93. Which of the following statements about the HICAP program is false?

Explanation

The false statement about the HICAP program is that it provides assistance for a fee based upon ability to pay. The HICAP program does not charge a fee for its services, as stated in the given options.

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94. The Employee Retirement Income Security Act of 1974 (ERISA) mandates requiring plan sponsor to provide participants with

Explanation

ERISA, enacted in 1974, is a federal law that sets standards for pension and health plans offered by employers. It requires plan sponsors to provide participants with plan descriptions and benefit statements. Plan descriptions outline the details of the plan, including eligibility requirements, contribution limits, and investment options. Benefit statements provide participants with information about their accrued benefits, including account balances and projected retirement income. These requirements aim to ensure transparency and enable participants to make informed decisions regarding their retirement plans. Therefore, plan descriptions and benefit statements are necessary components of ERISA compliance.

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95. Which of the following is a type of deductible that charges the insured after basic medical benefits have been paid and before other medical coverage begins?

Explanation

A corridor deductible is a type of deductible that charges the insured after basic medical benefits have been paid and before other medical coverage begins. This means that once the insured has reached their deductible for basic medical benefits, they will then be responsible for paying the corridor deductible before their other medical coverage kicks in. This type of deductible helps to limit the amount of out-of-pocket expenses for the insured and ensures that they have some coverage before reaching their out-of-pocket limit.

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96. Under social security, the definition of disability is the inability to engage in

Explanation

The correct answer is "Any substantial gainful activity." This means that in order to be considered disabled under social security, a person must be unable to engage in any activity that provides a significant income. This definition is used to determine eligibility for disability benefits, as it ensures that individuals who are truly unable to work and earn a living are provided with financial support.

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97. In order to determine the amount of premium an insured will pay, the insurer multiplies the rate by:

Explanation

The correct answer is the number of exposure units. The amount of premium an insured will pay is determined by multiplying the rate by the number of exposure units. Exposure units refer to the units of measurement used to assess the potential risk or exposure faced by the insured. The more exposure units there are, the higher the premium will be, as it indicates a greater likelihood of a claim being made.

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98. Which of these statements concerning Medicare is not true ?

Explanation

The statement that is not true is "Part C provides long-term care benefits." Medicare Part C, also known as Medicare Advantage, provides additional benefits beyond what is covered by Parts A and B, such as prescription drug coverage and dental services. However, it does not provide long-term care benefits, which are typically covered by Medicaid or private long-term care insurance.

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99. In the Medicare system, the services provided by doctors and surgeons are covered by:
1. Part A
2. Part B
3. There is no charge for coverage
4. there is a charge for coverage

Explanation

The correct answer is 2 and 4. In the Medicare system, the services provided by doctors and surgeons are covered by Part B, which requires a charge for coverage. Therefore, options 2 and 4 are the correct choices. Option 1 is incorrect because Part A does not cover the services provided by doctors and surgeons. Option 3 is also incorrect because there is a charge for coverage under Part B.

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100. A significant benefit to the insured in group underwriting verses individual is

Explanation

In group underwriting, the cost of coverage is lower compared to individual underwriting. This is because the risk is spread across a larger pool of individuals, which allows for a more affordable premium for each member. Group underwriting also allows for negotiation of lower rates with insurance providers due to the larger number of individuals being insured. Therefore, the cost of coverage is a significant benefit for the insured in group underwriting.

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101. The additional premium charged by an insurer for adding the accidental death benefit to a whole life policy

Explanation

Adding the accidental death benefit to a whole life policy does not affect the policy's cash value. This means that the cash value of the policy remains the same even after adding the accidental death benefit. The additional premium charged for this benefit is separate from the cash value and does not impact it. The accidental death benefit provides an additional payout if the insured dies due to an accident, but it does not impact the policy's cash value.

