Understanding Unilateral & Aleatory Contracts in Insurance, Exams of Public Health

Download Understanding Unilateral & Aleatory Contracts in Insurance and more Exams Public Health in PDF only on Docsity! only one party makes a legally enforceable promise - ANSWER--What is meant by referring to an insurance policy as a unilateral contract? at all times - ANSWER--When must insurance records of insurance agents and brokers be made available to the Insurance Commissioner? a loss exposure - ANSWER--Any situation that presents the possibility of a loss is known as personal judgement - ANSWER--Which of the following information is not required to be communicated in a Life Insurance contract? telephone call from the agent - ANSWER--The direct distribution of insurance utilizes all of the following to promote the sale of insurance EXCEPT an insurance policy - ANSWER--A contract in which one party promises to indemnify another against loss that arises from an unknown event is an insured suffers a financial loss in the state lottery - ANSWER--All of the occurrences listed below are examples of an insurable event as defined by the California Insurance Code EXCEPT the insured and insurer contribute equally to the contract - ANSWER--All of the following statements about aleatory contracts are true EXCEPT committing any act of discrimination whether it be deemed fair or unfair - ANSWER--All of the following would be considered unfair trade practices EXCEPT Mary Brown Insurance Services - ANSWER--As authorized by the California Insurance Code, the Insurance Commissioner has provided standards for names used by life insurance agents. Under these standards which, if any, of the following are automatically acceptable for Mary Brown, a holder of the CLU designation? one party is restored to the same financial position the party was in before the loss occurred - ANSWER--A contract of indemnity is one in which make whole - ANSWER--In insurance terminology, "indemnity" means ANSWER--Why is having a large number of similar exposure units important to insurers? it eliminates fraudulent losses - ANSWER--All of the following are benefits of insurance EXCEPT life and health insurers - ANSWER--Who are members of the Medical Information Bureau? underwriting - ANSWER--The process by which an insurer decides whether to issue requested insurance is called promise - ANSWER--Unless it is merely a statement of an expectation belief, a representation as to the future is considered which of the following by interview appointment with the agent of record - ANSWER- -Upon notification of a claim, a claimant must be given access to the California Fair Claims Settlement Practices resolution by all of the following means EXCEPT money an insured pays an insurer to obtain the benefits provided in the policy - ANSWER--What is the definition of premium? to avoid selecting a disproportionate number of bad risks - ANSWER--What is the goal of the underwriting process? premiums - ANSWER--Insurer policy expenses include all of the following EXCEPT rescission of the contract - ANSWER--Unintentional concealment entitles the injured party to which course of action, if any? the principle of indemnity - ANSWER--Making an insured whole by restoring them to the same condition as before a loss is an example of the cause of loss - ANSWER--Risk can be defined as all of the following EXCEPT there must be an offer and acceptance of the contract terms - ANSWER--Which of the following is a requirement of a contract? chance of a loss occurring due to an insured's dishonest tendencies - ANSWER--Moral hazard can be defined as the name is the licensee's actual name - ANSWER--According to the California Insurance Code, the Commissioner can disapprove a licensee's request to use a fictitious name for any of the following reasons EXCEPT a member of the Insurance Guarantee Association - ANSWER- -It is considered an unfair method of competition for an agent to advertise that the insurer the agent is appointed with is there must be equal consideration between the parties - ANSWER--All of the following are requirements of contract EXCEPT prior approval - ANSWER--If an insurer must have its rates accepted by the insurance Department prior to using them, the insurer would be operating in which of the following types of jurisdictions? misrepresent facts on an insurance application - ANSWER--It is a Federal offense for an insurance agent to do all of the following EXCEPT annually - ANSWER--How often MUST an insurer file the National Association of Insurance Commissioners (NAIC) financial statement? authority is revoked, the Commissioner can proceed with any of the following actions EXCEPT 30 - ANSWER--Section 1729.2 of the California Insurance Code requires insurance producer applications and licensees to notify the Insurance Commissioner in writing, within how many days of charges in background information after an application has been submitted or a license has been issued underwriting - ANSWER--The insurer's department with PRIMARY responsibility for the risk selection process is called for a minimum of 120 months and a maximum of the remainder of his life - ANSWER--A person owns a life annuity. He elects to receive his annuity payments monthly for the remainder of his life with "ten