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
2. A health maintenance organization (HMO) plan contains costs by promotina
a. After-hours care
b. Generic care
c. Preventative care
d. Fee for service 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
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
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
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 misrepresentation,
and to determine an appropriate course of action
b. None, if the policy has been in force for over 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
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
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
estate
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.
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
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
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 faithfully made all
payments when due. The policy's cash value is
a. $150,000
b. $100,000
c. $0
d. $50,000
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
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
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
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
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
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
18. Which type of insurance guarantees the right to renew the policy each year, regardless of
health, but at an increased premium?
a. Convertible term
b. Level term
c. Decreasing term
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
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
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
c. Who declined to join the group at the time of eligibility
d. With a pre-existing condition when they joined the group
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
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
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
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
26. All of the following statements 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
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 of the policy payments
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
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
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
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
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 disability 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 policies
33. People commonly purchase an annuity to protect against the risk of
a. Dying before their home mortgage is paid off
b. Becoming uninsurable
c. Outliving their financial resources
d. Dying too soon
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
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
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
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
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
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
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
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
42. According to the CA Insurance Code, an insured's policy must specify all 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
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
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 likelihood of a loss occurring
d. A speculative risk
45. A hospital confinement indemnity insurance policy pays
a. An indemnity to the insured for all expenses incurred 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
46. When a licensed agent submits a renewal application 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
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
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
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
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
51. What would we call a representation which fails to correspond with its stipulations or
assertion??
a. Fatal b. Fraud
c. Frivolous
d. False
52. In the state of California
a. Twisting is an approved practice
b. Providing free insurance coverage in connection with the sale of services as an inducement for
completing the transaction is not legal
c. Life and health ratings may not be related to the age of the insured
d. A life solicitor's license has the same licensing requirements as a life agent's license
53. The adjustments that an insurer makes in a cash value account in a universal life policy each
time a payment is made includes all of the following, except
a. Subtract from mortality and general expense charges
b. Add the current interest
c. Subtract the policy surrender charges
d. Add the current premium paid
54. The Employee Retirement Income Security Act of 1974 (ERISA) mandates requiring plan
sponsor to provide participants with
a. Plan descriptions and benefit statements
b. Reports of tax qualification fulfillment
c. Trust and solvency reports
d. Annual financial statements
55. Which of the following requires a reporting company to respond to a consumer's complaint
that his file contains inaccurate information about them
a. Unfair Practices Act
b. Fair Credit Reporting Act
c. COBRA
d. Medical Information Act
56. Under an individual health guaranteed renewal contract, the insurer has the right to
a. Discontinue coverage on the basis of employment
b. Cancel the policy for health reasons
c. Make unilateral benefit changes
d. Change premiums for the same class insured
57. All of the following statements about social security disability benefits are true, except
a. Benefits are based on the level of a worker's earnings up to the time of the disability
b. Benefits will continue only while the worker cannot work at all
c. Benefits are designed to replace the entire amount of a worker's earnings
d. Workers must be totally and permanently disabled for at least five months to be eligible for
benefits
58. Under COBRA, a qualifying event ensures that an employee who loses coverage can
a. Transfer coverage to another group
b. Convert to an individual policy
c. Elect to continue coverage
d. Request a waiver of premium
59. Under social security, the definition of disability is the inability to engage in
a. An approved occupation
b. An activity with a given level of compensation
c. Any substantial gainful activity
d. The person's chosen career
60. Which of the following statements about LTC is correct:
a. In 1990, the average annual cost for a nursing care home was approximately $10,000 per year
b. The need for LTC coverage can arise only after age 50
c. Medi-Cal is one of the most commonly sold LTC policies. It is designed to protect the assets of
middle-class Californians
d. The very poor and the very rich probably do not need LTC coverage
61. Which of the following is a true statement regarding the social security (OASDHI) program?
a. The program provides only a minimum floor of income. Individuals are expected to
supplement this with their own personal programs.