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102. Loss retention is an effective risk management technique when all of the following conditions exist except:

Explanation

Loss retention is an effective risk management technique when the losses are highly predictable, the insured chooses to assume the losses involved, and the worst possible loss is not serious. However, if the probability of loss is unknown, it becomes difficult to assess the potential risks and make informed decisions regarding loss retention. Therefore, the absence of knowledge about the probability of loss would make loss retention less effective as a risk management technique.

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103. All of the following would fall under the category of an "adverse underwriting decision", except:

Explanation

An adverse underwriting decision refers to a decision made by an insurance company that negatively impacts the applicant. Charging a higher rate based on the information provided, declination of insurance coverage, and termination of insurance coverage are all examples of adverse underwriting decisions as they result in the applicant facing higher costs or being denied coverage. However, failure of the agent to submit the application to an insurance company does not directly impact the applicant and therefore does not fall under the category of an adverse underwriting decision.

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104. In the state of California

Explanation

In the state of California, it is not legal to provide free insurance coverage as an inducement for completing a transaction. This means that businesses cannot offer free insurance as a way to entice customers to purchase their services.

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105. Medicare Part A provides coverage for all of the following, except

Explanation

Medicare Part A provides coverage for hospitalization, home health care, and hospice services. However, it does not cover physicians' services. These services are typically covered under Medicare Part B, which includes coverage for doctor visits, outpatient care, and other medical services provided by physicians. Therefore, physicians' services are not included in the coverage provided by Medicare Part A.

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106. Identify which of the following is not a principal factor used to determine group disability income rates

Explanation

The location of the insured entity is not a principal factor used to determine group disability income rates. Factors such as the average age of the insureds, maximum indemnity period, and length of the waiting/elimination period are typically considered when calculating group disability income rates. The location of the insured entity may have an impact on other aspects of insurance, such as the cost of healthcare, but it is not directly related to determining disability income rates.

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107. Self-funding of employee benefit plans cannot be used for

Explanation

Self-funding of employee benefit plans can be used for short-term disability benefits, health benefits, and hospital benefits. However, death benefits are typically not covered under self-funded plans. Death benefits are usually provided through life insurance policies or other separate arrangements, as they involve a different type of risk and financial consideration compared to other employee benefits.

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108. Under COBRA, a qualifying event ensures that an employee who loses coverage can

Explanation

Under COBRA, a qualifying event ensures that an employee who loses coverage can elect to continue coverage. This means that if an employee experiences a qualifying event, such as termination of employment or reduction in work hours, they have the option to choose to maintain their health insurance coverage, usually for a limited period of time, by paying the full premium themselves. This allows individuals to maintain their healthcare benefits even if they are no longer employed or their hours are reduced.

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109. Which of the following is a true staement regarding the social security (OASDHI) program ?

Explanation

The social security (OASDHI) program provides only a minimum floor of income, and individuals are expected to supplement this with their own personal programs. This means that the program does not guarantee a sufficient income for individuals, and they are encouraged to have additional sources of income or savings to meet their financial needs.

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110. HMOs are involved in all of the following, except

Explanation

HMOs, or Health Maintenance Organizations, are involved in providing healthcare services, controlling costs by encouraging preventive care, and providing healthcare financial coverage. However, they do not emphasize the use of specialty physicians. HMOs typically focus on primary care physicians and encourage patients to seek care from within their network of providers. Specialty physicians are often accessed through referrals from primary care physicians, but they are not the primary emphasis of HMOs.

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111. Which of the following describes an insurer who has enough financial resources only to provide for all its liabilities and for all reinsurance of all outstanding risks?

Explanation

An insurer who has enough financial resources only to provide for all its liabilities and for all reinsurance of all outstanding risks is described as "solvent." Solvency means that the insurer has the financial capacity to meet its obligations and cover potential losses without being in a state of insolvency or financial distress.

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112. Which of the following is false about the marketing of long-term care insurance according to the code ?

Explanation

The correct answer is "All the above are false." This means that all of the statements mentioned in the question are false according to the code. According to the code, long-term care insurance cannot exclude degenerative conditions like Alzheimer's, they cannot require hospital stays of certain lengths before providing benefits, and "Inflation guard" is not a non-legal provision in LTC policies.