years certain". The annuity will make payments a listing of a person's civic and professional organization memberships - ANSWER--All of the following information is gathered during the personal financial planning process EXCEPT The reinstatement provision - ANSWER--Which policy provision allows an insured to continue coverage under a previously lapsed policy? a presentation of policy features that includes non-guaranteed elements - ANSWER--According to the California Insurance Code, governing the use of life insurance policy illustrations, the term Mustration means pay the premium after the due date without loss of coverage - ANSWER--The life insurance grace period allows the insured to evidence of insurability is required to convert coverage for children to permanent insurance - ANSWER--When a family policy covers children, all of the following are true EXCEPT conservation - ANSWER--An attempt by an agent to deter an insured from replacing an existing life insurance policy is called A misdemeanor - ANSWER--Which of the following would an agent be guilty of for misrepresenting the amount of dividends a policy will pay? does not affect the policy's cash value - ANSWER--The additional premium charged by an insurer for adding the accidental death benefit to a whole life policy $50,000 - ANSWER--How much employer-provided group term life insurance is exempt from income taxation? 30 days - ANSWER--How long is the free cancellation period for the life insurance offered to individuals who are 60 or older? The total death benefit is paid whenever the insured dies - ANSWER--What does the statement "life insurance created an immediate estate" mean? Consumer report - ANSWER--Which report of an insurance applicant's creditworthiness and personal characteristics may influence eligibility for life and health insurance? The participant - ANSWER--In group life insurance, who is issued a certificate of insurance? Renewable term - ANSWER--Which type of insurance guarantees the right to renew the policy each year, regardless of health, but at an increased seniors in the State of California must include a prominently placed statement that divulges all of the following information EXCEPT outliving their financial resources - ANSWER--People commonly purchase an annuity to protect against the risk of Individual life insurance requires the applicant to answer medical questions - ANSWER--What is one difference between group life an individual life underwriting? The cash value is used to select a $20,000 paid-up policy - ANSWER--A $50,000 whole life policy with a cash value of $10,000 has been in force for eleven years. The policyowner is unable to continue the premium payments. Which of the following describes the reduced paid-up nonfordeiture option? Tax-deferred earnings - ANSWER--Which of the following is a characteristic of nonqualified annuities? 60 payments - ANSWER--A 10-year certain annuity with an installment refund is purchased. The annuitant dies after receiving monthly payments for 5 years. How many remaining payments will the insurer make? insurer will make the payments until the insured juvenile reaches a specified age-usually twenty-one or twenty-five - ANSWER--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 in the policy that the Variable life insurance - ANSWER--Which of the following contracts provides benefits that fluctuate automatically with investment results? mortality tables - ANSWER--The theory of probability is applied to life insurance through the use of Deferred annuities have longer accumulation periods - ANSWER--What is the difference between deferred annuities and immediate annuities? Fund the distribution of monthly income payments - ANSWER--which of the following is NOT an option for the use of the policy dividends? waiver of premium provision - ANSWER--The insured is totally and permanently disabled. The insured's policy continues in force without payment of further premiums because the policy contains a Decreasing term policy - ANSWER--Your client has just bought a new home which he has financed with a $150,000, 7.5% interest, 30-year bank loan. He would like to be sure that if he dies that the unpaid balance of the mortgage would be paid. He wants a policy that will cover the mortgage balance- no more, no less-anytime during the life of the mortgage. Which policy is designed to meet this need? exempt from federal income tax - ANSWER--Death benefits that are received by a beneficiary are generally an unnecessary replacement - ANSWER--An insured replaces an existing annuity with a new one and must pay a surrender charge for cancelling the existing annuity. The new policy holds no greater financial benefits to the insured than the existing contract. This is an example of Underwriting - ANSWER--What do we call the process whereby insurers decide which customers to insure and what coverage to offer? The exclusion ratio - ANSWER--what is used to determine the amount of an annuity distribution that is exempt from taxation? Endowment insurance - ANSWER--Which policy pays the face amount if the insured survives to the end of a certain period? Second-to-die policy - ANSWER--A husband and wife have a disabled child who is financially dependent upon them. The death of one parent would not result in