Life And Health Insurance License Exam Practice Test

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  • 1/150 Questions

    When Workers compensation laws became mandatory, it meant:

    • HMOs were required to provide medical services to all employees
    • Employers could use common law defenses more to their advantage
    • Employers were financially responsible for employees on-the-job injuries, regardless of fault
    • Employees were required to provide employers fault to file legal action
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About This 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 career, 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!

Life And Health Insurance License Exam Practice Test - Quiz

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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:

    • $150,000

    • $100,000

    • $0

    • $50,000

    Correct Answer
    A. $150,000
    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:

    • The company workers compensation policy

    • Medi-Cal, assuming he qualifies for coverage

    • Mike's private auto insurance policy

    • None of the above

    Correct Answer
    A. The company workers compensation policy
    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:

    • Convertible term

    • Level term

    • Decreasing term

    • Renewable term

    Correct Answer
    A. Renewable term
    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. 

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

    • Insolvent

    • Unauthorized

    • Impaired

    • Non-admitted

    Correct Answer
    A. Insolvent
    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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  • 6. 

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

    • Over the course of a set period

    • On a sliding schedule

    • In one lump sum

    • As a monthly indemnity

    Correct Answer
    A. In one lump sum
    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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  • 7. 

    Hospice care provides services to patients who are:

    • In a hospital and expected to recover

    • Terminally ill

    • Receiving respite care through Medicare

    • None of the above

    Correct Answer
    A. Terminally ill
    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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  • 8. 

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

    • As part of an auto policy

    • As a part of a comprehensive homeowner umbrella policy

    • As part of a life insurance policy through the use of an endorsement

    Correct Answer
    A. As part of a life insurance policy through the use of an endorsement
    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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  • 9. 

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

    • After-hours care

    • Generic care

    • Preventative care

    • Fee for service care

    Correct Answer
    A. Preventative care
    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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  • 10. 

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

    • Dying before their home mortgage is paid off

    • Becoming uninsurable

    • Outliving their financial resources

    • Dying too soon

    Correct Answer
    A. Outliving their financial resources
    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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  • 11. 

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

    • Activities of daily living

    • The gatekeeper mechanism

    • Case management

    • Coinsurance

    Correct Answer
    A. Activities of daily living
    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?

    • To provide health insurance benefits to key employees

    • To give a key employee the ability to purchase the business

    • To give retirement benefits to key employees

    • To cover decreased business earnings due to the death of a key employee

    Correct Answer
    A. To cover decreased business earnings due to the death of a key employee
    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. 

    The passage of worker's compensation legislation meant

    • Employees no longer had any legal means of obtaining reimbursement for work injuries

    • Employees would have to sue their employers to obtain reimbursement for work injuries

    • Employers would be held responsible for the cost of their employee's work injuries regardless of fault

    • Employers were no longer responsible for work injuries to employees

    Correct Answer
    A. Employers would be held responsible for the cost of their employee's work injuries regardless of fault
    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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  • 14. 

    An example of a third party administrator is:

    • An agent's supervisor who takes part of his commission

    • An employee who handles self-insurance claims

    • An employee who is responsible for evaluating for relative quality of competing group health and welfare benefits offered to his employer by insurers

    • An outside organization that processes claims for an employers self-funded plans

    Correct Answer
    A. An outside organization that processes claims for an employers self-funded plans
    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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  • 15. 

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

    • Capitation fee

    • Deductible

    • Co-insurance

    • Maximum amounts

    Correct Answer
    A. Capitation fee
    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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  • 16. 

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

    • Those who are very rich or very poor probably are not in need of long term care coverage

    • The annual cost of nursing home care was about $10,000 in 1990

    • One of the best-structured plans for long term care for those in the middle class is Medi-Cal

    • The need for long term care insurance begins only at middle age.

    Correct Answer
    A. The need for long term care insurance begins only at middle age.
    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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  • 17. 