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113. In which plans do employers make specific contributions to an employee's retirement account?

Explanation

In defined contribution plans, employers make specific contributions to an employee's retirement account. These contributions are usually a percentage of the employee's salary or a fixed amount determined by the employer. The amount of money in the retirement account depends on the contributions made by both the employer and the employee, as well as the performance of the investments made with those contributions. This is different from defined benefit plans where the employer guarantees a specific retirement benefit to the employee, regardless of the contributions made. Individual retirement accounts and Keogh plans are types of retirement accounts that individuals can contribute to on their own.

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114. What would we call a representation which fails to correspond with its stipulations or assertions ?

Explanation

False is the correct answer because it refers to a representation that does not align with its stipulations or assertions. It indicates that something is not true or accurate, suggesting that the representation is misleading or incorrect.

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115. Common life insurance policy riders include all of the following, except:

Explanation

The given answer is "Extended term." Common life insurance policy riders typically include options such as guaranteed insurability, accidental death, and waiver of premium. However, extended term is not typically included as a rider. Extended term is a feature that allows the policyholder to use the cash value of the policy to convert it into a term policy for a specific period. While it is a feature available in some life insurance policies, it is not considered a rider.

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116. A group health plan third party administrator might do any of the following, except:

Explanation

A group health plan third party administrator is responsible for various tasks related to the administration of the plan. They typically handle tasks such as receiving employee payments, tracking insured eligibility, and handling member complaints. However, paying policy owner premiums is not typically a responsibility of the third party administrator. This task is usually handled directly by the policy owner or their designated representative.

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117. All of the following statements about the election of a life insurance policy's settlement options are true, except:

Explanation

The correct answer is "When no settlement option is chosen, the proceeds are automatically paid to the policy owner's state." This statement is not true because when no settlement option is chosen, the proceeds are typically paid to the policy owner's beneficiaries or estate, not to the policy owner's state.

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118. All of the following statements about survivorship life insurance are true, except

Explanation

Survivorship life insurance, also known as second-to-die insurance, is a type of policy where the death benefit is paid out upon the death of the second insured individual. This means that the policy face amount is not paid out only upon the death of the first insured to die, making this statement false. Survivorship life insurance is commonly used to meet estate tax obligations as it provides a lump sum payout that can be used to cover these expenses. Additionally, survivorship life insurance policies often have lower premiums compared to separate policies covering each individual insured. However, the statement that the policy face amounts are usually more than $1,000,000 is not necessarily true, as the face amount can vary depending on the specific policy and coverage needs.

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119. When a licensed agent submits a renewal applications with applicable fee on or before the expiration date

Explanation

When a licensed agent submits a renewal application with the applicable fee on or before the expiration date, they will be able to operate for up to 60 days after the specified expiration date. This means that even if the license has technically expired, the agent is still allowed to continue operating for an additional 60 days. This provides a grace period for the agent to complete the renewal process and ensure that their license remains valid.

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120. Concerning Part B of Medicare, which of the following is incorrect?

Explanation

The statement "It is paid entirely by FICA (social security) payroll taxes" is incorrect. Part B of Medicare is not paid entirely by FICA payroll taxes. While a portion of the funding for Part B comes from these taxes, beneficiaries are also responsible for paying monthly premiums, annual deductibles, and co-payments or coinsurance for the services they receive under Part B.

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121. In California after January 1, 2002, the definition of health insurance includes all of the following types of coverages, except:

Explanation

The given answer, "Accidental death and dismemberment coverage," is not included in the definition of health insurance in California after January 1, 2002. This means that health insurance in California includes group medical coverage, individual hospital coverage, and individual surgical benefits. However, accidental death and dismemberment coverage is not considered a type of health insurance coverage in California.

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122. When may a representation be withdrawn ?