b. The actuarial value of each person's contributions are closely related to the actuarial value of
each person's benefits
c. With only a few exceptions, this is a voluntary program
d. The program is fully funded
62. The insured's policy has a deductible that is applied between the exhaustion of basic plan
limits and the commencement of excess coverage. This is called a:
a. Family deductible
b. Per cause deductible
c. Corridor deductible
d. Stop-loss limit
63. What makes up the entire contract in a life insurance policy?
a. The policy, and when attached, the application
b. The policy, and any sales literature presented by the agent of the policy holder
c. The policy, the application, and any verbal understandings
d. The policy by itself, but never the application
64. Each of the following terms is an important characteristic of a major medical policy, except
a. Deductible
b. Co-insurance
c. Maximum amounts
d. Capitation
65. In California, the minimum participation requirement for a contributory large group health
insurance plan is
a. 50% of eligible employees
b. 25% of eligible employees
c. 75% of eligible employees
d. 40% of eligible employees
66. Which of the following is a correct statement about life insurance policy types?
a. Group life insurance is offered only to employees who provide evidence of insurability
b. The initial premium for term insurance is lower than the initial premium for whole life
insurance
c. Limited payment whole life policies stay in effect only for as long as the premium is paid
d. Universal life policies have a structured premium payment schedule that must be followed
during the entire contract period
67. During the disability elimination period
a. Residual benefits are payable
c. No benefits are payable
b. Occupational claims are payable
d. All claims are payable
68. A provision stating that the insured and the insurer will share covered losses in an agreed
proportion is called
a. Percentage sharing
b. Co-insurance
c. Stop-loss provision
d. Comprehensive insurance
69. While an insurer is paying the premium for a life insurance policy under the waiver of
premium rider
a. The insurer is named as the primary beneficiary
b. The cash value does not increase
c. The dividend payments cease
d. The policy remains in full force in every respect
70. Medicare Part A provides coverage for all of the following, except
a. Home health care
b. Hospice
c. Hospitalization
d. Physicians services
71. According to the CA Insurance Code, all insurers must maintain a department to investigate:
a. Possible abuses of rating laws
b. Possible arson
c. Possible fraudulent claims from insureds
d. Possible abuses of fiduciary responsibilities
72. Which of the following is a type of deductible that charges the insured after basic medical
benefits have been paid, and before other medical coverage begins?
a. Out-of-pocket limit
b. Calendar deductible
c. Carry-over provision
d. Corridor deductible
73. Which of these statements concerning Medicare is not true?
a. Part A provides hospital care.
b. Part B provides doctors and physicians services.
c. Part C provides long-term care benefits.
d. It is part of the Social Security program
74. Concerning Part B of Medicare, which of the following is incorrect?
a. There is an annual deductible and co-payment
b. It is paid entirely by FICA (social security) payroll taxes.
c. An individual must sign a form rejecting Part B or they will be enrolled in it.
d. It provides some coverage and benefits for most medical expenses not covered by Part A.
75. From the list of descriptions below, select the one that is not eligible for Medicare.
a. A person who has been entitled to Social Security disability benefits for 24 months.
b. A person who has reached 65, is willing to pay a premium but is not eligible for Social
Security.
c. A person who has reached 65 and is eligible for Social Security.
d. All the above are eligible
76. Hospice care provides services to patients who are:
a. In a hospital and expected to recover
b. Terminally ill
c. Receiving respite care through Medicare
d. None of the above
77. In the Medicare system, the services provided by doctors and surgeons are covered by:
1. Part A
3. There is no charge for coverage
2. Part B
4. There is a charge for coverage
a. 1 and 3
b. 1 and 4
c. 2 and 3
d. 2 and 4
78. A person reaches the age of 65 and is currently covered under her employer's health plan. She
elects to take Medicare coverage by rejecting her employer's plan. This still keeps the company
plan primary.
a. True b. False
79. Which of these statements is not true with regard to insurers and policies that provide
Medicare supplement coverage?
a. They are required to issue all policies on either a guaranteed renewable or non-cancelable
basis.
b. If the policy has been in force for at least 6 months, the insurer is prohibited from excluding
any preexisting conditions.
c. The insurers are prohibited from any exclusion for all preexisting conditions.
