A Life And Health Trivia Quiz!

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A Life And Health Trivia Quiz! - Quiz

Here we go with another Life and Health trivia quiz. Life on earth goes hand in hand with a healthy lifestyle, and there are different ways of achieving this. All living things depend on each other for survival, and this forms a basis for the life and health class. This is the sixth practice exam in preparation for the main exam. Take it up and keep an eye out for the seventh one.


Questions and Answers
  • 1. 

    What is required when an applicant reveals conditions that require more information?

    • A.

      Physical examination

    • B.

      Attending physician's statement

    • C.

      Investigative consumer report

    • D.

      Agent's report

    Correct Answer
    A. Physical examination
    Explanation
    When an applicant reveals conditions that require more information, a physical examination is required. This is because a physical examination allows a healthcare professional to assess the applicant's overall health and determine if there are any underlying medical conditions that may affect their eligibility or coverage. By conducting a physical examination, the insurer can gather additional information to make an informed decision about the applicant's insurability and potential risk factors.

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  • 2. 

    Which risk classification carries the lowest premium?

    • A.

      Endowed

    • B.

      Substandard

    • C.

      Standard

    • D.

      Preferred

    Correct Answer
    D. Preferred
    Explanation
    Preferred carries the lowest premium because it represents the lowest level of risk for the insurance company. Preferred individuals are considered to be in good health and have a low likelihood of making a claim. Therefore, the insurance company charges them a lower premium compared to other risk classifications such as Standard, Substandard, or Endowed, which indicate higher levels of risk and potential for claims.

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  • 3. 

    During the disability elimination period:

    • A.

      Occupational claims are payable

    • B.

      Small claims are payable

    • C.

      No benefits are payable

    • D.

      Residual benefits are payable

    Correct Answer
    C. No benefits are payable
    Explanation
    During the disability elimination period, no benefits are payable. This period is a waiting period before the insurance policy starts providing benefits. It is typically the initial period of disability where the insured individual must wait before receiving any benefits. This waiting period allows the insurance company to verify the disability and ensure that it meets the policy's criteria for benefits. Therefore, during this period, no benefits are payable to the insured individual.

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  • 4. 

    Which of the following statements defines partial disability?

    • A.

      A disabled employee while he is working part-time and receiving lost income under their long-term disability benefit

    • B.

      An employee who loses sight in one eye because of an accident on the job

    • C.

      An employer contributing half of the disability benefit to an employee out on long-term disability

    • D.

      The prorated income an employer pays an injured employee out on short-term disability

    Correct Answer
    A. A disabled employee while he is working part-time and receiving lost income under their long-term disability benefit
  • 5. 

    Which statement best describes a life insurance policy dividend?

    • A.

      It is somewhat larger in a non-participating whole life policy than in a comparable participating policy

    • B.

      It is the interest paid to the policy owner on the cash value of a permanent insurance policy

    • C.

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

    • D.

      It is a stockholders return on his investment in the company

    Correct Answer
    C. It is distribution of excess of funds accumulated by the insurer on participating policies
    Explanation
    A life insurance policy dividend is the distribution of excess funds accumulated by the insurer on participating policies. This means that when the insurance company collects more premiums than necessary to cover claims and expenses, they distribute the excess funds back to the policyholders who have a participating policy. This is different from a non-participating policy, where the policyholder does not receive a dividend. Therefore, the statement that best describes a life insurance policy dividend is that it is the distribution of excess funds accumulated by the insurer on participating policies.

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  • 6. 

    If a person was in violation of Section 770 of the CA Insurance Code, what action would the insurance Commissioner most likely take if the violation dealt with loans on the security of real or personal property?

    • A.

      Require the violator to complete an approved ethics course before soliciting in the statement of California again

    • B.

      Issue a cease and desist order for a violation of more than one transaction

    • C.

      Charge the violator with a felony with a six month maximum jai sentence per violation

    • D.

      Issue a fine or $205,000 per violation

    Correct Answer
    B. Issue a cease and desist order for a violation of more than one transaction
    Explanation
    If a person is in violation of Section 770 of the CA Insurance Code, the insurance Commissioner would most likely issue a cease and desist order for a violation of more than one transaction. This means that the violator would be ordered to stop engaging in the illegal activity of making loans on the security of real or personal property. This action is taken to prevent further violations and protect the interests of consumers.