financial disaster for the disabled child, but the death of both parents would. Which policy should they purchase? Buy-sell agreements - ANSWER--How can partners guarantee a market for their share of the business in the event of death? Joint life policy - ANSWER--Which policy covering two or more individuals terminates after paying benefits on the first to die? double indemnity - ANSWER--The accidental benefit rider is also known as insureds can avoid answering medical questions on the application - ANSWER--The use of non-medical life insurance accomplishes all of the following EXCEPT The applicant and the agent - ANSWER--Who MUST sign a statement acknowledging that a life insurance policy illustration was given to an applicant? income - ANSWER--In financial planning, the human life value concept is based on an individual's The individuals depends on the other person for financial support - ANSWER--When does an individual have an insurable interest in the life of another person? taxable as income to the employee - ANSWER--The cost of employer-provided group life insurance above $50,000 is a higher premium is payable at each renewal - ANSWER--If a term life insurance policy is renewable, the renewal provision usually states that policy summary description - ANSWER--Life insurers must include all of the following in their financial statements EXCEPT extended term - ANSWER--Common life insurance policy riders include all of the following EXCEPT The insurer and the employer - ANSWER--In a group life insurance policy, who are the parties to the master contract? They are tax deductible by the employer - ANSWER--Which statement is TRUE regarding employer contributions to qualified plans? Insureds elect a dividend option at the time of policy purchase - ANSWER--Which of the following statements about policy dividends is TRUE? Variable life - ANSWER--Which policy allows the insured to choose where the assets backing the cash value are invested? insured's estate - ANSWER--Creditors have rights to life insurance policy proceeds when the beneficiary is the A single payment made to a taxpayer who is age 55 - ANSWER--Which distribution from an annuity would be subject to a penalty tax? subtract the policy surrender charges - ANSWER--The adjustments that insurers make to the cash value account in a universal life policy each time a payment is made includes all of the following EXCEPT Facility of payment - ANSWER--Under which group term life provision does an insurer make payments to the guardian of a beneficiary who is a minor? Interest option - ANSWER--A beneficiary wants to let the death benefit accumulate and receive only the monthly investment proceeds. Which settlement option should be chosen? exempt from federal income tax - ANSWER--Death benefits that are received by a beneficiary are generally gives a senior at least 30 days to return specified life and/or annuity contracts for a full refund - ANSWER--The California Insurance Code requirements regarding the return of life or annuity contracts issued to seniors evidence of insurability is required to convert coverage for children to permanent insurance - ANSWER--When a family policy covers children, all of the following are true EXCEPT signed authorization - ANSWER--An insurer's request for an attending physician's report MUST be accompanied by a copy of the Attending physician's statement - ANSWER--What is REQUIRED when an application reveals conditions that require more information? Grace period - ANSWER--Which policy provision protects the policyowner from unintentional lapse of the contract? Nonforfeiture options - ANSWER--Under which policy provision can a policy be surrendered for its net cash value? Use the policy loan provision to borrow money from the policy, but keep making the premium payments to keep the policy in force - ANSWER--The policyowner, age 50, has been paying the premiums on his whole life policy for fifteen years. He needs the equivalent of one-third of his policy's cash value for two years. He wants to continue to have the same amount of life insurance protection and he can afford to continue to pay the policy's premium. Which of the following would appear to be his BEST course of action? 100% - ANSWER--In a 5-year vesting schedule, what percentage of employer contributions MUST be vested after 5 years of service? Tax-deferred earnings - ANSWER--Which of the following is a characteristic of nonqualified annuities? greater if the premium is paid semiannually rather than annually - ANSWER--Which of the following is a correct statement about the premium payment modes? The total premium paid by a life policyowner for one policy year is The face amount of the policy - ANSWER--What is the limit of liability on a life insurance policy? first-dollar coverage - ANSWER--Traditional comprehensive major medical plans include all of the following EXCEPT totally disabled - ANSWER--Under a disability income insurance policy with an own occupation clause, an individual who can no longer perform the tasks of the job held at the time of injury is considered home health care benefits - ANSWER--Part-time nursing care that follows a hospitalization and can be provided in a patient's home is covered under Three months - ANSWER--The initial enrollment period for