Explanation

A representation may be withdrawn only before the insurance is in effect because once the insurance policy is in effect, the representation becomes a part of the contract and cannot be changed or withdrawn unilaterally. The representation is a statement made by the insured regarding a material fact that influences the insurer's decision to accept or reject the risk. Therefore, it is crucial for the insured to provide accurate and truthful information before the insurance takes effect.

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123. What is the tax treatment for individual disability income policies?

Explanation

Individual disability income policies have non-deductible premiums, meaning that the policyholder cannot claim a tax deduction for the premiums paid. However, the benefits received from the policy are tax-free, meaning that the policyholder does not have to pay taxes on the benefits received. This tax treatment is designed to provide financial support to individuals who are unable to work due to a disability, without imposing additional tax burdens on them.

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124. Retirement benefits under social security are available only for workers who are

Explanation

Retirement benefits under social security are available only for workers who have earned enough credits to be considered "fully insured". This means that they have accumulated a sufficient number of quarters of coverage based on their work history and earnings. Being fully insured ensures that individuals are eligible to receive retirement benefits once they reach the eligible age, regardless of their current employment status or health condition.

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125. A $50,000 whole life policy with a cash value of $10,000 has been in force for 11 years.  The policy owner is unable to continue the premium payments.  Which of the following describes the reduced paid-up non-forfeiture option

Explanation

When the policy owner is unable to continue premium payments, the reduced paid-up non-forfeiture option allows them to use the cash value of the policy to purchase a new paid-up policy. In this case, the cash value of $10,000 is used to purchase a new policy with a face value of $20,000. This means that the policy owner will no longer have to make premium payments and the new policy is fully paid-up.

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126. Which of the following statements about LTC is correct:

Explanation

not-available-via-ai

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

Explanation

The purpose of laws regarding the replacement of life and annuity contracts is to establish penalties for failure to comply with replacement requirements, to assure the purchaser receives information to make an informed decision, and to reduce the opportunity for misrepresentation and incomplete disclosures. These laws are not intended to protect the interests of life insurers and their agents, as their main focus is on protecting the consumers and ensuring fair practices in the insurance industry.

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128. A life agent's records must include all of the following, except:

Explanation

A life agent's records must include all correspondence between the agent and the policy holder, a copy of the outline of coverage, and all policies sold by the agent. However, printed material in general use which has been distributed by the insurer does not need to be included in the agent's records. This is because such material is readily available to the policy holder and does not need to be specifically recorded by the agent.

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129. Which non-forfeiture option uses an existing policy's cash value to purchase a paid-up policy with a lower face than the original policy?

Explanation

The reduced paid-up insurance option allows the policyholder to use the cash value of their existing policy to purchase a new paid-up policy with a lower face value. This means that the policyholder will have a new policy that is fully paid for and does not require any further premium payments, but the coverage amount will be less than the original policy. This option is often chosen when the policyholder wants to maintain some level of coverage but cannot afford to continue paying premiums at the current level.

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130. A husband and wife work for different companies.  The husband works for ABC Company. The wife works for XYZ company.  Each has group health insurance coverage from their employer that also insures their spouse.  Both plans have a coordination of benefits clause.  Which of the following statements is true regarding the coordination of benefits clause for medical services covered by the group policies?

Explanation

The husband receives medical care and XYZ group insurer is secondary. This means that the wife's insurance from XYZ company will only pay benefits after the husband's insurance from ABC company has paid its share. The coordination of benefits clause ensures that there is no over-insurance and that each insurer determines their responsibility for a claim based on what the other insurer will not pay.

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131. "The seamless delivery of medical and indemnity for both occupational and non-occupational injuries and illnesses" is the definition of:

Explanation

24-hour coverage refers to a type of insurance policy that provides continuous protection for both work-related and non-work-related injuries and illnesses. This means that individuals are covered for medical expenses and indemnity regardless of whether the injury or illness occurred on the job or outside of work. It offers a seamless delivery of benefits, ensuring that individuals receive the necessary support and compensation regardless of the circumstances surrounding their injury or illness.