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  • 7. 

    If no other method of payment is selected, which of the following is the automatic mode of settlement for life insurance proceeds?

    • A.

      Extended term insurance

    • B.

      Lump-sum settlement in cash

    • C.

      Life income

    • D.

      Paid-up policy

    Correct Answer
    B. Lump-sum settlement in cash
    Explanation
    The automatic mode of settlement for life insurance proceeds, if no other method of payment is selected, is a lump-sum settlement in cash. This means that the beneficiary will receive the entire amount of the life insurance proceeds in a single payment, rather than receiving it in installments or through other methods such as extended term insurance, life income, or a paid-up policy.

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  • 8. 

    The process whereby a mutual insurer becomes a stock company is called:

    • A.

      Reorganization

    • B.

      Stock split

    • C.

      Stock buyout

    • D.

      Demutualization

    Correct Answer
    D. Demutualization
    Explanation
    Demutualization is the process by which a mutual insurer converts itself into a stock company. This involves the transformation of the company's ownership structure from being owned by policyholders to being owned by shareholders. Through demutualization, the company's policyholders receive shares in the newly formed stock company, allowing them to become shareholders and potentially benefit from any future profits. This process is often undertaken to increase the company's access to capital markets and improve its ability to compete in the industry.

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  • 9. 

    A supplemental insurance policy that pays a set amount for each day that an individual is hospitalized is known as:

    • A.

      Long term care supplement

    • B.

      Temporary major medical

    • C.

      Hospital confinement indemnity

    • D.

      Hospital surgical expense

    Correct Answer
    C. Hospital confinement indemnity
    Explanation
    A supplemental insurance policy that pays a set amount for each day that an individual is hospitalized is known as a hospital confinement indemnity. This type of policy provides additional coverage specifically for hospital stays, offering financial assistance to cover the costs associated with being hospitalized. It is designed to provide a fixed daily benefit to the policyholder during their hospital confinement, regardless of other medical expenses or treatments.

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  • 10. 

    Any situation that presents the possibility of a loss is known as:

    • A.

      A covered loss

    • B.

      A loss exposure

    • C.

      Risk potential

    • D.

      Consideration

    Correct Answer
    B. A loss exposure
    Explanation
    A loss exposure refers to any situation that presents the possibility of a loss. This could include events such as accidents, natural disasters, or financial downturns that could result in financial or other types of losses. By identifying and assessing these potential risks, individuals or organizations can take appropriate measures to mitigate or manage them effectively.

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  • 11. 

    A commonly used cost containment measure for emergency hospital care under a major medical expense plan is:

    • A.

      Premium tax

    • B.

      Deductible

    • C.

      In-patient fee

    • D.

      Pre-admission test

    Correct Answer
    B. Deductible
    Explanation
    A deductible is a commonly used cost containment measure for emergency hospital care under a major medical expense plan. It refers to the amount of money that the insured individual must pay out of pocket before the insurance coverage kicks in. By having a deductible, it helps to reduce the overall cost of healthcare by shifting a portion of the financial responsibility onto the insured individual. This encourages individuals to be more mindful of their healthcare expenses and helps to control unnecessary utilization of emergency hospital care.

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  • 12. 

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

    • A.

      Cash option

    • B.

      Fixed amount option

    • C.

      Interest option

    • D.

      Fixed period option

    Correct Answer
    C. Interest option
    Explanation
    The interest option allows only the death benefit earnings to be paid to the beneficiary. This means that the beneficiary will receive the interest earned on the death benefit amount, but not the principal amount itself. This option is often chosen by individuals who want to ensure a steady stream of income for their beneficiaries without depleting the principal amount.

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  • 13. 

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

    • A.

      Legal representative

    • B.

      Fiduciary

    • C.

      Managing general agent

    • D.

