Life & Health - Practice Exam
Life & Health - Practice Exam 5
- 1.
A disability income policy social insurance supplement (SIS) benefit rider:
- A.
Pays benefits only if it turns out the insured is eligible for benefits from social insurance
- B.
Pays a benefit if the insured is injured on the job and qualifies for workers compensation benefits
- C.
Provides a payment only when the insured is totally disabled, but not receiving any social insurance benefit plans
- D.
Provides for a bonus payment that will match social security disability income benefits, if they are paid
Correct Answer
C. Provides a payment only when the insured is totally disabled, but not receiving any social insurance benefit plans -
- 2.
A health maintenance organization (HMO) plan contains costs by promoting
- A.
After-hours care
- B.
Generic care
- C.
Preventative care
- D.
Fee for service care
Correct Answer
C. Preventative care -
- 3.
Renewable term insurance can be best described as :
- A.
A level death benefit with an increase in premium
- B.
A level death benefit with a decrease in premium
- C.
A decreasing death benefit with a level premium
- D.
An increasing death benefit with a level premium
Correct Answer
A. A level death benefit with an increase in premium -
- 4.
The basic feature of a managed care indemnity plan is that the participants
- A.
Select a provider and submit claims to the insurance company
- B.
Select a provider at work and claims processor
- C.
Pre-select a physician and third-party claims administrator
- D.
Pre-select a clinic and submit claims to the insurance company
Correct Answer
A. Select a provider and submit claims to the insurance company -
- 5.
How do rights of an irrevocable beneficiary differ from those of a revocable beneficiary ?
- A.
An irrevocable beneficiary may be changed by the policy owner without the beneficiary's consent
- B.
An irrevocable beneficiary has a vested right that neither the policy owner nor his creditors can impair without the beneficiary's consent
- C.
A revocable beneficiary can become the policy owner at any time by paying the premiums
- D.
An irrevocable beneficiary has the right to name a contingent beneficiary for the policy
Correct Answer
B. An irrevocable beneficiary has a vested right that neither the policy owner nor his creditors can impair without the beneficiary's consent -
- 6.
What recourse does an insurer have if a violation of a material warranty on the part of the insured is discovered
- A.
A hearing by the insurance commissioner to determine the severity of the the misrepresentation and to determine an appropriate course of action
- B.
None, if the policy has been in force for ove 12 months
- C.
Rescission of the policy
- D.
A hearing by a court of law to determine an appropriate course of action an insurer may take
Correct Answer
C. Rescission of the policy -
- 7.
Which of the following describes an insurer who has enough financial resources only to provide for all its liabilities and for all reinsurance of all outstanding risks ?
- A.
Guaranteed
- B.
Insolvent
- C.
Solvent
- D.
Non-participating
Correct Answer
B. Insolvent -
- 8.
All of the following statements about the election of a life insurance policy's settlement options are true, except
- A.
The election is made by the policy owner at the time the application is submitted
- B.
When no settlement option is chosen, the proceeds are automatically paid to the policy owner's state
- C.
The policy owner may change the settlement option after it has been chosen
- D.
The election may be made by the beneficiary if no settlement option is in force at the time of death of the insured.
Correct Answer
B. When no settlement option is chosen, the proceeds are automatically paid to the policy owner's state -
- 9.
What is the purpose of "key person" insurance ?
- A.
To provide health insurance benefits to key employees
- B.
To give a key employee the ability to purchase the business
- C.
To give retirement benefits to key employees
- D.
To cover decreased business earnings due to the death of a key employee
Correct Answer
D. To cover decreased business earnings due to the death of a key employee -
- 10.
What would be the Insurance Commissioner's most likely course of action if an applicant for an insurance license had a previous application for a professional license denied for cause by any licensing authority within five years of the date of the filing ?
- A.
Deny the application probably after a hearing
- B.
As long as it was not insurance related, the application will be granted
- C.
Approve only after a review by a panel of insurance professionals
- D.
Deny the application without a hearing
Correct Answer
D. Deny the application without a hearing -
- 11.
An insured bought a $150,000 non-participating whole life policy many years ago. He is 100 years old today. He has never borrowed from the policy's cash value and has faithfuly made all the payments when due. The policy's cash value is
- A.
$150,000
- B.
$100,000
- C.
$0
- D.
$50,000
Correct Answer
A. $150,000 -
- 12.
An intentional concealment entitles the injured party to which course of action ?