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132. A representation in an insurance contract qualifies as which of the following ?

Explanation



Although representations are not inherently policy provisions, they can affect the terms and conditions of the insurance policy if they are included or specifically referenced within the policy itself. While representations are not express or implied warranties (which guarantee the absolute truth and condition of something insured), they must be truthful and accurate to the best of the applicant's knowledge; otherwise, they can lead to issues like misrepresentation, affecting the validity of the insurance. Thus, among the given options, categorizing a representation as a policy provision (when specifically included) is the closest and most appropriate choice, although the term does not perfectly align with the traditional definition of a policy provision.
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133. Which statement is true regarding Medicare Supplement Insurance plans?

Explanation

Insurers may offer policies that contain only the core benefits. This means that Medicare Supplement Insurance plans are not required to include additional benefits beyond the core benefits. Insurers have the flexibility to design and offer policies that only provide the basic coverage required by Medicare.

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134. The adjustments that an insurer makes in a cash value account in a universal life policy each time a payment is made includes all of the following, except

Explanation

The adjustments made in a cash value account in a universal life policy each time a payment is made include subtracting from mortality and general expense charges, adding the current interest, and adding the current premium paid. However, the insurer does not subtract the policy surrender charges from the cash value account when a payment is made.

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135. Which of these statement is not true with regard to insurers and policies that provide Medicare supplement coverage ?

Explanation

Insurers and policies that provide Medicare supplement coverage are not prohibited from excluding any preexisting conditions if the policy has been in force for at least 6 months. This means that if an individual has a preexisting condition and they have had the policy for less than 6 months, the insurer may exclude coverage for that condition. However, after the 6-month period, the insurer cannot exclude coverage for any preexisting conditions.

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136. Benefits will be paid from a Worker's Compensation Subsequent Injury Fund only if both the first and second injury are the result of an on-the-job accident

Explanation

The Worker's Compensation Subsequent Injury Fund typically provides benefits when an employee who has already suffered a work-related injury subsequently suffers another work-related injury. The fund is designed to encourage employers to hire workers with pre-existing disabilities by covering the additional costs associated with subsequent injuries. Therefore, both the first and second injuries must be the result of on-the-job accidents for benefits to be paid from this fund.

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137. Which of the following is not allowed by code in connection with the sale of Medicare supplement policies ?

Explanation

The correct answer is "Offer only broader plans." This is not allowed by code in connection with the sale of Medicare supplement policies because it violates the requirement to offer core plans as a stand-alone or along with broader plans. The code mandates that insurers must offer at least one standardized core plan in addition to any other plans they offer. Therefore, offering only broader plans would not be in compliance with the code.

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138. All of the following statements abut qualified pension plans are true, except:

Explanation

Employer contributions to qualified pension plans are not taxable to employees in the year they are contributed. Instead, these contributions are tax-deferred, meaning they are not subject to income tax until the employees receive them as benefits in the future. This tax advantage allows the contributions to grow and accumulate investment earnings without being reduced by immediate taxes. Once the employees receive the contributions as benefits, they are then taxed on the amounts received.

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139. Medicare covers which of the following in order to provide long-term care for elderly:

Explanation

Medicare provides very limited nursing home coverage for long-term care for the elderly. This means that Medicare only covers a small portion of the costs associated with nursing home care. It is important for individuals to understand that Medicare is not designed to provide extensive coverage for long-term care needs, and they may need to explore other options such as Medicaid or private insurance to fully cover their long-term care expenses.

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140. Viatical settlements are accomplished through the use of

Explanation

An absolute assignment refers to the transfer of ownership of a life insurance policy to another party. In the context of viatical settlements, it means that the policyholder assigns their policy to a third party in exchange for a lump sum payment. This allows the policyholder to receive immediate funds while they are still alive, rather than waiting for the death benefit to be paid out. Therefore, an absolute assignment is the method through which viatical settlements are accomplished.

