Life & Health - Practice Exam 6

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  • 1/70 Questions

    During the disability elimination period

    • Occupational claims are payable
    • Small claims are payable
    • No benefits are payable
    • Residual benefits are payable
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Insurance Quizzes & Trivia
About This Quiz

Life & Health - Practice Exam 6 assesses knowledge on key insurance topics, including applicant requirements, risk classifications, disability terms, and insurance policies. It is crucial for professionals preparing for licensing or maintaining compliance in the insurance industry.

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  • 2. 

    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?

    • Legal representative

    • Fiduciary

    • Managing general agent

    • Natural person

    Correct Answer
    A. 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 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.

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  • 3. 

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

    • Categorizing

    • Unfair discrimination

    • Social injustice

    • Redlining

    Correct Answer
    A. Unfair discrimination
    Explanation
    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.

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  • 4. 

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

    • Long term care supplement

    • Temporary major medical

    • Hospital confinement indemnity

    • Hospital surgical expense

    Correct Answer
    A. 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 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.

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  • 5. 

    Which type of insurance policy provides a death benefit that matches the projected outstanding debt on an individual's home?

    • Family protection

    • Level term

    • Mortgage protection

    • Joint life

    Correct Answer
    A. Mortgage protection
    Explanation
    Mortgage protection insurance is a type of insurance policy that provides a death benefit that matches the projected outstanding debt on an individual's home. This means that if the policyholder passes away, the insurance company will pay off the remaining mortgage balance, ensuring that the family or beneficiaries are not burdened with the debt. It is specifically designed to protect the family's financial security by ensuring that the mortgage is paid off in the event of the policyholder's death.

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  • 6. 

    All of the following are used in underwriting for health insurance, except:

    • Income

    • Sex

    • Age

    • Intelligence

    Correct Answer
    A. Intelligence
    Explanation
    In underwriting for health insurance, various factors are considered to assess the risk of insuring an individual. Income, sex, and age are commonly used factors as they can provide insight into a person's health and potential risk factors. However, intelligence is not typically used in underwriting as it is not directly related to an individual's health or risk of needing medical care. Therefore, intelligence is not considered in the underwriting process for health insurance.

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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?

    • Extended term insurance

    • Lump-sum settlement in cash

    • Life income

    • Paid-up policy

    Correct Answer
    A. 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 one payment, rather than receiving it in installments or other forms of settlement.

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  • 8. 

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

    • Deductibles

    • Co-insurance

    • Out-of-pocket maximums

    • First-dollar coverage

    Correct Answer
    A. First-dollar coverage
    Explanation
    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.

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  • 9. 

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

    • 20%

    • 50%

    • 80%

    • 100%

    Correct Answer
    A. 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.

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  • 10. 

    After a life insurance policy has been in effect for two years, what prevents it from being rescinded by the insurer ?

    • The incontestability clause

    • The reinstatement clause

    • The grace period provision

    • The right to return provision

    Correct Answer
    A. The incontestability clause
    Explanation
    The incontestability clause prevents a life insurance policy from being rescinded by the insurer after it has been in effect for two years. This clause states that the insurer cannot challenge the validity of the policy or deny a claim based on misrepresentation or concealment by the policyholder after the two-year period has passed. This provides security and assurance to the policyholder that their policy will not be canceled or revoked without valid reasons after the specified time frame.

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  • 11. 

    A measure for rating an individuals need for long term care benefits is called:

    • A gatekeeper mechanism

    • Activities of daily living

    • Case management

    • Co-insurance

    Correct Answer
    A. Activities of daily living
    Explanation
    Activities of daily living (ADLs) refer to the basic tasks that individuals perform on a daily basis, such as eating, bathing, dressing, toileting, transferring, and continence. The ability to perform these activities is often used as a measure to determine an individual's need for long-term care benefits. ADLs are used by healthcare professionals and insurance providers to assess an individual's functional abilities and determine the level of assistance or care required. The higher the level of dependence on others for ADLs, the greater the need for long-term care benefits.