80. Which of the following is not allowed by code in connection with the saleof Medicare
supplement policies?
a. Offer only core benefits
b. Offer only broader plans
c. Offer core plans as a stand-alone or offer core plans along with broader plans.
d. Both A and B are not allowed
81. Medicare covers which of the following in order to provide long-term care for the elderly:
a. Very broad and substantial intermediate care benefits
b. A wide range of custodial care coverage.
c. Very limited nursing home coverage.
d. Medicare provides none of the above.
82. Choose the correct statement about long-term care (LTC) insurance.
a. Those who are very rich or very poor probably are not in need of long term care coverage.
b. The annual cost of nursing home care was about $10.000 in 1990.
c. One of the best-structured plans for long term care for those in the middle class is Medi-Cal
d. The need for long term care insurance begins only at middle age.
83. There is a type of benefit that pays for the cost of relief given to the caregiver of a person who
requires constant care and supervision. What is this type of care called?
a. Custodial care
b. Hospice care
c. Intermediate relief care
d. Respite care
84. Long-term care policies can be sold in various ways. Which of the following is one of these
ways?
a. As part of an auto policy
b. As a part of a comprehensive homeowner umbrella policy
c. As part of a life insurance policy through the use of an endorsement
85. Pick from the following choices the features of a long-term care policy that would have the
highest premium,
1. Long benefit period 3. Long elimination period
2. Short benefit period 4. Short elimination period
a. 1 and 3
b. 2 and 3
c. 1 and 4
d. 2 and 4
86. Which of the following categories of benefits are not covered in a long-term care policy
a. Home care benefits
b. Custodial care benefits
c. Acute care coverage in a hospital
d. Community based care benefits
87. Any long-term care policy sold in California must provide for certain benefits. Select the most
correct answer describing these benefits from the choices below.
a. Home care only
b. Medicare supplement
c. Institutional care only
d. Institutional care and home care
88. Long-term care policies that deliver benefits for community based or home care services must
include which of the following:
1. Respite care 2. Hospice Care
3. Home health care services
a. 1 and 3
b. 1 and 2
c. 1, 2 and 3
d. none of the above
89. Which of the following is false about the marketing of long-term care insurance according to
the code?
a. They can exclude degenerative conditions like Alzheimer's.
b. They may require hospital stays of certain lengths be satisfied before benefits are provided.
c. "Inflation guard" is a non-legal provision in LTC policies
d. All the above are false
90. The Health Insurance Counseling Advocacy Program (HICAP) provides assistance to the
public on a fee basis if the person requiring assistance is financially able to pay.
a. True b. False
91. When Workers Compensation laws became mandatory, it meant:
a. HMOs were required to provide medical services to all employees.
b. Employers could use common law defenses more to their advantage.
c. Employers were financially responsible for employees on-the-job injuries, regardless of fault.
d. Employees were required to prove employers fault to file legal action.
92. Who pays the premiums for a Workers Compensation policy for a retail store?
a. Equally divided between the employees and the storeowner.
b. Because of the occupation classification, it is paid entirely by the employees.
c. It is always paid entirely by the employer.
d. Retail stores are excluded from statutory workers compensation laws.
93. Mike drives a truck for a delivery company. In the course of making a delivery he is involved
in a serious accident, and is taken to the hospital. The hospital and doctors bills will be paid by:
a. The company workers compensation policy.
b. Medi-Cal, assuming he qualifies for coverage.
c. Mike's private auto insurance policy.
d. None of the above.
94. Benefits will be paid from a Worker's Compensation Subsequent Injury Fund only if both the
first and second injury are the result of an on-the-job accident.
a. True b. False
95. The Worker's Compensation portion (Part I) of the Worker's Compensation policy covers
payments the employer (insured) must pay:
a. Under Worker's Compensation law.
b. To bring the work environment up to state safety codes.
c. To cover common law exposures.
d. To coordinate with HMO coverage.