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141. A return premium rider is a rider that

Explanation

The correct answer is "Provides for the periodic return of a percentage of the premiums that have been paid if the insured becomes and remains disabled." This means that if the insured becomes disabled and remains disabled, they will receive a percentage of the premiums they have paid over time. This rider provides a form of financial protection for the insured in case they become disabled and are unable to continue paying premiums.

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142. Which settlement option allows only the death benefit earnings to be paid to the beneficiary

Explanation

The interest option is a settlement option that allows only the death benefit earnings to be paid to the beneficiary. This means that the beneficiary will receive only the interest earned on the death benefit, rather than the entire death benefit itself. This option may be chosen by the policyholder if they want to ensure that the principal amount of the death benefit remains intact and can continue to earn interest over time.

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143. In the absence of a coordination of benefits clause, all of the following circumstances might result in recovery of more than 100% of actual health care expenses, except:

Explanation

A coordination of benefits clause is designed to prevent an individual from receiving more than 100% of their actual healthcare expenses by coordinating multiple health insurance plans. In this scenario, all of the given circumstances could potentially result in recovery of more than 100% of actual healthcare expenses, except for a worker's medical plan including a carryover deductible provision. This provision allows the worker to carry over any unused deductible amount from the previous year, which may help reduce their out-of-pocket expenses but does not directly contribute to exceeding the 100% recovery limit.

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144. The social security blackout period ends when the surviving spouse reaches the age of

Explanation

The correct answer is 60. The social security blackout period refers to the period of time after the death of a spouse when the surviving spouse is not eligible to receive social security benefits. This blackout period typically ends when the surviving spouse reaches the age of 60. At this age, the surviving spouse becomes eligible to receive survivor benefits based on their deceased spouse's social security earnings record.

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145. What is the transplant donor benefit in a disability income policy ?

Explanation

The correct answer is "A provision that considers the insured to be disabled if donating a body organ." This means that if the insured person donates a body organ, they will be considered disabled and eligible for disability income benefits. This provision recognizes the potential impact on the donor's health and ability to work after organ donation, providing financial support during the recovery period.

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146. A policy holder stops making payments on a 20-pay life policy and converts the cash surrender value to extended term insurance.  All of the following statements are true, except:

Explanation

When a policy holder stops making payments on a 20-pay life policy and converts the cash surrender value to extended term insurance, the extended term coverage will stay in force for a specified period of time, and then coverage will cease. No further premium payments are required, and the extended term insurance will be for the same face amount as the 20-pay life policy. However, the term policy will not have the same loan value as the original policy.

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147. All of the following apply to the life insurance cost-of-living rider, except:

Explanation

The correct answer is that the face value of the policy raises or lowers as the cost of living index increases or decreases. This is because the cost-of-living rider in a life insurance policy provides an automatic increase in the policy's death benefit when there is an increase in the cost of living index. This means that the coverage amount will adjust to keep up with inflation and the increasing cost of living. The other options mentioned, such as the additional premium for additional coverage and no evidence of insurability required for annual increases in coverage, are all true for the life insurance cost-of-living rider.

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148. A worker dies while he is credited with six quarters of the last 13 quarter period.  What status does the worker have under social security ?

Explanation

The worker is considered currently insured under social security. This means that they have earned enough credits to be eligible for certain benefits, such as retirement or disability benefits. Being currently insured indicates that the worker has contributed enough to the social security system to qualify for these benefits.

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149. Which non-forfeiture option uses cash surrender values to purchase paid-up term insurance for the full face amount of the policy ?

Explanation

Extended term insurance is a non-forfeiture option that uses cash surrender values to purchase paid-up term insurance for the full face amount of the policy. This means that instead of forfeiting the policy and losing all the premiums paid, the policyholder can use the cash surrender value to purchase a new term insurance policy with the same coverage amount. This allows the policyholder to continue having life insurance coverage without having to pay further premiums.

