Life & Health - Practice Exam 6
Life & Health - Practice Exam 6
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 examinationExplanation
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 or risks that may affect their ability to perform certain tasks or activities. By conducting a physical examination, the insurer can gather more information about the applicant's health status and make an informed decision regarding their insurance application.Rate this question:
-
- 2.
Which risk classification carries the lowest premium ?
- A.
Endowed
- B.
Substandard
- C.
Standard
- D.
Preferred
Correct Answer
D. PreferredExplanation
Preferred risk classification carries the lowest premium because it represents individuals who have the lowest risk of experiencing a claim or loss. These individuals are considered to be in good health, have a low likelihood of engaging in risky behavior, and have a good credit history. Insurance companies offer lower premiums to preferred risk individuals as they are less likely to file claims, resulting in lower costs for the insurance company.Rate this question:
-
- 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 payableExplanation
During the disability elimination period, no benefits are payable. This period refers to the waiting period before an individual can start receiving disability benefits. It is a specified period of time that an individual must wait after becoming disabled before they can start receiving benefits. During this elimination period, the individual is not eligible to receive any benefits, regardless of the type of claim or the size of the claim. Once the elimination period is over, the individual may become eligible for different types of benefits depending on their specific policy.Rate this question:
-
- 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 benefitExplanation
Partial disability refers to a situation where an employee is still able to work part-time despite having a disability, and they receive lost income through their long-term disability benefit. This means that the employee is not completely unable to work, but their disability affects their ability to work full-time and earn their regular income.Rate this question:
-
- 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 policiesExplanation
A life insurance policy dividend is the distribution of excess funds accumulated by the insurer on participating policies. This means that when an insurance company has accumulated more funds than necessary to cover claims and expenses, they distribute the excess to policyholders who have participating policies. This is a benefit for policyholders and is not related to the cash value or interest paid on a permanent insurance policy. It is also not a return on investment for stockholders in the company.Rate this question:
-
- 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 transactionExplanation
The correct answer suggests that if a person violates Section 770 of the CA Insurance Code regarding loans on the security of real or personal property, the insurance Commissioner would most likely issue a cease and desist order. This implies that the Commissioner would order the violator to stop engaging in such transactions. The other options either do not directly address the violation or impose different consequences that are not specifically related to the violation described.Rate this question:
-
- 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 cashExplanation
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 one payment, rather than receiving it in installments or other forms of settlement.Rate this question:
-
- 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. DemutualizationExplanation
Demutualization refers to the process in which a mutual insurer, owned by its policyholders, converts into a stock company owned by shareholders. This transition allows the company to issue stock and raise capital from the public. Through demutualization, the insurer can access additional funding sources, increase its competitiveness, and potentially expand its operations. This process typically involves a reorganization of the company's structure and governance to align with the requirements of a stock company.Rate this question:
-
- 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 indemnityExplanation
A supplemental insurance policy that pays a set amount for each day that an individual is hospitalized is known as a hospital confinement indemnity policy. This type of insurance provides coverage specifically for hospital stays, offering financial support to cover expenses incurred during the hospitalization period. It is designed to complement primary health insurance plans and can help individuals manage the costs associated with hospital stays, such as room charges, medical procedures, and other related expenses.Rate this question:
-
- 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 exposureExplanation
A loss exposure refers to any situation that presents the possibility of a loss. It can include events or circumstances that may result in financial or non-financial harm. By identifying and understanding loss exposures, individuals or organizations can take appropriate measures to manage and mitigate the potential risks associated with these situations.Rate this question:
-
- 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. DeductibleExplanation
A commonly used cost containment measure for emergency hospital care under a major medical expense plan is a deductible. A deductible is the amount of money that the insured individual must pay out of pocket before their insurance coverage begins. By having a deductible, it encourages individuals to be more cautious with their healthcare expenses and helps to control costs for the insurance provider. It also ensures that individuals are responsible for a portion of their healthcare expenses, reducing the likelihood of unnecessary and excessive medical visits.Rate this question:
-
- 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 optionExplanation
The interest option 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 full death benefit amount. This option may be chosen by the policyholder to ensure that the principal amount remains intact while providing a regular income to the beneficiary.Rate this question:
-
- 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. FiduciaryExplanation
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 someone 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 insured's premiums, which involves managing and safeguarding the insured's funds. The agent is expected to exercise loyalty, good faith, and honesty in their dealings with the insured, ensuring that the premiums are properly accounted for and used for the intended purposes.Rate this question:
-
- 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 membersExplanation
