California Life Accident and Health agent exam 32 Questions with Answers,100% CORRECT

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California Life Accident and Health agent exam 32 Questions with Answers If an applicant for a health insurance policy is found to be a substandard risk, the insurance company is most likely to ... A) lower its insurability standards B) refuse to issue the policy C) charge an extra premium D) require a yearly medical examination - CORRECT ANSWER C) charge and extra premium The premium rate will be adjusted to relflect the insurer's risk According to California Insurance Code, which of the following can be classified as an insurable event? A) extreme levels of loss B) pure risks C) unpredictable losses D) speculative risks - CORRECT ANSWER B) pure risks Any event, whether past or future, which may damnify a person having an insurable interest, or create a liability against him/her, may be insured against. The more predictable a loss, the more insurable it becomes. Only pure risks are insurable. Speculative losses are uninsurable The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called A) Fixed amount B) Joint life C) Joint and Survivor D) Fixed Period - CORRECT ANSWER C) Joint and Survivor a joint and survivor option pays while either beneficiary is still living How long is an open enrollment period for Medicare supplement policies? A) 1 Year B) 30 Days C) 90 Days D) 6 Months - CORRECT ANSWER D) 6 Months An open enrollment period is a 6-month period that guarantees the applicants the right to buy Medigap once they first sign up for Medicare Part B What is a penalty tax for nonqualified distributions from a medical savings account? A) 8% B) 10% C) 16% D) 20% - CORRECT ANSWER D) 20% If a distribution is made for a reason other than to pay for qualified medical expenses, the amount withdrawn will be subject to an income tax and an additional 20% tax. What are the 2 types of Flexible Spending Accounts? A) Medical Savings Accounts and Health Reimbursement Accounts B) Health Care Accounts and Dependent Care Accounts C) Health Care Accounts and Health Reimbursement Accounts D) Medical Savings Accounts and Dependent Care Accounts - CORRECT ANSWER B) Health Care Accounts and Dependent Care Accounts There are 2 types of Flexible Spending Accounts : a Health Care Account for out-of-pocket health care expenses, and a Dependent Care Account to help pay for dependent care expenses which make it possible for an employee and his or her spouse, if applicable, to work As it pertains to IRA eligibility, which of the following would NOT be considered earned income? A) an annual salary B) unemployment benefits C) wages for a part-time job D) commissions - CORRECT ANSWER B) unemployment benefits Earned income means salary, wages, commissions, but would not include income from investments, unemployment benefits, income from trust funds, and any other forms of payment that are unearned Which renewability provision allows an insurer to terminate a policy for any reason, and to increase the premiums for any class of insureds? A) guaranteed renewable B) optionally renewable C) conditionally renewable D) cancellable - CORRECT ANSWER B) optionally renewable The renewability provision in an optionally renewable policy gives the insurer the option to terminate the policy for any reason on the date specified in the contract (usually a renewal date). Furthermore, this provision allows the insurer to increase the premium for any class of optionally renewable insureds. Insurance is the transfer of A) hazard B) peril C) risk D) loss - CORRECT ANSWER C) risk Insurance is the transfer of financial responsibility associated with a potential of a loss (risk) to an insurance company. The annuity owner dies during the accumulation period of his annuity. The cash value of his annuity exceeds the premiums he paid. There is no named beneficiary. Which of the following is true? A) The premium value will be paid to the annuitant's estate B) The state government will receive the amount of premiums paid C) The state government will receive the cash value of the annuity D) The cash value will be paid to the annuitant's estate - CORRECT ANSWER D) The cash value will be paid to the annuitant's estate If an annuitant dies during the accumulation period, the beneficiary is paid either the cash value of the policy or the amount of premiums paid, which ever is the larger amount. In this case, a beneficiary is not named, so the cash value will be paid to the annuitant's estate The death benefit under the Universal Life Option B A) Increases for the first few years of the policy, and the levels off B) Remains Level C) Gradually increases each year by the amount that the cash value increases D) Decreases by the amount that the cash value increases - CORRECT ANSWER C) Gradually increases each year by the amount that the cash value increases Under Option B the death benefit includes the annual increase in cash value so that the death benefit gradually increases each year by the amount the cash value increases In a group health policy, a probationary period is intended for people who A) want lower premiums B) join the group after the effective date C) have a pre-existing condition at the time they join the group D) have additional coverage through a spouse - CORRECT ANSWER B) join the group after the effective date The probationary period is the waiting period new employees must satisfy before becoming eligible for benefits. An association could buy