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  • 12. 

    Which risk classification carries the lowest premium ?

    • Endowed

    • Substandard

    • Standard

    • Preferred

    Correct Answer
    A. Preferred
    Explanation
    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.

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  • 13. 

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

    • Reorganization

    • Stock split

    • Stock buyout

    • Demutualization

    Correct Answer
    A. Demutualization
    Explanation
    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.

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  • 14. 

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

    • Premium tax

    • Deductible

    • In-patient fee

    • Pre-admission test

    Correct Answer
    A. Deductible
    Explanation
    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.

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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?

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

    • Larger print than any other printed information on the material

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

    • Small print a the bottom of the material

    Correct Answer
    A. The same size print as the licensee's phone number, fax number or address
    Explanation
    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.

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  • 16. 

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

    • Integration

    • Co-insurance

    • Coordination of benefits

    • Maximum benefits

    Correct Answer
    A. Coordination of benefits
    Explanation
    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.

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  • 17. 

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

    • Sign a consent form

    • Send a letter to the physician

    • Furnish the name of the physician

    • 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 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.

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  • 18. 

    To meet the chronically ill trigger of a long term care policy, an individual must be unable to perform a minimum of :

    • 1 activity of daily living

    • 2 activities of daily living

    • 3 activities of daily living

    • 4 activities of daily living

    Correct Answer
    A. 2 activities of daily living
    Explanation
    To meet the chronically ill trigger of a long term care policy, an individual must be unable to perform a minimum of two activities of daily living. This means that the person must have limitations in at least two basic self-care tasks such as bathing, dressing, eating, toileting, transferring, or continence. This requirement ensures that the individual requires assistance and care on a regular basis due to their chronic illness or condition.

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  • 19. 

    The initial requirements for a licensed agent to sell long term care insurance includes training in all of the following area, except:

    • Financial planning

    • Available long term care services and facilities

    • California regulations

    • Alternatives to the purchase of long term care insurance

    Correct Answer
    A. Financial planning
    Explanation
    The initial requirements for a licensed agent to sell long term care insurance include training in all of the following areas except financial planning. This means that agents are required to have knowledge and training in areas such as available long term care services and facilities, California regulations, and alternatives to the purchase of long term care insurance. However, they do not need specific training in financial planning.

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  • 20. 

    Yearly probabilities of death are shown in

    • Mortality tables

    • Morbidity tables

    • Policy illustrations

    • 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 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.

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  • 21. 

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

    • Institutional (nursing facilities) and home care

    • Institutional care (nursing facilities) only

    • Disability income

    • 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, 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.

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  • 22. 

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

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

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

    • The application contains essential information about the applicant

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

    Correct Answer
    A. The beneficiary must sign the application before the insurer will issue the policy
    Explanation
    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.

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  • 23. 

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

    • 20%

    • 50%

    • 80%

    • 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%.

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  • 24. 

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

    • Comprehensive insurance

    • Stop-loss provision

    • Co-insurance

    • Percentage sharing

    Correct Answer
    A. Co-insurance
    Explanation
    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.

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  • 25. 

    A group insurance plan is contributory when the:

    • 3rd party administrator collects part of the premium

    • Employer pays all of the premium

    • Employee pays part of the premium

    • Service provider collects part of the premium

    Correct Answer
    A. 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 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.

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  • 26. 

    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 ?

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

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

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

    • Issue a fine or $205,000 per violation

    Correct Answer
    A. Issue a cease and desist order for a violation of more than one transaction
    Explanation
    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.

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  • 27. 

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

    • Medicare Part A

    • Medicare Part B

    • Social Security retirement benefits

    • Long term care insurance

    Correct Answer
    A. Medicare Part A
    Explanation
    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.

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  • 28. 