A non-contributory group health plan must cover all eligible members. This means that every eligible member of the group must be provided with health insurance coverage without any contribution or cost-sharing required from the members.Rate this question:
-
- 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 addressExplanation
The correct answer is that the license number must be printed in the same size print as the licensee's phone number, fax number, or address. This means that the license number should be given equal importance and visibility as the contact information of the licensee.Rate this question:
-
- 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 monthsExplanation
Social Security disability benefits are paid to individuals who are expected to be disabled for at least 12 months. This means that the disability must be long-term and have a significant impact on the person's ability to work and earn a living. The 12-month requirement ensures that the benefits are provided to those who have a sustained and severe disability that prevents them from engaging in substantial gainful activity for an extended period of time.Rate this question:
-
- 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 insuranceExplanation
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 the policyholder can use the cash value of their policy to buy additional term insurance coverage without having to pay any additional premiums. This option allows the policyholder to maintain the same level of coverage even if they can no longer afford to pay the premiums.Rate this question:
-
- 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 benefitsExplanation
Coordination of benefits is the correct answer because it refers to the provision in a group medical plan that determines how benefits are coordinated when a claimant has coverage under multiple plans. This provision helps avoid overpayment or duplication of benefits by ensuring that the total benefits received do not exceed the actual expenses incurred.Rate this question:
-
- 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
B. The insured must utilize their primary pHysicians who authorize all care for the insuredExplanation
The correct answer is "The insured must utilize their primary physicians who authorize all care for the insured" because it is not true. In a gatekeeper system, specialists can choose to be gatekeepers for their patients, referrals to specialists must be authorized by the gatekeeper, and gatekeepers are a common feature of HMO plans. However, the insured is not required to utilize their primary physicians for all care, as they can seek care directly from specialists without a referral from the gatekeeper.Rate this question:
-
- 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 AExplanation
Medicare Part A is available at no cost to persons at age 65. This coverage provides hospital insurance and covers inpatient hospital stays, skilled nursing facility care, hospice care, and some home health care services. It is funded through payroll taxes paid by employees and employers during their working years. Medicare Part B, on the other hand, requires a monthly premium and covers outpatient medical services, doctor visits, and preventive care. Social Security retirement benefits are separate from Medicare and are based on a person's earnings history. Long term care insurance is a separate insurance policy that covers the costs of long-term care services.Rate this question:
-
- 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 BExplanation
Medicare Part B is the correct answer because it is an optional program that is specifically designed for individuals who are 65 years of age or older. Medicare Part B provides medical insurance coverage for services such as doctor visits, outpatient care, and preventive services. It is important to note that while Medicare Part A is also available to individuals age 65 or older, it is not optional as it provides coverage for hospital care. Therefore, Medicare Part B is the only optional program in the given options that is exclusively for individuals age 65 or older.Rate this question:
-
- 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 coverageExplanation
Traditional comprehensive major medical plans typically include deductibles, co-insurance, and out-of-pocket maximums. These features require the insured individual to pay a certain amount before the insurance coverage kicks in, share a percentage of the cost with the insurance company, and have a limit on the total amount they have to pay out of pocket, respectively. However, first-dollar coverage is not included in traditional comprehensive major medical plans. First-dollar coverage means that the insurance company pays for all eligible expenses from the first dollar without the insured individual having to pay any deductibles or co-insurance.Rate this question:
-
- 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 beneficiariesExplanation
According to the Employee Retirement Income Security Act of 1974 (ERISA) fiduciary standards, benefit plans are operated for the benefit of plan participants and beneficiaries. This means that the primary focus of the plan is to ensure that the participants and beneficiaries receive the intended benefits and are protected from any potential conflicts of interest. The plan sponsors and employees may also benefit from the plan, but their interests are secondary to those of the plan participants and beneficiaries.Rate this question:
-
- 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 remaining 20% will be the responsibility of the individual.Rate this question:
-
- 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 basisExplanation
Part B of Medicare 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. Part B is an important component of Medicare as it helps individuals access necessary diagnostic tests and x-rays without the need for hospitalization. This coverage is especially beneficial for individuals who require regular diagnostic tests or monitoring for their medical conditions.Rate this question:
-
- 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 optionExplanation
The extended term option is not a life insurance settlement option. Life insurance settlement options are different ways in which the policyholder or beneficiary can receive the death benefit of a life insurance policy. The interest option allows the beneficiary to leave the death benefit with the insurance company and earn interest on it. The fixed amount option allows the beneficiary to receive a specific amount of money in installments. The fixed period option allows the beneficiary to receive the death benefit over a specific period of time. However, the extended term option is not a valid settlement option.Rate this question:
-