      Natural person

    Correct Answer
    B. Fiduciary
    Explanation
    An agent acting as an insurance agent, broker, solicitor, life agent, or bail agent acts in the capacity of a fiduciary when handling premiums or return premiums for an insured. A fiduciary is a person who is entrusted with the responsibility to act in the best interest of another party. In this case, the agent is entrusted with handling the funds of the insured, and therefore, has a legal and ethical duty to act in the insured's best interest. This includes ensuring that the premiums are handled properly and returned if necessary.

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  • 14. 

    Which statement is true regarding participating in a group health insurance plan?

    • A.

      A minimum of 75% of eligible members is required for a non-contributory group health plan

    • B.

      A non-contributory group health plan must cover all eligible members

    • C.

      A contributory group health plan must cover all eligible members

    • D.

      A minimum participation of 50% of eligible members is required for a contributory group health plan

    Correct Answer
    B. A non-contributory group health plan must cover all eligible members
    Explanation
    A non-contributory group health plan must cover all eligible members means that every eligible member of the group must be included in the plan without having to pay any premiums or contributions. This type of plan is fully funded by the employer or the group sponsor, and the members do not have to make any financial contributions towards the coverage.

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  • 15. 

    According to state law, what size print must be used for the licensee's license number on all price quotes, business cards, and printed material?

    • A.

      There are no requirements for the license no. to be printed on any printed material

    • B.

      Larger print than any other printed information on the material

    • C.

      The same size print as the licensee's phone number, fax number or address

    • D.

      Small print a the bottom of the material

    Correct Answer
    C. The same size print as the licensee's phone number, fax number or address
    Explanation
    According to state law, the licensee's license number must be printed in the same size as their phone number, fax number, or address. This means that the license number should not be larger or smaller than any other contact information on the material.

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  • 16. 

    Social Security disability benefits are paid to persons expected to die or be disabled at least:

    • A.

      3 months

    • B.

      6 months

    • C.

      12 months

    • D.

      24 months

    Correct Answer
    C. 12 months
    Explanation
    Social Security disability benefits are paid to persons who are expected to be disabled for at least 12 months. This means that the individual must have a medical condition that prevents them from working and is expected to last for at least a year or result in death. The 12-month requirement ensures that the benefits are provided to individuals with long-term disabilities, rather than those with short-term or temporary conditions.

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  • 17. 

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

    • A.

      Extended paid-up insurance

    • B.

      Reduced term insurance

    • C.

      Extended term insurance

    • D.

      Reduced paid-up insurance

    Correct Answer
    C. Extended term insurance
    Explanation
    Extended term insurance is a non-forfeiture option that uses the cash surrender values of a policy to purchase paid-up term insurance for the full face amount of the policy. This means that the policyholder can use the accumulated cash value to continue the coverage without paying additional premiums, but instead, the policy is converted into a term insurance policy for the same face amount. This option allows the policyholder to maintain coverage while utilizing the cash value of the policy.

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  • 18. 

    The group medical plan provision that applies when a claimant has coverage under more than one plan is knows as?

    • A.

      Integration

    • B.

      Co-insurance

    • C.

      Coordination of benefits

    • D.

      Maximum benefits

    Correct Answer
    C. Coordination of benefits
    Explanation
    Coordination of benefits is the group medical plan provision that applies when a claimant has coverage under more than one plan. This provision ensures that the total benefits received by the claimant do not exceed the actual cost of the medical expenses. It helps in determining the primary and secondary payer for the claim, avoiding duplicate payments, and ensuring fair distribution of benefits among multiple insurance plans.

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  • 19. 

    All of the following statements about the gatekeeper system are true, except:

    • A.

      Specialists can choose to be gatekeepers for their patients

    • B.

      The insured must utilize their primary physicians who authorize all care for the insured

    • C.

      Referrals to specialists must be authorized by the gatekeeper

    • D.

      Gatekeepers are a common feature of HMO plans

    Correct Answer
    A. Specialists can choose to be gatekeepers for their patients
    Explanation
    The gatekeeper system is a common feature of Health Maintenance Organization (HMO) plans, where insured individuals are required to choose a primary care physician (PCP) as their gatekeeper. The PCP authorizes and coordinates all medical care, including referrals to specialists when necessary. This system ensures that insured individuals must seek initial care through their PCP, who plays a central role in managing their healthcare. Specialists themselves do not typically serve as gatekeepers in this system.

