Insurance Regulations and Concepts in California, Exams of Public Policy

Download Insurance Regulations and Concepts in California and more Exams Public Policy in PDF only on Docsity! What Only one party makes a legally enforceable promise - ANSWER- is meant by referring to an insurance policy as a unilateral contract? When must insurance records of insurance At all times - ANSWER- agents and brokers be made available to the Insurance Commissioner? Any situation that presents the possibility a loss exposure - ANSWER- of a loss is known as Which of the following information is Personal judgment - ANSWER- not required to be communicated in a Life insurance contract? The direct distribution of telephone call from an agent - ANSWER- insurance utilizes all of the following to promote the sale of insurance EXCEPT A contract in which one party an insurance policy - ANSWER- promises to indemnify another against loss that arises from an unknown event is All of an insured suffers a financial loss in the state lottery - ANSWER- 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 contract - ANSWER-As defined in the California insurance Code, "insurance" is a A misdemeanor - ANSWER-What would a person be guilty of who refuses to deliver any books, records, or assets to the commissioner once a seizure order has been executed? Fiduciary - ANSWER-An agent who is acting as an insurance agent, broker, solicitor, life agent, accident and health, or bail agent acts in which capacity when handling premiums or return premiums for an insured? 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 increase 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 that the 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 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? life agent - ANSWER-person authorized by and on behalf of an insurer who transacts life, disability or life and accident and health insurance is defined as a admitted carrier - ANSWER-An insurer entitled to transact business by complying with the California Insurance Code is known as an Life and Health insurers - ANSWER-Who are the members of the Medical Information Bureau? Even though your misdemeanor conviction was expunged, you must still disclose your misdemeanor conviction on your individual application for an insurance license - ANSWER-If you have been convicted of a misdemeanor and that misdemeanor conviction is later expunged pursuant to California Penal Code Section 1203.4, which of the following is true? telephone call from the agent - ANSWER-The direct response distribution of Insurance utilizes all of the following to promote the sales of insurance EXCEPT moral hazard - ANSWER-The increase in the probability of a loss resulting from an insured's dishonest tendencies is known as Reinsurance - ANSWER-Which is an agreement in which an insurer contacts with a third party to insure itself against losses from insurance policies it issues? A misdemeanor - ANSWER-Which if the following would an agent be guilty of for misrepresenting the amount of dividends a policy will pay? The materiality of concealment - ANSWER-What rule is used to determine the importance of a representation? $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 premium? the insurer must submit a notice of appointment to the Commissioner - ANSWER-If a life agent sells a whole life policy to a prospect on behalf of an insurer without an appointment... Mortality - ANSWER-Which component of a life insurance premium is based on the insured's age and gender? Payment to a business when an important employee dies. - ANSWER- Which benefits are provided by key employee insurance? 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 pays the face amount only when the first person dies? Life insurance and disability insurance - ANSWER-Which two insurance products are commonly used to fund buy-sell agreements? Suicide clause - ANSWER-Which policy provision protects the insurer against possible adverse selection? Universal life - ANSWER-Which type of insurance coverage has both a savings element and a flexible premium option? a modified endowment contract - ANSWER-A life insurance policy written after 1988 that fails to meet the seven pay test is known as Mortgage redemption - ANSWER-What type of insurance policy provides a death benefit that matches the projected outstanding debt on an individual's home? mandatory termination of all insurer appointments - ANSWER-An agent who violates the laws governing life insurance policy illustrations is subject to all of the following EXCEPT Deferred annuity - ANSWER-Which policy is a saving instrument designed to first accumulate funds and then systematically to liquidate the funds? proof of surrender must be notarized at the agent's principal office - ANSWER-Individual life insurance policies sold to 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 policy owner is unable to continue the premium payments. Which of the following describes the reduced paid-up non-forfeiture option? Tax-deferred earnings - ANSWER-Which of the following is a characteristic of nonqualified annuities? Employee Stock Ownership Plan - ANSWER-What is an ESOP? Suicide clause - ANSWER-Which policy provision protects the insurer against possible adverse selection? an unnecessary replacement - ANSWER-An insured replaces an exciting 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 insured employees will pay part of the premium - ANSWER-A group life policy is issued on a contributory basis. This means that the 10% - ANSWER-What is the penalty tax imposed on amounts received from a modified endowment contract? allows the policy owner to receive a share of surplus in the form of policy dividends - ANSWER-A participating life insurance policy is defined as a contract that number living at the end of designated year - ANSWER-All of the following are contained in a mortality table EXCEPT 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? dividends risks - ANSWER-Underwriters classify insurance risks as any 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 policy owner from unintentional lapse of the contract? Non-forfeiture 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 policy owner, 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 policy owner 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 travel accident insurance - ANSWER-What type of insurance can be purchased at airports, bus terminals, and railroad stations? an individual enrolling in a bronze level plan is not eligible for reduced cost-sharing - ANSWER-Regarding the Health Benefit Exchanges, as created by PPACA, all of the following statements are true EXCEPT gold - ANSWER-Under the PPACA, which medical enrollment tier is 80% actuarial value? deductible and coinsurance amounts - ANSWER-Provision in a disability income policy include all of the following EXCEPT are qualified to give legal advice - ANSWER-All of the following statements are true regarding Health Insurance Counseling Advocacy Program (HICAP) counselors EXCEPT HICAP counselors 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