- A.
None, due to the fact that the concealment was unintentional
- B.
$250 fine to be paid to the injured party
- C.
Possible imprisonment to the party who concealed the information
- D.
Rescission of the contract
Correct Answer
D. Rescission of the contract -
- 13.
Loss retention is an effective risk management technique when all of the following conditions exist except
- A.
The probability of loss is unknown
- B.
The losses are highly predictable
- C.
The insured chooses to assume the losses involved
- D.
The worst possible loss is not serious
Correct Answer
A. The probability of loss is unknown -
- 14.
A disability policy, described as "guaranteed renewable" is one where the insurance company
- A.
Surrenders the right to change the premiums
- B.
Reserves the right to change any of its terms
- C.
Reserves the right to change the premiums, but may not change any of its terms
- D.
May not renew the policy if the insured ceases to comply with certain conditions such as continued employment
Correct Answer
C. Reserves the right to change the premiums, but may not change any of its terms -
- 15.
When are parties to a contract required to communicate information solely based on personal judgment for a matter in question
- A.
Only when asked
- B.
Only when the policy terms require it
- C.
Only when relevant
- D.
Never
Correct Answer
D. Never -
- 16.
Which statement is true regarding Medicare Supplement Insurance plans ?
- A.
Insurers may offer only broad coverage plans that contain both core benefits and additional benefits
- B.
Insurers may freely offer whatever supplemental coverages they prefer to market
- C.
Insurers may offer policies that contain only the core benefits
- D.
Insurers may create insurance policies for approval by the CA Department of Insurance
Correct Answer
C. Insurers may offer policies that contain only the core benefits -
- 17.
The guaranteed insurability option provides the ability to:
- A.
Waive premium payments in the event of disability
- B.
Access a portion of the death benefit in the event of serious illness
- C.
Double the amount of the death benefit in the event of accidental death
- D.
Purchase additional insurance regardless of insurability
Correct Answer
D. Purchase additional insurance regardless of insurability -
- 18.
Which type of insurance guarantees the right to renew thepolicy each year, regardless of health but at an increased premium
- A.
Convertible term
- B.
Level term
- C.
Decreasing term
- D.
Renewable term
Correct Answer
D. Renewable term -
- 19.
The passage of worker's compensation legislation meant
- A.
Employees no longer had any legal means of obtaining reimbursement for work injuries
- B.
Employees would have to sue their employers to obtain reimbursement for work injuries
- C.
Employers would be held responsible for the cost of their employee's work injuries regardless of fault
- D.
Employers were no longer responsible for work injuries to employees
Correct Answer
C. Employers would be held responsible for the cost of their employee's work injuries regardless of fault -
- 20.
RW and Associates is an agency which represents BLG Insurance Corporation. RW and Associates may leave the name BLG Insurance Corporation in its advertisements by clearly stating the relationship between the two businesses in any of the following ways, except:
- A.
RW and Associates who represent BLG Insurance Corporation
- B.
RW and Associates underwriting for BLG Insurance Corporation
- C.
RW and Associates placing business through BLG Insurance Corporation
- D.
RW and Associates using the services of BLG Insurance Corporation
Correct Answer
B. RW and Associates underwriting for BLG Insurance Corporation -
- 21.
The probationary period in a group health policy is intended for people
- A.
Who joined the group after the policy effective date
- B.
Without health coverage after a qualifying event who declined to join the group at the time of eligibility
- C.
With a pre-existing condition when they joined the group
Correct Answer
A. Who joined the group after the policy effective date -
- 22.
Which provision will pay a portion of the death benefit prior to the insured's death due to a serious illness
- A.
Waiver of premium
- B.
Accelerated death benefit
- C.
Cost of living
- D.
Disability Income
Correct Answer
B. Accelerated death benefit -
- 23.
An individual with a low income and high insurance needs should buy
- A.
Whole life insurance
- B.
Universal life insurance
- C.
Endowment insurance
- D.
Term insurance
Correct Answer
D. Term insurance -
- 24.
An example of a third party administrator is:
- A.
An agent's supervisor who takes part of his commission
- B.
An employee who handles self-insurance claims
- C.
An employee who is responsible for evaluating for relative quality of competing group health and welfare benefits offered to his employer by insurers
- D.
An outside organization that processes claims for an employers self-funded plans
Correct Answer
D. An outside organization that processes claims for an employers self-funded plans -
- 25.