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  • 20. 

    Which coverage is available at no cost to persons at age 65?

    • A.

      Medicare Part A

    • B.

      Medicare Part B

    • C.

      Social Security retirement benefits

    • D.

      Long term care insurance

    Correct Answer
    A. Medicare Part A
    Explanation
    Medicare Part A is available at no cost to persons at age 65. Medicare Part A is the hospital insurance portion of Medicare, which covers inpatient hospital stays, skilled nursing facility care, hospice care, and some home health care services. While Medicare Part B and Social Security retirement benefits are also available to persons at age 65, they may come with costs such as monthly premiums. Long term care insurance is a separate insurance policy that individuals can purchase to cover long-term care services, but it is not available at no cost.

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  • 21. 

    Which optional program is only for individuals age 65 or older?

    • A.

      Long term care insurance

    • B.

      Medicare Part A

    • C.

      Social Security survivor benefits

    • D.

      Medicare Part B

    Correct Answer
    D. Medicare Part B
    Explanation
    Medicare Part B is the correct answer because it is a program specifically designed for individuals age 65 or older. Medicare Part B provides medical insurance coverage, including doctor visits, outpatient care, and preventive services. It is an optional program that individuals can choose to enroll in, in addition to Medicare Part A, which covers hospital insurance. Long term care insurance is not age-restricted and can be purchased by individuals of any age. Social Security survivor benefits are available to eligible individuals regardless of age.

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  • 22. 

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

    • A.

      Deductibles

    • B.

      Co-insurance

    • C.

      Out-of-pocket maximums

    • D.

      First-dollar coverage

    Correct Answer
    D. First-dollar coverage
    Explanation
    Traditional comprehensive major medical plans include deductibles, co-insurance, and out-of-pocket maximums. These features require the policyholder to pay a certain amount of expenses before the insurance coverage kicks in, share a percentage of costs with the insurance company, and limit the maximum amount the policyholder has to pay out of pocket, respectively. However, first-dollar coverage is not included in these plans. First-dollar coverage means that the insurance starts paying for medical expenses from the first dollar spent, without any deductibles or co-insurance requirements. Therefore, it is not a part of traditional comprehensive major medical plans.

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  • 23. 

    According to Employee Retirement Income Security Act of 1974 (ERISA) fiduciary standards, benefit plans are operated for:

    • A.

      Plan sponsors and beneficiaries

    • B.

      Plan participants and employees

    • C.

      Plan sponsors and employees

    • D.

      Plan participants and beneficiaries

    Correct Answer
    D. Plan participants and beneficiaries
    Explanation
    The correct answer is plan participants and beneficiaries. According to the Employee Retirement Income Security Act of 1974 (ERISA) fiduciary standards, benefit plans are operated for the benefit of the plan participants and beneficiaries. This means that the fiduciaries of the plan have a legal duty to act in the best interests of the participants and beneficiaries, ensuring that the plan is managed and administered in a way that maximizes their benefits and protects their rights. The plan sponsors and employees may also benefit from the plan, but the primary focus is on the participants and beneficiaries.

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  • 24. 

    After the deductible is paid, what percentage of the balance of approved charges does Medicare Part B pay?

    • A.

      20%

    • B.

      50%

    • C.

      80%

    • D.

      100%

    Correct Answer
    C. 80%
    Explanation
    Medicare Part B pays 80% of the balance of approved charges after the deductible is paid. This means that once the deductible is met, Medicare will cover 80% of the remaining approved charges, while the individual is responsible for the remaining 20%.

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  • 25. 

    With Medicare coverage:

    • A.

      Benefits are available only to persons age 65 or older

    • B.

      Both Part a and Part B provide benefits for care and skilled nursing facilities

    • C.

      Part B provides benefits for diagnostic tests and x-rays performed on an out-patient basis

    • D.