96. "The seamless delivery of medical and indemnity benefits for both occupational and nonoccupational injuries and illnesses" is the definition of:
a. Worker's compensation
b. 24-hour coverage
c. All disability policies
97. In California after January 1, 2002, the definition of health insurance includes all of the
following types of coverages, except:
a. Group medical coverage
b. Accidental death and dismemberment coverage
c. Individual hospital coverage
d. Individual surgical benefits
98. A group health plan third party administrator might do any of the following, except:
a. Receive employee payments
b. Pay policy owner premiums
c. Track insured eligibility
d. Handle member complaints
99. Unintentional concealment entitles the injured party to which course of action?
a. Possible imprisonment to the party who concealed the information
b. $250 fine to be paid to the injured party
c. None, given the fact that the concealment was unintentional
d. Rescission of the contract
100. When may a representation be withdrawn?
a. Only before the insurance is in effect
b. At any time as long as both parties agree
c. It can never be withdrawn
d. Only after the policy is in effect
101. A significant benefit to the insured in group underwriting verses individual is
a. There are no enrollment restrictions
b. Previous claims are not a consideration
c. The cost of coverage is lower
d. Members are eligible for the entire contract period
102. What kind of insurance pays medical benefits only in the event the insured suffers from one
stipulated disease?
a. Critical illness
b. Group medical expense
c. Specified disease
d. Individual medical expense
103. How long must a life agent maintain records regarding policies sold in this state?
a. 1 year
b. 2 years
c. 3 years
d. 5 years
104. The purpose of laws regarding the replacement of life and annuity contracts includes all of
the following, except:
a. To protect the interests of life insurers and their agents
b. To establish penalties for failure to comply with replacement requirements
c. To assure the purchaser receives information to make an informed decision
d. To reduce the opportunity for misrepresentation and incomplete disclosures
105. All of the following would fall under the category of an "adverse underwriting decision."
except:
a. Charging a higher rate based upon the information given on the insurance application.
b. Failure of the agent to submit the application to an insurance company
c. Declination of insurance coverage
d. Termination of insurance coverage
106. What is the transplant donor benefit in a disability income policy?
a. A provision that provides medical coverage for the surgical expense of donating a body organ
b. A provision that considers the insured to be disabled if donating a body organ
c. A provision that covers hospital expenses following the donation of a body organ
d. A provision that extends coverage for rehabilitation after the donation of a body organ
107. In order to obtain group insurance without providing evidence of insurability, what do
eligible individuals generally have to do?
a. Submit an attending physician's statement with their group enrollment cards
b. Pay the first year premium in advance
c. Nothing
d. Enroll within a specified eligibility period
108. What is the purpose of the rehabilitation provision in a disability income policy?
a. To provide increases in disability benefits to keep pace with inflation
b. To compensate insured's who lose their sight in both eyes
c. To encourage disabled insureds to return to their original occupations
d. To pay a portion of a workers pre-disability income when the insured returns to work
109. An agent who acts 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. Natural person
b. Fiduciary
c. Legal representative
d. Managing general agent
110. A measure of rating an individual's need for long term care benefits is called
a. Activities of daily living
b. The gatekeeper mechanism
c. Case management
d. Coinsurance
111. In order to determine the amount of premium an insured will pay, the insurer multiplies the
rate by:
a. The number of insureds on the policy
b. The number of exposure units
c. The expense factor
d. The premium adjustment factor
112. Viatical settlements are accomplished through the use of
a. Non-forfeiture provisions
b. Settlement options
c. Collateral assignment
d. Absolute assignment
113. What rights do individuals have if they disagree with the decision on the amount Medicare
will pay?