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

    • Under Worker's compensation law

    • To bring the work environment up to state safety codes.

    • To cover common law exposures

    • To coordinate with HMO coverage

    Correct Answer
    A. Under Worker's compensation law
    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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  • 18. 

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

    • Premature death

    • Disability

    • Poor investments

    • Retirement

    Correct Answer
    A. Poor investments
    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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  • 19. 

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

    • None, due to the fact that the concealment was unintentional

    • $250 fine to be paid to the injured party

    • Possible imprisonment to the party who concealed the information

    • Rescission of the contract

    Correct Answer
    A. Rescission of the contract
    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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  • 20. 

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

    • Waiver of premium

    • Accelerated death benefit

    • Cost of living

    • Disability Income

    Correct Answer
    A. Accelerated death benefit
    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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  • 21. 

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

    • Equally divided between the employees and the storeowner.

    • Because of the occupation classification, it is paid entirely by the employees.

    • It is always paid entirely by the employer

    • Retail stores are excluded from statutory workers compensation laws

    Correct Answer
    A. It is always paid entirely by the employer
    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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  • 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.

    • The insurer will make the payments until the insured juvenile reaches the specified age

    • The insurer will lend money to keep the policy in force

    • The insured's estate will make the premium payments

    • The insurer will make all the of the policy payments

    Correct Answer
    A. The insurer will make the payments until the insured juvenile reaches the specified age
    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. 

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

    • Whole life insurance

    • Universal life insurance

    • Endowment insurance

    • Term insurance

    Correct Answer
    A. Term insurance
    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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  • 24. 

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

    • Percentage sharing

    • Co-insurance

    • Stop-loss provision

    • Comprehensive insurance

    Correct Answer
    A. Co-insurance
    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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  • 25. 

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

    • An irrevocable beneficiary may be changed by the policy owner without the beneficiary's consent

    • An irrevocable beneficiary has a vested right that neither the policy owner nor his creditors can impair without the beneficiary's consent

    • A revocable beneficiary can become the policy owner at any time by paying the premiums

    • An irrevocable beneficiary has the right to name a contingent beneficiary for the policy

    Correct Answer
    A. An irrevocable beneficiary has a vested right that neither the policy owner nor his creditors can impair without the beneficiary's consent
    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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  • 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:

    • Grace period provision

    • Guaranteed insurability provision

    • Reinstatement provision

    • Waiver of premium provision

    Correct Answer
    A. Waiver of premium provision
    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. 

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

    • Deductible

    • Co-insurance

    • Maximum amounts

    • Capitation

    Correct Answer
    A. Capitation
    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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  • 28. 

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

    • An insured suffers a financial loss in the state lottery

    • A guest is injured by a fall from the insured's deck

    • An insured is sued for unintentional slander of another person

    • An insured is admitted to the hospital for delivery of a newborn

    Correct Answer
    A. An insured suffers a financial loss in the state lottery
    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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  • 29. 

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

    • Unfair Practices Act

    • Fair Credit Reporting Act

    • COBRA

    • Medical Information Act

    Correct Answer
    A. Fair Credit Reporting Act
    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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  • 30. 

    During the disability elimination period

    • Residual benefits are payable

    • Occupational claims are payable

    • No benefits are payable

    • All claims are payable

    Correct Answer
    A. No benefits are payable
    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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  • 31. 

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

    • The provisions

    • The warrantees

    • The policy

    • The risk

    Correct Answer
    A. The policy
    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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  • 32. 