      Part A has no deductibles nor co-insurance for the first 60 days of hospitalization

    Correct Answer
    C. Part B provides benefits for diagnostic tests and x-rays performed on an out-patient basis
    Explanation
    Part B provides benefits for diagnostic tests and x-rays performed on an out-patient basis. This means that individuals covered by Medicare can receive coverage for these types of medical procedures without being admitted to a hospital or other in-patient facility. Part B coverage is specifically designed to provide outpatient services, including diagnostic tests and x-rays, which can be crucial for diagnosing and monitoring various medical conditions. This coverage is separate from Part A, which focuses on in-patient hospital care.

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  • 26. 

    Life insurance settlement options include all of the following, except:

    • A.

      Interest option

    • B.

      Extended term option

    • C.

      Fixed amount option

    • D.

      Fixed period option

    Correct Answer
    B. Extended term option
    Explanation
    The extended term option is not a life insurance settlement option. This option allows the policyholder to use the cash value of the policy to purchase a term insurance policy with the same death benefit as the original policy. The other options mentioned, such as the interest option, fixed amount option, and fixed period option, are all valid settlement options that allow the policyholder to receive the policy's cash value in different ways.

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  • 27. 

    All of the following are features of a preferred provider organization (PPO), except:

    • A.

      Dependence upon referrals to see a specialist

    • B.

      Providers are paid on a fee-for-service basis

    • C.

      Employees have a choice of practitioners

    • D.

      Primary care physicians act as gatekeepers

    Correct Answer
    D. Primary care physicians act as gatekeepers
    Explanation
    A preferred provider organization (PPO) is a type of healthcare plan that allows individuals to choose their healthcare providers from a network of preferred providers. The providers are paid on a fee-for-service basis, meaning they are paid for each service they provide. Employees have the freedom to choose their practitioners without the need for referrals. However, in a PPO, primary care physicians do not act as gatekeepers. This means that individuals do not need to obtain a referral from their primary care physician in order to see a specialist.

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  • 28. 

    What must a life agent do in order to be able to sell 24-hour care coverage?

    • A.

      Complete a course on workers compensation and general principles of employer liability

    • B.

      Nothing; they are already authorized to sell this coverage with a life license

    • C.

      Complete a course on long-term disability coverage and workers compensation coverage

    • D.

      Complete the proper application and pay the fee

    Correct Answer
    B. Nothing; they are already authorized to sell this coverage with a life license
    Explanation
    Life agents are already authorized to sell 24-hour care coverage with a life license. This means they do not need to complete any additional courses or applications to sell this type of coverage.

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  • 29. 

    A life insurance application is important for all of the following reasons, except:

    • A.

      Statements made in the application are required to be true to the best of the applicant's knowledge

    • B.

      The beneficiary must sign the application before the insurer will issue the policy

    • C.

      The application contains essential information about the applicant

    • D.

      The application becomes a part of the policy if a copy is attached

    Correct Answer
    B. The beneficiary must sign the application before the insurer will issue the policy
    Explanation
    The correct answer is that the beneficiary must sign the application before the insurer will issue the policy. This is because the beneficiary's signature is not a requirement for the issuance of a life insurance policy. The application is important for all the other reasons mentioned, such as requiring truthful statements, containing essential information about the applicant, and becoming a part of the policy if a copy is attached.

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  • 30. 

    The price of insurance for each exposure unit is called the:

    • A.

      Premium

    • B.

      Rate

    • C.

      Adjustment factor

    • D.

      Package price

    Correct Answer
    B. Rate
    Explanation
    The price of insurance for each exposure unit is called the rate. This rate is determined based on various factors such as the level of risk associated with the exposure unit and the coverage provided by the insurance policy. It represents the cost of the insurance coverage for a specific unit of exposure, such as a person or property. The rate is typically calculated by insurance companies to ensure that they are charging an appropriate amount to cover potential claims and expenses.

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  • 31. 

    By adopting a self-funded health plan, an employer will have greater flexibility in all areas of the planning, except:

    • A.

      Claims severity

    • B.

      Group size

    • C.

      Benefits provided

    • D.