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150. What is the difference between a defined contribution plan and a defined benefit plan ?

Explanation

The difference between a defined contribution plan and a defined benefit plan lies in the penalties for early distribution. In a defined contribution plan, there may be penalties for withdrawing funds before a certain age or time period, as the plan is designed to accumulate savings for retirement. On the other hand, a defined benefit plan guarantees a specific benefit amount upon retirement, and typically does not have penalties for early distribution since the benefit is predetermined.

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When Workers compensation laws became mandatory, it meant:
An insured bought a $150,000 non-participating whole life policy many...
Mike drives a truck for a delivery company.  In the course of...
Which type of insurance guarantees the right to renew the policy each...
Hospice care provides services to patients who are:
Long-term care policies can be sold in various ways.  Which of...
A health maintenance organization (HMO) plan reduces costs by...
If an insurer is not able to meet financial obligations when due, the...
People commonly purchase an annuity to protect against the risk of:
In the event of an accidental death, the principal sum in a disability...
A measure of rating an individual's need for long term care benefits...
What is the purpose of "key person" insurance?
Choose the correct statement about long-term care (LTC) insurance
Each of the following terms is an imortant characteristic of a major...
The passage of worker's compensation legislation meant
An example of a third party administrator is:
Who pays the premiums for a Workers Compensation policy for a retail...
The Worker's compensation portion (Part I) of the Worker's...
Social Security provides protection against the financial consequences...
Intentional concealment entitles the injured party to which course of...
Which provision will pay a portion of the death benefit prior to the...
The payer rider on a juvenile life policy provides that if the payor...
A provision stating that the insured and the insurer will share...
How do rights of an irrevocable beneficiary differ from those of a...
An individual with a low income and high insurance needs should buy
The insured is totally and permanently disabled. The insured's...
All of the occurrences listed below are examples of an insurable event...
Each of the following terms is an important characteristic of a major...
During the disability elimination period
What is the written instrument called in which the insurance contract...
Which of the following requires a reporting company to respond to a...
Renewable term insurance can be best described as :
What does the Insurance Commissioner have the right to do if an agent...
A measure for rating an individual's need for LTC benefits is called:
According to the CA insurance code, an insured's policy must specify...
In California, the minimum participation requirement for a...
A disability policy, described as "guaranteed renewable" is one where...
A form of rest or relief offered to family members who are caring for...
Why is having a large number of similar exposure units important to...
While an insurer is paying the premium for a life insurance policy...
There is a type of benefit that pays for the cost of relief given to...
What provision prevents a family from receiving benefits from two...
Which of the following are commonly covered by medical expense...
A provision stating that health insured's and their insurers will...
A life insurance policy's cash value can be used as collateral for...
The complete ransfer by the existing owner of all rights in an...
The guaranteed insurability option provides the ability to:
A health insurance deductible is:
Unintentional concealment entitles the injured party to which course...
An agent who acts as an insurance agent, broker, solicitor, life...
The basic feature of a managed care indemnity plan is that the...
What recourse does an insurer have if a violation of a material...
Which of the following categories of benefits are not covered in a...
In a 7 year vesting schedule, what percentage of employer...
Which of the following is a hazard ?
All of the following statements about social security disability...
According to the CA Insurance Code, all insurers must maintain a...
Any long-term care policy sold in California must provide for certain...
Which of the following coverages is NOT one of the three traditional...
Wellness benefits under a Health Maintenance Organization (HMO)...
Term insurance is typically characterized by
All of the following statement about contingent beneficiaries are...
Under an individual health guaranteed renewal contract, the insurer...
Which of the following is a correct statement about life insurance...
The Health Insurance Counseling Advocacy Program (HICAP) provides...
What kind of insurance pays medical benefits only in the event the...
In order to obtain group insurance without providing evidence of...
What is the purpose of the rehabilitation provision in a disability...
What makes up the entire contract in a life insurance policy ?
How long must a life agent maintain records regarding policies sold in...
What rights do individuals have if they disagree with the decision on...