Medicare Part B ends how many months after the 65th birthday month? Medi-Cal - ANSWER--Which program is designed to provide medical assistance to people with low incomes? deductible - ANSWER--A commonly used cost containment measure for emergency hospital care under a major medical expense plan is the hospital confinement indemnity - ANSWER--A supplemental insurance policy that pays a set amount for each day that an individual is hospitalized is known as coordination of benefits - ANSWER--The group medical plan provision that applies when a claimant has coverage under more than one plan is known as The Health Insurance Counseling and Advocacy Program(HICAP) - ANSWER--Which group provides information about Health-related issues to the elderly in California? disclosure and reporting - ANSWER--The Employee Retirement Income Security Act of 1974 (ERISA) regulates group health insurance in the area of Preferred Provider Organization(PPO) - ANSWER--Which health plan pays more for care received from a network provider than it pays for care from a non-network provider? hospital acute care - ANSWER--A Long-Term Care insurance rider can include coverage for all of the following EXCEPT the amount the insured's income is reduced by the disability - ANSWER--Residual disability income insurance payments are based on It is covered by the state Worker's Compensation program - ANSWER--Why is an injury caused by an accident at an employee's workplace excluded from individual health insurance Coverage? a percentage paid for covered expenses by the insured and insurer after the deductible is satisfied - ANSWER--In health insurance the coinsurance is a specific dollar amount for examinations - ANSWER--Vision insurance usually limits coverage in all of the following ways EXCEPT Insurers that do not meet the Medical Loss Ratio standard will be required to provide rebates to their customers and reduce spending on their administrative costs - ANSWER--What happens if an insurer violates the Medical Loss Ratio rule and spends too much money on administrative costs? The medical provider submits expenses to Medicare - ANSWER--What is the first step in submitting Medicare claims? charge for their services - ANSWER--Health Insurance Counseling and Advocacy Program (HICAP) counselors can do all of the following EXCEPT usual, customary, and reasonable charges - ANSWER--When medical expense policies do not state specific dollar benefit amounts, but instead base payments upon the charges for like services in the same geographical area, benefits are designated as Medicare supplement - ANSWER--Which plan covers the medical expenses that are NOT covered by Medicare? Health Maintenance Organization - ANSWER--The type of health care provider that provides both the health care services and health care coverage is called Deductible - ANSWER--In medical expense insurance, what serves the same purpose as the elimination period in disability income insurance? outside organization that processes claims for an employer's self-funded group plan - ANSWER--An example of a third- party administer is an traveling with a spouse who has been transferred overseas - ANSWER--The Family and Medical Leave Act(FMLA) covers all of the following EXCEPT To protect certain vulnerable segments of the population - ANSWER--What is the purpose of social insurance? Medi-Cal - ANSWER--Which program pays the cost of nursing home care for people who cannot afford it themselves? fully insured - ANSWER--Benefits under Social Security are available only for workers who are 20 employees - ANSWER--Group health plans obligated by the Consolidated Omnibus Budget Reconciliation Act (COBRA) cover groups of at least. Part B provides benefits for diagnostic tests and X-rays performed on an outpatient basis - ANSWER--With Medicare coverage 80% - ANSWER--A health insurance issuer offering coverage in the individual market must provide premium rebates if its medical loss ratio (MLR) is less than what percentage? a replacement LTC policy with equal benefits for a lower premium - ANSWER--According to the California Insurance Code, all of the following Long-Term Care(LTC) insurance sales are considered unnecessary EXCEPT medical expense - ANSWER--All of the following types of insurance pay benefits in addition to those paid by other insurance policies held by the insured EXCEPT cancer - ANSWER--The most common type of specified disease insurance policy is 80% - ANSWER--After the deductible is satisfied, what percentage of a reasonable charges does Medicare Part B pay? When two plans both have the provision, coverage as an employee is primary to coverage as a dependent - ANSWER-- Which of the following statements concerning the usual coordination of benefits provision is correct? Stop-loss - ANSWER--Which health insurance provision protects an insured from the expense of a catastrophic illness? Coordination benefits - ANSWER--Which health insurance contract provision addresses the problem of overinsurance? intelligence - ANSWER--Relevant factors in the health insurance principle of morbidity include all of the following EXCEPT 6 quarters of coverage during the last 13-quarter period - ANSWER--To reach currently insured status under the Social Security system, an individual must be credited with