      Cost

    Correct Answer
    A. Claims severity
    Explanation
    By adopting a self-funded health plan, an employer will have greater flexibility in all areas of the planning, except claims severity. This means that while the employer can have more control and flexibility over the group size, benefits provided, and cost of the plan, they may not have the same level of control over the severity of the claims made by employees. Claims severity refers to the extent or seriousness of the medical conditions or treatments required, and this may be influenced by factors beyond the employer's control, such as the health status and needs of the employees.

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  • 32. 

    To authorize the release of an attending physician's report, the applicant must:

    • A.

      Sign a consent form

    • B.

      Send a letter to the physician

    • C.

      Furnish the name of the physician

    • D.

      Submit to a physical examination

    Correct Answer
    A. Sign a consent form
    Explanation
    To authorize the release of an attending physician's report, the applicant is required to sign a consent form. This form serves as a legal document granting permission for the release of the report to the relevant parties. By signing the consent form, the applicant acknowledges their understanding and agreement to allow the physician to disclose their medical information. This ensures that the release of the report is done in compliance with privacy laws and regulations.

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  • 33. 

    Yearly probabilities of death are shown in:

    • A.

      Mortality tables

    • B.

      Morbidity tables

    • C.

      Policy illustrations

    • D.

      Policy summaries

    Correct Answer
    A. Mortality tables
    Explanation
    Mortality tables provide yearly probabilities of death for different age groups. These tables are used by insurance companies to calculate premiums and assess the risk of insuring individuals. They provide valuable information on the likelihood of death at different ages, which is essential for determining life insurance rates and payouts. Morbidity tables, on the other hand, focus on the probability of illness or disability rather than death. Policy illustrations and summaries are documents that provide an overview of the terms and conditions of an insurance policy, but they do not contain specific mortality data.

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  • 34. 

    Members of the Medical information Bureau are required to report:

    • A.

      The names of all patients treated by member physicians

    • B.

      The cause of death when death benefits are paid

    • C.

      Medical impairments found during the underwriting process

    • D.

      Amounts of insurance applied for by all applicants

    Correct Answer
    C. Medical impairments found during the underwriting process
    Explanation
    Members of the Medical Information Bureau are required to report medical impairments found during the underwriting process. This means that if a member physician identifies any medical conditions or impairments while evaluating an applicant's eligibility for insurance coverage, they must report this information to the Medical Information Bureau. This reporting helps insurance companies assess the risk associated with insuring individuals with specific medical conditions and make informed decisions about coverage and premiums.

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  • 35. 

    When referring to an insurance contract, when must a representation be made?

    • A.

      Either at the time of or after policy issuance

    • B.

      Only after a policy is issued

    • C.

      Only before a policy is issued

    • D.

      Either at the time of or before policy issuance

    Correct Answer
    D. Either at the time of or before policy issuance
    Explanation
    In the context of an insurance contract, a representation must be made either at the time of or before policy issuance. This means that the representation can be made during the application process when applying for the insurance policy, or it can be made after the policy has been issued but before it takes effect. In both cases, the insured individual is required to provide accurate and truthful information about themselves and the subject matter of the insurance policy. The representation helps the insurer assess the risk and determine the terms and conditions of the policy.

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  • 36. 

    Frank and Ernest are 25 year old identical twins. They are both in excellent health. Both buy life policies that have $500 annual premiums. Frank buys a 5-year renewable term policy. Ernest buys a whole life policy. Which statement is no true ?

    • A.

      Ernest's whole life policy will have a larger death benefit if he dies during the first 5 years

    • B.

      Frank has the option of using his cash value to purchase a reduced amount of paid-up whole life insurance

    • C.

      Ernest's whole life policy will develop a larger cash value

    • D.

      Ernest's whole life premium will remain the same. Frank's premium will increase every 5 yeas.

    Correct Answer
    D. Ernest's whole life premium will remain the same. Frank's premium will increase every 5 yeas.
  • 37. 

    The request for an attending physician's report must be accompanied by a copy of the:

    • A.

      Policy illustration

    • B.

      Signed application

    • C.

      Underwriting criteria

    • D.

      Signed authorization

    Correct Answer
    D. Signed authorization
    Explanation
    When requesting an attending physician's report, it is necessary to include a signed authorization. This authorization allows the insurance company to access the individual's medical records and obtain the necessary information from the attending physician. Without a signed authorization, the insurance company would not have the legal permission to request and obtain the required medical information. Therefore, a signed authorization is a crucial document that must accompany the request for an attending physician's report.