- 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 gatekeepersExplanation
A preferred provider organization (PPO) is a type of health insurance plan that allows individuals to choose their healthcare providers from a network of preferred providers. The features of a PPO include providers being paid on a fee-for-service basis, employees having a choice of practitioners, and dependence upon referrals to see a specialist. However, primary care physicians acting as gatekeepers is not a feature of a PPO. Gatekeepers are typically associated with health maintenance organizations (HMOs), where primary care physicians serve as the central point of contact for all healthcare needs and referrals to specialists are required.Rate this question:
-
- 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 licenseExplanation
Life agents are already authorized to sell 24-hour care coverage with a life license. Therefore, they do not need to complete any additional courses or applications to be able to sell this coverage.Rate this question:
-
- 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 policyExplanation
The correct answer is "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 insurer to issue the policy. The application is important for other reasons, such as ensuring that the statements made are true, providing essential information about the applicant, and becoming a part of the policy when a copy is attached.Rate this question:
-
- 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. RateExplanation
The price of insurance for each exposure unit is called the rate. This refers to the cost that an individual or entity must pay for a specific amount of insurance coverage. It is determined based on various factors such as the type of insurance, the level of risk associated with the insured party, and the coverage limits. The rate is typically calculated by insurance companies to ensure that they are charging an appropriate amount for the level of risk they are assuming.Rate this question:
-
- 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 severityExplanation
By adopting a self-funded health plan, an employer will have greater flexibility in all areas of the planning, including group size, benefits provided, and cost. However, claims severity is not something that can be controlled or influenced by the employer's choice of health plan. Claims severity refers to the seriousness and cost of medical claims made by employees. It is determined by the employees' health conditions and the treatments they require, which are factors beyond the employer's control. Therefore, claims severity is the exception to the employer's greater flexibility when adopting a self-funded health plan.Rate this question:
-
- 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 formExplanation
To authorize the release of an attending physician's report, the applicant must sign a consent form. This is because a consent form is a legal document that gives permission for the release of medical information. By signing the consent form, the applicant is acknowledging their understanding of the release and granting permission for the physician to share their medical report with the necessary parties. This ensures that the release of the report is done in a legal and ethical manner, protecting the privacy and confidentiality of the applicant's medical information.Rate this question:
-
- 33.
Yearly probabilities of death are shown in
- A.
Mortality tables
- B.
Morbidity tables
- C.
Policy illustrations
- D.
Policy summaries
Correct Answer
A. Mortality tablesExplanation
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 help determine the likelihood of an individual's death based on their age and other factors, allowing insurers to accurately price their policies. Mortality tables are a crucial tool in the insurance industry for assessing mortality risk and making informed decisions about policy pricing and coverage.Rate this question:
-
- 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 processExplanation
Members of the Medical Information Bureau are required to report medical impairments found during the underwriting process. This means that if any medical conditions or impairments are discovered while assessing an individual's eligibility for insurance coverage, the member physicians are obligated to report this information to the Medical Information Bureau. This helps the insurance industry to have a comprehensive understanding of an individual's medical history and assess the risk associated with providing insurance coverage to them.Rate this question:
-
- 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 issuanceExplanation
A representation must be made either at the time of or before policy issuance in an insurance contract. This means that the insured individual must provide accurate and truthful information about themselves or the insured property either when applying for the policy or during the underwriting process. It is important for the insurance company to have accurate information in order to assess the risk and determine the appropriate premium for the policy.Rate this question:
-
- 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.Explanation
Ernest's whole life policy will have a larger death benefit if he dies during the first 5 years because whole life policies typically have a higher initial death benefit compared to term policies. Frank has the option of using his cash value to purchase a reduced amount of paid-up whole life insurance, as cash value accumulates over time in whole life policies. Ernest's whole life policy will develop a larger cash value due to the investment component of whole life policies.Rate this question:
-
- 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 authorizationExplanation
When requesting an attending physician's report, it is necessary to include a signed authorization. This authorization grants permission for the attending physician to release the required medical information to the requesting party. Without a signed authorization, the attending physician may not be legally allowed to disclose the medical information, making the report incomplete or unavailable. The other options, such as the policy illustration, signed application, or underwriting criteria, are not directly related to the need for a signed authorization in this context.Rate this question:
-
- 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-insuranceExplanation
Co-insurance is a provision in health insurance that requires both the insured individual and the insurance company to share the cost of covered losses in an agreed proportion. This means that the insured person will have to pay a certain percentage of the covered expenses out of pocket, while the insurance company will cover the remaining percentage. 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.Rate this question:
-
- 39.