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

    • One month after policy issuance

    • At all times

    • Within 30 days of a written request by the commissioner

    • Annually and submitted with the proper paperwork

    Correct Answer
    A. 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. 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.

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  • 29. 

    Members of the Medical information Bureau are required to report:

    • The names of all patients treated by member physicians

    • The cause of death when death benefits are paid

    • Medical impairments found during the underwriting process

    • Amounts of insurance applied for by all applicants

    Correct Answer
    A. 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 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.

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  • 30. 

    Whose benefits are affected by the blackout period ?

    • The surviving children

    • The surviving spouse

    • The disabled worker

    • The fully insured worker

    Correct Answer
    A. The surviving spouse
    Explanation
    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.

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  • 31. 

    Under a disability income insurance policy with an "own occupation" clause, an employee who can no longer perform the tasks of the job held at the time of injury is considered:

    • Gainfully disabled

    • Totally disabled

    • Presumptively disabled

    • Medically disabled

    Correct Answer
    A. Totally disabled
    Explanation
    Under a disability income insurance policy with an "own occupation" clause, an employee who can no longer perform the tasks of the job held at the time of injury is considered "totally disabled." This means that the individual is unable to engage in any type of work that is consistent with their education, training, or experience. The "own occupation" clause ensures that the policyholder is protected if they are unable to perform the specific duties of their own occupation, even if they may still be able to work in a different capacity or field.

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  • 32. 

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

    • 3 months

    • 6 months

    • 12 months

    • 24 months

    Correct Answer
    A. 12 months
    Explanation
    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.

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  • 33. 

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

    • Rate making

    • Underwriting

    • Claims handling

    • Marketing

    Correct Answer
    A. 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, 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.

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  • 34. 

    If an insurer pays an insured $25,000 in lost wages, $45,000 for physicians visits and hospital costs, and $15,000 for physical therapy treatments, and later discovers that the claim was fraudulent, the insured may be fined as much as:

    • $25,000

    • $60,000

    • $85,000

    • $170,000

    Correct Answer
    A. $170,000
    Explanation
    If an insurer pays an insured $25,000 in lost wages, $45,000 for physicians visits and hospital costs, and $15,000 for physical therapy treatments, and later discovers that the claim was fraudulent, the insured may be fined as much as $170,000. This is because the insured received a total of $85,000 in fraudulent payments ($25,000 + $45,000 + $15,000), and the fine for fraudulent claims is typically double the amount received. Therefore, the insured may be fined $170,000 ($85,000 x 2).

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  • 35. 

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

    • Physical examination

    • Attending physician's statement

    • Investigative consumer report

    • 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 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.

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  • 36. 

    Which statement best describes a life insurance policy dividend?

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

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

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

    • It is a stockholders return on his investment in the company

    Correct Answer
    A. 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 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.

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  • 37. 

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

    • The beneficiary

    • The payment mode

    • The dividend schedule

    • The dividend option

    Correct Answer
    A. The dividend schedule
    Explanation
    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.

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  • 38. 

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

    • Long term care insurance

    • Medicare Part A

    • Social Security survivor benefits

    • Medicare Part B

    Correct Answer
    A. Medicare Part B
    Explanation
    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.

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  • 39. 

    Which life insurance classification carries the highest premium ?

    • Substandard

    • Standard

    • Endowed

    • Preferred

    Correct Answer
    A. Substandard
    Explanation
    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.

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  • 40. 

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

    • The new policy has a lower premium

    • The insured's condition has materially improved

    • The new policy has greater benefits

    • The new policy has fewer benefits and a higher premium

    Correct Answer
    A. The new policy has fewer benefits and a higher premium
    Explanation
    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.

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  • 41. 