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  • 38. 

    A provision stating that health insureds and their insurers will share covered losses in an agreed proportion is called:

    • A.

      Comprehensive insurance

    • B.

      Stop-loss provision

    • C.

      Co-insurance

    • D.

      Percentage sharing

    Correct Answer
    C. Co-insurance
    Explanation
    Co-insurance is a provision in health insurance where the insured individual and the insurance company share the covered losses in an agreed proportion. This means that the insured person is responsible for paying a certain percentage of the covered expenses, while the insurance company covers the remaining portion. Co-insurance helps to distribute the financial risk between the insured individual and the insurer, ensuring that both parties contribute to the cost of healthcare services.

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  • 39. 

    Which life insurance classification carries the highest premium?

    • A.

      Substandard

    • B.

      Standard

    • C.

      Endowed

    • D.

      Preferred

    Correct Answer
    A. Substandard
    Explanation
    Substandard life insurance classification carries the highest premium because it is offered to individuals who pose a higher risk to the insurance company due to their health conditions, lifestyle choices, or occupation. These individuals may have pre-existing medical conditions, engage in risky activities, or have a history of health issues. As a result, the insurance company charges higher premiums to compensate for the increased likelihood of having to pay out a claim.

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  • 40. 

    A group insurance plan is contributory when the:

    • A.

      3rd party administrator collects part of the premium

    • B.

      Employer pays all of the premium

    • C.

      Employee pays part of the premium

    • D.

      Service provider collects part of the premium

    Correct Answer
    C. Employee pays part of the premium
    Explanation
    In a contributory group insurance plan, the employee is required to pay a portion of the premium. This means that the cost of the insurance coverage is shared between the employer and the employee. The employer may still contribute to the premium, but the employee is responsible for paying a portion as well. This arrangement helps to distribute the financial burden of the insurance coverage and encourages employees to have a stake in their own coverage.

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  • 41. 

    The CA Insurance Code states that policies or certificates may be called comprehensive long term care insurance if they provide benefits for:

    • A.

      Institutional (nursing facilities) and home care

    • B.

      Institutional care (nursing facilities) only

    • C.

      Disability income

    • D.

      Home care only

    Correct Answer
    A. Institutional (nursing facilities) and home care
    Explanation
    The correct answer is Institutional (nursing facilities) and home care. According to the CA Insurance Code, policies or certificates can be called comprehensive long term care insurance if they provide benefits for both institutional care (nursing facilities) and home care. This means that the insurance coverage includes both types of care settings, allowing individuals to receive care either in a nursing facility or in their own homes.

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  • 42. 

    Whose benefits are affected by the blackout period?

    • A.

      The surviving children

    • B.

      The surviving spouse

    • C.

      The disabled worker

    • D.

      The fully insured worker

    Correct Answer
    B. The surviving spouse
    Explanation
    The blackout period refers to the period of time after the death of a fully insured worker when the surviving spouse is not yet eligible to receive Social Security benefits. During this period, the surviving spouse's benefits are affected as they are not able to receive any financial support from Social Security. Therefore, the correct answer is the surviving spouse.

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  • 43. 

    Which of the following is not an option for the use of the policy dividends?

    • A.

      Fund the addition of monthly income payments

    • B.

      Purchase a one-year term addition

    • C.

      Purchase paid-up additions

    • D.

      Reduce the current premium

    Correct Answer
    A. Fund the addition of monthly income payments
    Explanation
    The policy dividends cannot be used to fund the addition of monthly income payments. Policy dividends are typically used to purchase additional insurance coverage or reduce premiums. Monthly income payments are not typically considered as an option for the use of policy dividends.

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  • 44. 

    Who are members of the Medical Information Bureau?

    • A.

      Life insurance companies

    • B.

      Physicians

    • C.

      Hospitals

    • D.