A form of rest or relief offered to family members who are caring for a person who requires continual care is
- A.
Hospice care
- B.
Hospital care
- C.
Respite care
- D.
Intermediate care
Correct Answer
C. Respite care -
- 26.
All of the following statement about contingent beneficiaries are true, except
- A.
They receive remaining payments to be made under a settlement agreement upon the primary beneficiary's death
- B.
The contingent beneficiary shares death proceeds equally with the primary beneficiary
- C.
They receive the death proceeds if the primary beneficiary is deceased at the time of the insured's death
- D.
More than one contingent beneficiary may be named
Correct Answer
B. The contingent beneficiary shares death proceeds equally with the primary beneficiary -
- 27.
The payor rider on a juvenile life policy provides that if the payor dies or becomes disabled before the insured juvenile reaches the age specified on the policy
- A.
The insurer will make the payments until the insured juvenile reaches the specified age
- B.
The insurer will lend money to keep the policy in force
- C.
The insured's estate will make the premium payments
- D.
The insurer will make all the of the policy payments
Correct Answer
A. The insurer will make the payments until the insured juvenile reaches the specified age -
- 28.
The insured is totally and permanently disabled. The insured's policy continues in force without the payment of a premium because the policy contains a
- A.
Grace period provision
- B.
Guaranteed insurability provision
- C.
Reinstatement provision
- D.
Waiver of premium provision
Correct Answer
D. Waiver of premium provision -
- 29.
All of the following statements about survivorship life insurance are true, except
- A.
The policy face amounts are usually more than $1,000,000
- B.
The policy face amount is paid out only upon the death of the first insured to die
- C.
It offers premiums that are quite low compared to what is charged on separate policies
- D.
It is particularly well suited to meet the needs of estate taxes
Correct Answer
B. The policy face amount is paid out only upon the death of the first insured to die -
- 30.
If an insurer is not able to meet financial obligations when due, the insurer would be considered
- A.
Insolvent
- B.
Unauthorized
- C.
Impaired
- D.
Non-admitted
Correct Answer
A. Insolvent -
- 31.
What does the Insurance Commissioner have the right to do if an agent lacks authority from an insurer named on a binder for coverage
- A.
Fine the insurance company for non-compliance
- B.
Suspend or revoke the license of the agent
- C.
Authorize the agent with a certificate of convenience
- D.
Request a certificate of authority be issued immediately
Correct Answer
B. Suspend or revoke the license of the agent -
- 32.
Which definition of disability is the most difficult for an injured worker to satisfy?
- A.
The own-occupation definition used by the Social Security Administration
- B.
The typical definition of partial disabiity used by disability income policies
- C.
The total disability definition used by the Social Security Administration
- D.
The typical definition of temporary disability used by disability income polices
Correct Answer
C. The total disability definition used by the Social Security Administration -
- 33.
People commonly purchase an annuity to protect against the rist of
- A.
Dying before their home mortgage is paid off
- B.
Becoming uninsurable
- C.
Outliving their financial resources
- D.
Dying too soon
Correct Answer
C. Outliving their financial resources -
- 34.
In the event of an accidental death, the principal sum in a disability policy will be paid
- A.
Over the course of a set period
- B.
On a sliding schedule
- C.
In one lump sum
- D.
As a monthly indemnity
Correct Answer
C. In one lump sum -
- 35.
Which of the following statements about the HICAP program is false ?HICAP
- A.
Stands for Health Insurance Counseling Advocacy Program
- B.
Serves people needing information about Medicare
- C.
Does not sell or endorse any specific types of insurance
- D.
Provides assistance for a fee based upon ability to pay
Correct Answer
D. Provides assistance for a fee based upon ability to pay -
- 36.
Why is having a large number of similar exposure units important to insurers ?
- A.
The greater the number insured, the more premium is collected to offset fixed costs
- B.
The insurer increases its market share with every insured
- C.
The greater the number insured, the greater the amount of premiums collected to help cover losses
- D.
The greater the number insured, the more accurately the insurer can predict losses and set appropriate premiums
Correct Answer
D. The greater the number insured, the more accurately the insurer can predict losses and set appropriate premiums -
- 37.
The insured, aged 65, owns a $100,000 non-participating whole life policy. The policy is paid-up as of today. When would the cash value reach $100,000?
- A.
Today
- B.
Age 85
- C.
Never
- D.