Which life insurance classification carries the highest premium ?
- A.
Substandard
- B.
Standard
- C.
Endowed
- D.
Preferred
Correct Answer
A. SubstandardExplanation
Substandard life insurance classification carries the highest premium because it is offered to individuals who have a higher risk of mortality due to health issues, risky occupations, or unhealthy habits. Insurers charge higher premiums to compensate for the increased likelihood of paying out a claim. This classification is typically assigned to individuals with pre-existing medical conditions, a history of smoking or drug use, or those engaged in dangerous professions.Rate this question:
-
- 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 premiumExplanation
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 employee's contribution helps to offset the cost of the insurance, making it more affordable for both parties. By having employees contribute to the premium, it also encourages them to value and utilize the insurance benefits provided.Rate this question:
-
- 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 careExplanation
The correct answer is Institutional (nursing facilities) and home care. According to the CA Insurance Code, comprehensive long term care insurance policies or certificates must provide benefits for both institutional care in nursing facilities and home care. This means that the policy should cover expenses related to receiving care in a nursing facility as well as receiving care at home.Rate this question:
-
- 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 spouseExplanation
During a blackout period, certain Social Security benefits may be temporarily suspended. In this scenario, the surviving spouse is the one whose benefits are affected. This means that they will not receive their regular Social Security benefits during this period. It is important to note that the blackout period typically occurs when the surviving spouse is also entitled to receive benefits from another source, such as a pension.Rate this question:
-
- 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 paymentsExplanation
The policy dividends cannot be used to fund the addition of monthly income payments. Policy dividends are a return of excess premiums paid by the policyholder and can be used for various purposes such as purchasing paid-up additions, purchasing a one-year term addition, or reducing the current premium. However, using them to fund monthly income payments is not an option.Rate this question:
-
- 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 companiesExplanation
The Medical Information Bureau (MIB) is an organization that collects and maintains medical information on individuals for the purpose of assisting life insurance companies in underwriting policies. The members of the MIB are therefore life insurance companies, as they are the ones who utilize the information provided by the bureau to assess the risk associated with insuring individuals. Physicians, hospitals, and health insurance companies are not members of the MIB as they do not directly contribute to or utilize the bureau's database.Rate this question:
-
- 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
Under Medicare Part B, after the deductible is met, a patient is responsible for paying 20% of the covered expenses. This means that Medicare will cover 80% of the costs, while the patient will be responsible for the remaining 20%.Rate this question:
-
- 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. MarketingExplanation
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, promotion, and sales, which are all aimed at attracting and retaining customers. It involves understanding customer needs, creating awareness about insurance products, and persuading potential customers to purchase insurance policies. By effectively marketing their products and services, insurance companies can reach their target audience and increase their customer base.Rate this question:
-
- 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 discriminationExplanation
Unfair discrimination refers to the practice of an insurer using higher rates solely based on an individual's religion, race, or ethnic group. This practice is considered unfair and discriminatory as it treats individuals differently based on factors that are unrelated to their risk profile or ability to pay. It goes against principles of equality and fairness, and can contribute to social injustices and inequalities within society.Rate this question:
-
- 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 scheduleExplanation
A policy owner has the right to change the beneficiary, the payment mode, and the dividend option of their policy. However, they do not have the right to change the dividend schedule. The dividend schedule is predetermined by the insurance company and outlines when and how dividends will be paid to the policy owner. This schedule is typically based on the insurance company's financial performance and cannot be altered by the policy owner.Rate this question:
-
- 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 premiumExplanation
Long term care policies can be replaced for various reasons, such as when the insured's condition has improved or when a new policy offers greater benefits. Additionally, if a new policy has a lower premium, it might be more financially advantageous to switch. However, the given answer states that a long term care policy cannot be replaced if the new policy has fewer benefits and a higher premium. This means that even if the new policy is less beneficial and more expensive, it cannot be replaced according to the question.Rate this question:
-
- 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 timesExplanation
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. This ensures transparency and accountability in the insurance industry and allows the commissioner to effectively regulate and oversee the activities of insurance agents and brokers.Rate this question:
-
Quiz Review Timeline +
Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.
-
Current Version
-
Mar 20, 2023Quiz Edited by
ProProfs Editorial Team -
Jul 10, 2015Quiz Created by
Bogdach
Back to top