      Health insurance companies

    Correct Answer
    A. Life insurance companies
    Explanation
    The Medical Information Bureau (MIB) is a specialized organization that collects and maintains medical information on individuals. This information is primarily used by life insurance companies to assess the risk associated with insuring an individual. Therefore, the members of the MIB are life insurance companies who have access to the information stored in the database. Physicians, hospitals, and health insurance companies are not members of the MIB as they do not have direct access to the information or utilize it for insurance purposes.

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  • 45. 

    After the deductible, what portion does a patient pay for covered expenses under Medicare Part B?

    • A.

      20%

    • B.

      50%

    • C.

      80%

    • D.

      100%

    Correct Answer
    A. 20%
    Explanation
    After the deductible, a patient is responsible for paying 20% of the covered expenses under Medicare Part B. This means that Medicare will cover 80% of the costs, while the patient will be responsible for the remaining 20%. This system helps to ensure that patients have some financial responsibility for their healthcare expenses while still providing them with a significant amount of coverage.

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  • 46. 

    Which of the following functions is best defined as an insurance company's identifying and selling to potential customers?

    • A.

      Rate making

    • B.

      Underwriting

    • C.

      Claims handling

    • D.

      Marketing

    Correct Answer
    D. Marketing
    Explanation
    Marketing is the best defined function as an insurance company's identifying and selling to potential customers. Marketing involves activities such as market research, advertising, and promotion, which are aimed at identifying potential customers and persuading them to purchase insurance products. It focuses on creating brand awareness, developing marketing strategies, and implementing tactics to attract and retain customers. Marketing plays a crucial role in understanding customer needs, positioning insurance products, and effectively communicating their value to potential customers.

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  • 47. 

    What is it called when an insurer uses higher rates based solely on religion, race, or ethnic group?

    • A.

      Categorizing

    • B.

      Unfair discrimination

    • C.

      Social injustice

    • D.

      Redlining

    Correct Answer
    B. Unfair discrimination
    Explanation
    Unfair discrimination is the correct answer because it refers to the practice of an insurer using higher rates based solely on religion, race, or ethnic group. This practice is considered unfair as it violates the principles of equality and fairness, and it is illegal in many jurisdictions. It is important for insurers to assess risk based on relevant factors such as individual characteristics and behavior, rather than discriminatory factors like religion, race, or ethnicity.

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  • 48. 

    A policy owner has the right to change all of the following, except:

    • A.

      The beneficiary

    • B.

      The payment mode

    • C.

      The dividend schedule

    • D.

      The dividend option

    Correct Answer
    C. The dividend schedule
    Explanation
    A policy owner has the right to change the beneficiary, the payment mode, and the dividend option. However, the dividend schedule refers to the timing and frequency of dividend payments, which is determined by the insurance company. Therefore, the policy owner does not have the right to change the dividend schedule.

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  • 49. 

    Long term care policies can be replaced for all of the following reasons, except:

    • A.

      The new policy has a lower premium

    • B.

      The insured's condition has materially improved

    • C.

      The new policy has greater benefits

    • D.

      The new policy has fewer benefits and a higher premium

    Correct Answer
    D. The new policy has fewer benefits and a higher premium
    Explanation
    Long term care policies can be replaced for various reasons, such as if the new policy has a lower premium or greater benefits. Additionally, if the insured's condition has significantly improved, they may choose to replace their policy. However, the given answer states that the new policy has fewer benefits and a higher premium, which is not a valid reason for replacing a long term care policy.

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  • 50. 

    When must insurance records for insurance agents and insurance brokers be made available to the insurance commissioner?

    • A.

      One month after policy issuance

    • B.

      At all times

    • C.

      Within 30 days of a written request by the commissioner

    • D.

      Annually and submitted with the proper paperwork

    Correct Answer
    B. At all times
    Explanation
    Insurance records for insurance agents and insurance brokers must be made available to the insurance commissioner at all times. This means that the records should be accessible and ready for inspection whenever the commissioner requires them, without any specific time limit or condition. This ensures transparency and accountability in the insurance industry, allowing the commissioner to monitor and regulate the activities of agents and brokers effectively.

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Quiz Review Timeline +

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

  • Current Version
  • Oct 06, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Jan 29, 2010
    Quiz Created by
    Pchinna

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