Age 100
Correct Answer
D. Age 100 -
- 38.
A measure for rating an individual's need for LTC benefits is called:
- A.
Case management
- B.
Activities of daily living
- C.
The gatekeeper mechanism
- D.
Co-insurance
Correct Answer
B. Activities of daily living -
- 39.
In order to receive the principal sum benefit for death from a disability policy, the death must occur
- A.
Within a specified number of days after injury
- B.
Any time during a rehabilitation period
- C.
Any time during a total dismemberment period
- D.
Within the policy period from any cause
Correct Answer
A. Within a specified number of days after injury -
- 40.
Which of the following are commonly covered by medical expense policies ?
- A.
Elective cosmetic surgeries
- B.
Pre-existing conditions
- C.
Expenses covered by a workers compensation policy
- D.
Accidental injuries
Correct Answer
D. Accidental injuries -
- 41.
A health insurance deductible is:
- A.
The insured's payment for healthcare that is not considered a covered expense
- B.
The cost of a covered expense minus the office co-payment
- C.
The portion of insurance premium paid for coverage by the insured
- D.
The amount of covered expense that the insured pays before the insurer pays
Correct Answer
D. The amount of covered expense that the insured pays before the insurer pays -
- 42.
According to the CA insurance code, an insured's policy must specify all the of the following, except:
- A.
The risks insured against
- B.
The financial rating of the insurer
- C.
The property or life being insured
- D.
The policy period
Correct Answer
B. The financial rating of the insurer -
- 43.
Which of the following expenses is never covered by a LTC insurance policy ?
- A.
Home health care
- B.
Adult day care
- C.
Hospital acute care unit
- D.
Alzheimer's disease
Correct Answer
C. Hospital acute care unit -
- 44.
Which of the following is a hazard ?
- A.
A large number of similar exposure units
- B.
A peril
- C.
A condition that might increase the likelihoold of a loss occurring
- D.
A speculative risk
Correct Answer
C. A condition that might increase the likelihoold of a loss occurring -
- 45.
A hospital confinement indemnity insurance policy pays
- A.
An indemnity to the insured for all expenses incurrred when the insured is confined to a hospital
- B.
The daily benefit coverage amount stated in the policy for each day the insured is confined in the hospital
- C.
100% of the covered medical expenses less the deductible and co-insurance percentage
- D.
The amount of the actual hospital expenses
Correct Answer
B. The daily benefit coverage amount stated in the policy for each day the insured is confined in the hospital -
- 46.
When a licensed agent submits a renewal applications with applicable fee on or before the expiration date
- A.
The agent will be able to operate if a receipt for payment is returned prior to the license expiration date
- B.
The agent will be able to operate for up to 60 days after the specified expiration date
- C.
The agent will be able to operate if the agent goes in person to the insurance department to receive a temporary extension of the license
- D.
The agent will be able to continue to operate after a 30 day extension to operate without receipt if requested and approved
Correct Answer
B. The agent will be able to operate for up to 60 days after the specified expiration date -
- 47.
A provision stating that health insured's and their insurers will share covered losses in an agreed proportion is called
- A.
The stop-loss provision
- B.
Comprehensive insurance
- C.
Percentage insuring
- D.
Co-insurance
Correct Answer
D. Co-insurance -
- 48.
Common life insurance policy riders include all of the following, except:
- A.
Extended term
- B.
Guaranteed insurability
- C.
Accidental death
- D.
Waiver of premium
Correct Answer
A. Extended term -
- 49.
Term insurance is typically characterized by
- A.
Low premiums and high cash value
- B.
High premiums and no cash value
- C.
High premiums and high cash value
- D.
Low premiums and no cash value
Correct Answer
D. Low premiums and no cash value -
- 50.
A $50,000 whole life policy with a cash value of $10,000 has been in force for 11 years. The policy owner is unable to continue the premium payments. Which of the following describes the reduced paid-up non-forfeiture option
- A.
The policy owner begins to receive $200 monthly payments from the insurer that will continue for life
- B.
The policy is surrendered and the policy owner is paid $10,000 by the insurer
- C.
The cash value is used to purchase a $50,000 term policy that is paid-up for 10 years
- D.
The cash value is used to purchase a $20,000 paid-up policy
Correct Answer
D. The cash value is used to purchase a $20,000 paid-up policy -
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Jun 15, 2015Quiz Edited by
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Jun 15, 2015Quiz Created by
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