a. They can change Medicare carriers
b. They can terminate making premium payments until the claim is resolved
c. They can ask a Medicare carrier to review the decision
d. They can ask for a second opinion by the state medical examiner
114. What is the tax treatment for individual disability income policies
a. Non-deductible premiums and tax-free benefits
b. Non-deductible premiums and taxable benefits
c. Deductible premiums and taxable benefits
d. Deductible premiums and tax-free benefits
115. The conversion privilege allows a person to change coverage from
a. A life insurance policy to an annuity
b. A group policy to an individual policy
c. An individual policy to a group policy
d. An annuity to a life insurance policy
116. All of the following statements about qualified pension plans are true, except:
a. Employer contributions are taxable to employees in the year they are contributed
b. Investment earnings are exempt from income tax until distributed
c. Employer contributions are deductible from corporate income' taxation
d. Employer contributions are taxable to employees in the years they are received as benefits
117. What provision prevents a family from receiving benefits from two separate group policies
with the same medical expense?
a. Assignment of benefits
b. Conversion of benefits
c. Extension of benefits
d. Coordination of benefits
118. Self-funding of employee benefit plans cannot be used for
a. Short-term disability benefits
b. Health benefits
c. Death benefits
d. Hospital benefits
119. Which of the following coverages is NOT one of the three traditional benefits of a group
basic medical expense plan?
a. Surgical expense
b. Private nursing expense
c. Physicians visit expense
d. Hospital expense
120. The additional premium charged by an insurer for adding the accidental death benefit to a
whole life policy
a. Increases the yearly dividend amount
b. Does not affect the policy's cash value
c. Increases the policy's cash value
d. Decreases the length of time that premiums are payable
121. What is the written instrument called in which the insurance contract is set forth?
a. The provisions
b. The warrantees
c. The policy
d. The risk
122. 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. Extended term insurance
c. Reduced term insurance
d. Reduced paid-up insurance
123. What is the difference between a defined contribution plan and a defined benefit plan?
a. The party receiving the distribution
b. The party making the contribution
c. The contract period requiring specific payments
d. The penalties for early distribution
124. A life agent's records must include all of the following, except:
a. All correspondence between the agent and the policy holder
b. Printed material in general use which has been distributed by the insurer
c. A copy of the outline of coverage
d. All policies sold by the agent
125. A worker dies while he is credited with six quarters of the last 13 quarter period. What status
does the worker have under social security?
a. Partially insured
b. Disability insured
c. Currently insured
d. Fully insured
126. A return premium rider is a rider that
a. Returns insurance premiums if the insured surrenders the policy at any time after the third
policy year
b. Waives the policy premium while the insured is totally disabled
c. Provides for 'he periodic return of a percentage of the premiums that have been paid if the
insured becomes and remains disabled
d. Permits the policy owner to receive a full refund of premium if the policy is returned during the
first 90 days after delivery
127. An agent's appointment with an insurer will be discontinued if all of the following
circumstances exist, except:
a. The agent quits working for the insurer
b. The insurer files a notice to terminate the appointment
c. Another insurer submits an employment application
d. The agent's insurance license expires
128. Social Security provides protection against the financial consequences of all of the
following, except:
a. Premature death
b. Disability
c. Poor investments
d. Retirement
129. Which retirement plan utilizes non-deductible contributions?
a. Simplified employee pension plan
b. Roth IRAs
c. Profit-sharing plan
d. Tax-sheltered annuity
130. Wellness benefits under a Health Maintenance Organization (HMO) typically include all of
the following, except:
a. Routine physicals
b. Immunizations
c. Fluoride treatments
d. Vision checks
131. All of the occurrences listed below are examples of an insurable event as defined by the CA
Insurance Code, except:
a. An insured suffers a financial loss in the state lottery
b. A guest is injured by a fall from the insured's deck
c. An insured is sued for unintentional slander of another person
d. An insured is admitted to the hospital for delivery of a newborn
132. The social security normal retirement age depends upon
a. The number of quarters of coverage
b. The number of years of employment
c. The worker's year of birth
d. The worker's average annual earnings
133. The complete transfer by the existing owner of all rights in an insurance policy to another
person is
a. Absolute assignment
b. Endowment
c. Collateral assignment
d. Non-forfeiture
134. Which retirement plan was designed for employees of public school systems?
a. TSA
b. IRA
c. 401(k)
d. Keogh
135. Which settlement option allows only the death benefit earnings to be paid to the beneficiary?
a. Interest option
b. Cash option
c. Fixed period option
d. Fixed amount option
136. In the absence of a coordination of benefits clause, all of the following circumstances might
result in recovery of more than 100% of actual health care expenses, except:
a. A worker's medical plan includes a carryover deductible provision
b. A person working for two employers has health insurance through both
c. Spouses are both employed and eligible for group medical benefits
d. An executive has additional coverage through an association policy
137. All of the following apply to the life insurance cost-of-living rider, except:
a. There is an additional premium for the additional coverage
b. No evidence of insurability is required for the annual increases in coverage
c. The insured receives an automatic increase in the policy's death benefit when there is an
increase in the cost of living index
d. The face value of the policy raises or lowers as the cost of living index increases or decreases
138. The social security blackout period ends when the surviving spouse reaches the age of
a. 55 b. 60 c. 62 d. 65
139. Retirement benefits under social security are available only for workers who are
a. Medicare insured
b. Currently insured
c. Disability insured
d. Fully insured
140. In which plans do employers make specific contributions to an employee's retirement
account?
a. Defined contribution plans
b. Individual retirement accounts
c. Defined benefit plans
d. Keogh plans
141. Traditional comprehensive major medical plans include all of the following, except:
a. Deductibles
b. Out-of-pocket maximums
c. First-dollar coverage
d. Coinsurance
142. In a 7 year vesting schedule, what percentage of employer contributions must be vested after
7 years of service?
a. 40% b. 60% c. 80% d. 100%
143. A representation in an insurance contract qualifies as which of the following?
a. An express warranty
b. An implied warranty
c. An amendment
d. A policy provision
144. A policy holder stops making payments on a 20-pay life policy and converts the cash
surrender value to extended term insurance. All of the following statements are true, except:
a. The extended term coverage will stay in force for a specified period of time, and then coverage
will cease
b. No further premium payments are required
c. The term policy will have the same loan value as the original policy
d. The extended term insurance will be for the same face amount as the 20-pay life policy
145. Identify which of the following is not a principal factor used to determine group disability
income rates
a. Average age of the insureds who make up the group
b. Maximum indemnity period
c. Length of the waiting/elimination period
d. Location of the insured entity
146. Which non-forfeiture option uses an existing policy's cash value to purchase a paid-up policy
with a lower face value than the original policy?
a. Extended paid-up insurance option
b. Reduced paid-up insurance option
c. Cash surrender value option
d. Extended term option
147. A husband and wife work for different companies. The husband works for ABC Company.
The wife works for XYZ Company. Each has group health insurance coverage from their own
employer that also insures their spouse. Both plans have a coordination of benefits clause. Which
of the following statements is true regarding the coordination of benefits clause for medical
services covered by the group policies?
a. The wife receives medical care. ABC group insurer is primary.
b. To reduce the risk of over-insurance, neither insurer will pay any benefits on any claim that is
totally or partially covered by the other insurer if the other insurer is the primary carrier.
c. The primary carrier determines what they owe for a claim by finding out what the secondary
carrier will not pay
d. The husband receives medical care. XYZ group insurer is secondary.
148. The commonly used 30, 60, 90, and 180 disability terminology refers to the
a. Amount paid by the insured before benefits are payable
b. Payable amount split by the insured and the insurer
c. Number of days for which no benefits are payable
d. Number of days in which benefit payments end
149. Each of the following terms is an important characteristic of a major medical policy, except
a. Capitation fee
b. Deductible
c. Co-insurance
d. Maximum amounts
150. HMOs are involved in all of the following, except
a. Providing healthcare services
b. Emphasizing the use of specialty physicians
c. Controlling costs by encouraging preventive care
d. Providing healthcare financial coverage