    Renewable term insurance can be best described as :

    • A level death benefit with an increase in premium

    • A level death benefit with a decrease in premium

    • A decreasing death benefit with a level premium

    • An increasing death benefit with a level premium

    Correct Answer
    A. A level death benefit with an increase in premium
    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

    • Fine the insurance company for non-compliance

    • Suspend or revoke the license of the agent

    • Authorize the agent with a certificate of convenience

    • Request a certificate of authority be issued immediately

    Correct Answer
    A. Suspend or revoke the license of the agent
    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:

    • Case management

    • Activities of daily living

    • The gatekeeper mechanism

    • Co-insurance

    Correct Answer
    A. Activities of daily living
    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:

    • The risks insured against

    • The financial rating of the insurer

    • The property or life being insured

    • The policy period

    Correct Answer
    A. The financial rating of the insurer
    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

    • 50% of eligible employees

    • 25% of eligible employees

    • 75% of eligible employees

    • 40% of eligible employees

    Correct Answer
    A. 75% of eligible employees
    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

    • Surrenders the right to change the premiums

    • Reserves the right to change any of its terms

    • Reserves the right to change the premiums, but may not change any of its terms

    • May not renew the policy if the insured ceases to comply with certain conditions such as continued employment

    Correct Answer
    A. Reserves the right to change the premiums, but may not change any of its terms
    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

    • Hospice care

    • Hospital care

    • Respite care

    • Intermediate care

    Correct Answer
    A. Respite care
    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 ?

    • The greater the number insured, the more premium is collected to offset fixed costs

    • The insurer increases its market share with every insured

    • The greater the number insured, the greater the amount of premiums collected to help cover losses

    • The greater the number insured, the more accurately the insurer can predict losses and set appropriate premiums

    Correct Answer
    A. The greater the number insured, the more accurately the insurer can predict losses and set appropriate premiums
    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. 

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

    • Elective cosmetic surgeries

    • Pre-existing conditions

    • Expenses covered by a workers compensation policy

    • Accidental injuries

    Correct Answer
    A. Accidental injuries
    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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  • 41. 

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

    • The stop-loss provision

    • Comprehensive insurance

    • Percentage insuring

    • Co-insurance

    Correct Answer
    A. Co-insurance
    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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  • 42. 

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

    • The insurer is named as the primary beneficiary

    • The cash value does not increase

    • The dividend payments cease

    • The policy remains in full force in every respect

    Correct Answer
    A. The policy remains in full force in every respect
    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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  • 43. 

    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 ?

    • Custodial Care

    • Hospice care

    • Intermediate relief care

    • Respite care

    Correct Answer
    A. Respite care
    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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  • 44. 

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

    • Assignment of benefits

    • Conversion of benefits

    • Extension of benefits

    • Coordination of benefits

    Correct Answer
    A. Coordination of benefits
    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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  • 45. 

    A health insurance deductible is:

    • The insured's payment for healthcare that is not considered a covered expense

    • The cost of a covered expense minus the office co-payment

    • The portion of insurance premium paid for coverage by the insured

    • The amount of covered expense that the insured pays before the insurer pays

    Correct Answer
    A. The amount of covered expense that the insured pays before the insurer pays
    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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  • 46. 

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

    • Absolute assignment

    • Endowment

    • Collateral assignment

    • Non-forfeiture

    Correct Answer
    A. Absolute assignment
    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:

    • Waive premium payments in the event of disability

    • Access a portion of the death benefit in the event of serious illness

    • Double the amount of the death benefit in the event of accidental death

    • Purchase additional insurance regardless of insurability

    Correct Answer
    A. Purchase additional insurance regardless of insurability
    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 life insurance policy's cash value can be used as collateral for a loan.

    • True

    • False

    Correct Answer
    A. True
    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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  • 49. 

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

    • Possible imprisonment to the party who concealed the information

    • $250 fine to be paid to the injured party

    • None, given the fact that the concealment was unintentional

    • Rescission of the contract

    Correct Answer
    A. Rescission of the contract
    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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Quiz Review Timeline (Updated): Jan 13, 2025 +

Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

  • Current Version
  • Jan 13, 2025
    Quiz Edited by
    ProProfs Editorial Team
  • Jan 29, 2010
    Quiz Created by
    Pchinna
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