a MINIMUM of 65 - ANSWER--At what age are individuals eligible for Medicare Part A benefits? disclosure and reporting - ANSWER--The Employee Retirement Income Security Act of 1974(ERISA) regulates group health insurance in the area of Medicare supplement - ANSWER--Which plan covers the medical expenses that are NOT covered by Medicare? Deafness - ANSWER--Which of the following conditions would NOT be included among the chronic illness triggers of a long- term care policy? Two years - ANSWER--Insurers are prohibited from denying claims based on misrepresentations in a disability policy application after the policy has been in force for Medi-Cal - ANSWER--Which funded government program is jointly administered by the federal and state governments? They can ask the Medicare carrier to review the decision - ANSWER--What rights do individuals have if they disagree with a decision on the amount Medicare will pay? Inflation protection - ANSWER--Which long-term care policy provision allows for a periodic increase in policy benefits? it pays for virtually all drugs prescribed by a physician - ANSWER--All of the following statements about Medicare Part B are correct EXCEPT PPACA creates new entities called American Health Benefit Exchanges through which individuals, small businesses, and those who do not have access to affordable employer coverage, can purchase coverage - ANSWER--Under PPACA, what is a health benefit exchange? Three months - ANSWER--The initial enrollment period for Medicare Part B ends how many months after the 65th birthday month? The medical provider submits expenses to Medicare - ANSWER--What is the first step in submitting Medicare claims? The Department of Insurance - ANSWER--Unless certified by another governmental agency, which entity has jurisdiction over providers of coverage designed to pay for health care services? federal government-sponsored policies - ANSWER--Long-term care insurance may be purchased in all of the following forms EXCEPT elect to continue coverage - ANSWER--Under the Consolidated Omnibus Budget Reconciliation Act(COBRA),a qualifying event ensures that an employee who loses coverage can The employer pays the entire premium for Workers' Compensation coverage - ANSWER--Which statement is TRUE regarding Worker's Compensation? Medi-Cal - ANSWER--Which program is designed to provide medical assistance to people with low incomes? worker's year of birth - ANSWER--The Social Security normal retirement age depends upon the There is no limit - ANSWER--How long do Worker's Compensation medical expenses continue for disabled workers? perform some of their job activities on a part time basis after injury - ANSWER--Group disability insurance an employee is eligible for a partial disability benefit when they can Coordination - ANSWER--Which of the following is NOT an example of cost sharing in a health insurance policy? Cancel the policy for nonpayment of premium - ANSWER--The insurer can do which of the following under a noncancelable health insurance policy? a worker's medical plan includes a carryover deductible provision - ANSWER--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 They can ask a Medicare carrier to review the decision - ANSWER--What rights do individuals have if they disagree with a decision on the amount Medicare will pay? within 30 days of being diagnosed with an illness - ANSWER-- An individual is allowed to enroll in individual health insurance under the following circumstances EXCEPT physicians' services - ANSWER--Medicare Part A provides coverage for all of the following EXCEPT 80% - ANSWER--After the deductible, what portion does a patient pay for covered expenses under Medicare Part B? elimination period - ANSWER--The premium of proposed disability income policy could be lowered by increasing the lasik - ANSWER--Providers of coverage for all of the following types of care are subject to the jurisdiction of the California Department of Insurance(CDI)EXCEPT Medicare supplement - ANSWER--Which plan covers the medical expenses that are NOT covered by Medicare? who are 20 employees - ANSWER--Group health plans obligated by the Consolidated Omnibus Budget Reconciliation Act(COBRA) cover groups of at least Part B provides benefits for diagnostic tests and X-rays performed on an outpatient basis - ANSWER--With Medicare coverage 80% - ANSWER--A health insurance issuer offering coverage in the individual market must provide premium rebates if its medical loss ratio (MLR) is less than what percentage? a replacement LTC policy with equal benefits for a lower premium - ANSWER--According to the California Insurance Code, all of the following Long-Term Care (LTC) insurance sales are considered unnecessary EXCEPT medical expense - ANSWER--All of the following types of insurance pay benefits in addition to those paid by other insurance policies held by the insured EXCEPT cancer - ANSWER--The most common type of specified disease insurance policy is 80% - ANSWER--After the deductible is satisfied, what percentage of a reasonable charge does Medicare Part B pay? When two plans both have the provision, coverage as an employee is primary to coverage as a dependent - ANSWER-- Which of the following statements concerning the usual coordination of benefits provision is correct?