Practice Exam

Question 1

What will the insured be able to receive the full face amount from a whole life policy?

Answer 1

If the insured lives to age 100

Question 2

What type of insurance would be used for a Return of Premium rider?

Answer 2

Increasing Term

Question 3

An agent has how many days in which to receive an appointment after the issurnace of the insurance contact?

Answer 3

14 days

Question 4

What is the purpose of coinsurance provisions?

Answer 4

To help the insurance company to prevent overutilization of the policy

Question 5

A contract which one party undertakes to indemnify another against loss is called:

Answer 5

Insurance

Question 6

To sign up for a Medicare prescription drug plan, individuals must first be enrolled in:

Answer 6

Medicare Part A

Question 7

What is franchise insurance?

Answer 7

It is health coverage for small groups whose numbers are too small to qualify for true group insurance

Question 8

Which of the following is the largest branch within the California Department of Insurance?

Answer 8

Enforcement Branch

Question 9

In a group healthy policy, a probationary period is intended for people who:

Answer 9

Join the group after the effective date

Question 10

If a firm has 80 employees that are actively engaged in business on at least 50% of its working days during the preceding calendar year, what is its classification?

Answer 10

Small employer

Question 11

Based on Human Life Value Approach, which of the following is NOT used to calculate an individuals life value?

Answer 11

Prediced needs of the family after insured’s death

Question 12

What is the contract provision that allows the insurer to nonrenew health coverage if certain events occur?

Answer 12

Conditionally renewable

Question 13

Company employs 500 people. It offers group life insurance to its employees after 90 days of service. Who is considered the policyholder of the life insurance policies?

Answer 13

The company

Question 14

The main difference between immediate adn deferred annuities is:

Answer 14

When the income payments begin

Question 15

What are part of the policy structure between an insurer and insured, conforming to the state laws governing contracts?

Answer 15

Conditions

Question 16

What is the max amount that can be contributed to an MSA of the high deductible plan for individuals?

Answer 16

65%

Question 17

Qualified medical expenses paid for participants in a Medical Savings Account (MSA) are:

Answer 17

Not Taxable

Question 18

Which insurance principle states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount loss?

Answer 18

Indemnity

Question 19

Which renewability provision allows an insurer to terminate a policy for any reason, and increase the premiums for any class of insureds?

Answer 19

Optionally renewable

Question 20

Disability income policies can provide coverage for a loss of income when returning to work only part-time after recovering from total disability. What is the benefit that is based on the insured’s loss of earnings after recovery from a disabiltiy?

Answer 20

Residual disability

Question 21

A policy available to business owners that provides payment for normal business expenses in the event that the owner is disabled is called:

Answer 21

Business Overhead Expense

Question 22

The classification Small Employer means any person actively engaged in a business that on at least 50% of its working days during the preceding year employed:

Answer 22

No more than 100 employees

Question 23

Life income joint and survivor settlement option guarantees:

Answer 23

Income for 2 or more recipients until the die

Question 24

If the annuitant dies during the accumulation period, who will receive the annuity benefits?

Answer 24

The beneficiary

Question 25

An insured stops making payments on a loan taken from his cash value policy. What will most likely happen?

Answer 25

The policy will terminate when the loan amount with interest equals or exceeds the cash value

Question 26

Group underwriting is beneficial in comparision to individual underwriting due to which of the following:

Answer 26

The cost of coverage is generally lower due to to the reduction of risk

Question 27

How do employer contributions to a health savings account affect the insured’s taxes?

Answer 27

The employer contributions are not included in the individual insureds taxable income

Question 28

Who chooses a primary care phys. in an HMO?

Answer 28

The individual member

Question 29

Medical Loss Ration (MLR): what is the min. percentage of health coverage premium that must be applied to actual medical care in a large group health plan?

Answer 29

85%

Question 30

What does Part B of Medicare cover?

Answer 30

• Phys. expenses
• Home health care
• Lab services

Question 31

What are HMO & PPO for medicare recipient advantages?

Answer 31

• Prescriptions might be covered
• There are no claims forms required
• Health care costs can be budgeted

Question 32

What is not true about Medicare B

Answer 32

Part B coverage is provided free of charge when someone turns age 65

Question 33

Contracts that are prepared by one part and submitted to the other party on a take it or leave it basis are:

Answer 33

Contracts of adhesion