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

    • Benefits are based upon the level of the worker's earnings up to the time of disability

    • Benefits will continue only as long as the recipient cannot work at all

    • Benefits are designed to replace the entire amount of the worker's earnings

    • Worker's must be totally and permanently disabled for at least 5 months to be eligible for benefits

    Correct Answer
    A. Benefits are designed to replace the entire amount of the worker's earnings
    Explanation
    Social security disability benefits are not designed to replace the entire amount of the worker's earnings. Instead, the benefits are based on the level of the worker's earnings up to the time of disability.

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  • 42. 

    Health maintenance organizations (HMOs) are required to provide for all of the following services, except:

    • Prescription drugs

    • Emergency services

    • Preventive services

    • Physicians services

    Correct Answer
    A. Prescription drugs
    Explanation
    HMOs are required to provide prescription drugs as part of their services. This means that individuals who are part of an HMO can receive medications prescribed by their doctors. HMOs are also required to provide emergency services, preventive services, and physicians services. These services ensure that individuals have access to immediate medical attention in emergencies, receive preventive care to maintain their health, and can consult with physicians for diagnosis and treatment. Therefore, the correct answer is prescription drugs, as HMOs are obligated to cover this service.

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  • 43. 

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

    • Plan sponsors and beneficiaries

    • Plan participants and employees

    • Plan sponsors and employees

    • Plan participants and beneficiaries

    Correct Answer
    A. Plan participants and beneficiaries
    Explanation
    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.

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  • 44. 

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

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

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

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

    • Complete the proper application and pay the fee

    Correct Answer
    A. 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. Therefore, they do not need to complete any additional courses or applications to be able to sell this coverage.

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  • 45. 

    An agent must submit all of the following to the insurer, except:

    • A copy of all printed communications used for the presentation

    • A copy of the signed replacement notice, if replacement is involved

    • A statement signed by the applicant as to whether replacement of existing life insurance is involved in the transaction

    • A signed statement as to whether or not the agent knows a replacement is involved in the transaction

    Correct Answer
    A. A copy of all printed communications used for the presentation
    Explanation
    The agent must submit all of the listed items to the insurer except for a copy of all printed communications used for the presentation. This means that the agent is required to provide the insurer with a copy of the signed replacement notice, if replacement is involved; a statement signed by the applicant as to whether replacement of existing life insurance is involved in the transaction; and a signed statement as to whether or not the agent knows a replacement is involved in the transaction. However, they do not need to submit copies of all printed communications used for the presentation.

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  • 46. 

    Jean's healthcare provider is a "service provider".  This mans:

    • Her payment for services goes directly to the provider

    • She will get better service than a "fee for service" provider

    • Her payment for services are always paid to the insured

    • All the above above are true statements

    Correct Answer
    A. Her payment for services goes directly to the provider
    Explanation
    Since Jean's healthcare provider is a "service provider," it means that her payment for services goes directly to the provider. This implies that the payment does not go through any intermediaries or third parties, and instead, it is directly received by the healthcare provider. Therefore, the correct answer is that her payment for services goes directly to the provider.

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  • 47. 

    Which of the following statements defines partial disability ?

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

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

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

    • 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
    Explanation
    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.

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  • 48. 

    Which of the following may be offered by insurers providing Medicare supplement insurance?

    • Broad plans that exclude the core benefits

    • The core benefit plan without any additional benefits

    • Plans that duplicate benefits covered by Medicare

    • Plans without a right to return premium

    Correct Answer
    A. The core benefit plan without any additional benefits
    Explanation
    Insurers providing Medicare supplement insurance may offer the core benefit plan without any additional benefits. This means that the insurance coverage will only include the basic benefits provided by Medicare and will not include any additional coverage or benefits.

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  • 49. 

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

    • A covered loss

    • A loss exposure

    • Risk potential

    • Consideration

    Correct Answer
    A. A loss exposure
    Explanation
    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.

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Quiz Review Timeline (Updated): Mar 20, 2023 +

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

  • Current Version
  • Mar 20, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Jul 10, 2015
    Quiz Created by
    Bogdach

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