An agent's appointment with an insurer will be discontinued if all of...
The insured, aged 65, owns a $100,000 non-participating whole life...
Traditional comprehensive major medical plans include all of the...
A disability income policy social insurance supplement (SIS) benefit...
A hospital confinement indemnity insurance policy pays
From the list of descriptions below, select the one that is not...
What would be the Insurance Commissioner's most likely course of...
Which definition of disability is the most difficult for an injured...
In order to receive the principal sum benefit for death from a...
Long-term care policies that deliver benefits for community based or...
The social security normal retirement age depends upon
Which retirement plan was designed for employees of public school...
The commonly used 30, 60, 90, and 180 disability terminology refers to...
RW and Associates is an agency which represents BLG Insurance...
Pick from the following choices the features of a long-term care...
The conversion privilege allows a person to change coverage from
Which retirement plan utilizes non-deductible contributions?
When are parties to a contract required to communicate information...
Which of the following expenses is never covered by a LTC insurance...
The insured's policy has deductible that is applied between the...
The probationary period in a group health policy is intended for...
Which of the following statements about the HICAP program is false?
The Employee Retirement Income Security Act of 1974 (ERISA) mandates...
Which of the following is a type of deductible that charges the...
Under social security, the definition of disability is the inability...
In order to determine the amount of premium an insured will pay, the...
Which of these statements concerning Medicare is not true ?
In the Medicare system, the services provided by doctors and surgeons...
A significant benefit to the insured in group underwriting verses...
The additional premium charged by an insurer for adding the accidental...
Loss retention is an effective risk management technique when all of...
All of the following would fall under the category of an "adverse...
In the state of California
Medicare Part A provides coverage for all of the following, except
Identify which of the following is not a principal factor used to...
Self-funding of employee benefit plans cannot be used for
Under COBRA, a qualifying event ensures that an employee who loses...
Which of the following is a true staement regarding the social...
HMOs are involved in all of the following, except
Which of the following describes an insurer who has enough financial...
Which of the following is false about the marketing of long-term care...
In which plans do employers make specific contributions to an...
What would we call a representation which fails to correspond with its...
Common life insurance policy riders include all of the following,...
A group health plan third party administrator might do any of the...
All of the following statements about the election of a life insurance...
All of the following statements about survivorship life insurance are...
When a licensed agent submits a renewal applications with applicable...
Concerning Part B of Medicare, which of the following is incorrect?
In California after January 1, 2002, the definition of health...
When may a representation be withdrawn ?
What is the tax treatment for individual disability income policies?
Retirement benefits under social security are available only for...
A $50,000 whole life policy with a cash value of $10,000 has been in...
Which of the following statements about LTC is correct:
The purpose of laws regarding the replacement of life and annuity...
A life agent's records must include all of the following, except:
Which non-forfeiture option uses an existing policy's cash value to...
A husband and wife work for different companies.  The husband...
"The seamless delivery of medical and indemnity for both occupational...
A representation in an insurance contract qualifies as which of the...
Which statement is true regarding Medicare Supplement Insurance plans?
The adjustments that an insurer makes in a cash value account in a...
Which of these statement is not true with regard to insurers and...
Benefits will be paid from a Worker's Compensation Subsequent...
Which of the following is not allowed by code in connection with the...
All of the following statements abut qualified pension plans are true,...
Medicare covers which of the following in order to provide long-term...
Viatical settlements are accomplished through the use of
A return premium rider is a rider that
Which settlement option allows only the death benefit earnings to be...
In the absence of a coordination of benefits clause, all of the...
The social security blackout period ends when the surviving spouse...
What is the transplant donor benefit in a disability income policy ?
A policy holder stops making payments on a 20-pay life policy and...
All of the following apply to the life insurance cost-of-living rider,...
A worker dies while he is credited with six quarters of the last 13...
Which non-forfeiture option uses cash surrender values to purchase...
What is the difference between a defined contribution plan and a...
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