group insurance for its members if it meets all of the following requirements EXCEPT A) is contributory B) has at least 50 members C) has a constitution and by-laws D) holds annual meetings - CORRECT ANSWER B) has at least 50 members All of the above characteristics make an association group eligible for buying group insurance, except the group must at least have 100 members The policyowner pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this? A) Paid-up addition B) Accumulation at interest C) Cash Option D) Reduction of premiums - CORRECT ANSWER D) Reduction of premiums The Reduction of Premium option allows the policyholder to apply policy dividends toward the next year's premium. The dividend is subtracted from the premium amount, yielding the new premium due for the next year An insured is covered under a Medicare policy that provides a list of network healthcare providers that the insured must use to receive coverage. In exchange for this limitation, the insured is offered a lower premium. Which type of Medicare policy does the insured own? A) Medicare Supplement B) Medicare Advantage C) Medicare SELECT D) Medicare Part A - CORRECT ANSWER C) Medicare SELECT Medicare SELECT policies require insured to use specific healthcare providers and hospitals, except in emergency situations. In return, the insured pays for lower premium amounts B just bought a new car, which he anticipates will be paid for in 4 years from now. He also wants to buy a life insurance policy, but is financially limited until the car is paid off. Which of the following types of policies would be best for B? A) Limited term B) Limited pay C) Interest-sensitive Whole life D) Modified Life - CORRECT ANSWER D) Modified Life A Modified Life policy would be best. It charges a lower premium for the first few policy years and then a higher level of premium for the remainder of the life of the policy. These policies were developed to make the purchase of whole life insurance more attractive for individuals who have limited financial resources but will be able to afford higher premiums in the near future Which of the following would automatically qualify for Medi-Cal benefits? A) A low-income person under the age of 65 B) An individual receiving Social Security payments C) A person receiving Supplementary Security Income Assistance D) A child under the age of 21 - CORRECT ANSWER C) A person receiving Supplementary Security Income Assistance California residents in a variety of situations may qualify for benefits from Medi-Cal; however, individuals who receive cash assistance from one of the following programs are automatically eligible for Medi-Cal: SSI/SSP, CalWORKS, Refugee Assistance and Foster Care or Adoption Assistance Program. Which of the following statements is INCORRECT concerning Medicare Part B coverage? A) Part B will pay 80% of covered expenses, subject to Medicare's standards for reasonable charges. B) It is a voluntary program designed to provide supplementary medical insurance to cover physician services, medical services and supplies not covered under Part A C) Part B coverage is provided free of charge when an individual turns 65 D) Participants under Part B are responsible for an annual deductible - CORRECT ANSWER C) Part B coverage is provided free of charge when an individual turns 65 Those who desire part B coverage must enroll and pay a monthly premium HSAs are owned by the individual, not the employer, which means the individual is not dependent on a particular employer to enjoy the advantages of having an HSA. What term best describes this? A) Stationary B) Portable C) Mobile D) Attached - CORRECT ANSWER B) Portable HSAs are portable, which means the individual is not dependent on a particular employer to enjoy the advantages of having an HSA, because it is owned by the individual The paid-up addition option uses the dividend A) To accumulate additional savings for retirement B) To purchase a smaller amount of the same type of insurance as the original policy C) To purchase a one-year term insurance in the amount of the cash value D) To reduce the next year's premium - CORRECT ANSWER B) To purchase a smaller amount of the same type of insurance as the original policy The dividends are used to purchase a single premium policy in addition to the face amount of the permanent policy All of the following are features and requirements of the Living Needs Rider EXCEPT A) It is usually available at no additional charge B) The remainder of the policy proceeds is payable to the beneficiary at the insured's death C) It provides funds for medical and nursing home expenses to a terminally ill insured. D) Diagnosis must indicate that death is expected within 3 years - CORRECT ANSWER D) Diagnosis must indicate that death is expected within 3 years The Living Needs Rider Provides for the payment of part of the policy death benefit if the insured is diagnosed with a terminal illness that will result in death within 2 years The First Street Church Plans to sponsor a summer camp for the youth of their congregation. They would like to purchase insurance that would pay benefits should one of the youth get injured while participating in the camp activities. The type of policy they would likely need is a/an A) Limited Sickness B) Accidental Death and Dismemberment C) Limited Accident D) Blanket - CORRECT ANSWER D) Blanket A policy that covers all of the participants without naming them individually is a blanket policy Which of the following describes the taxation of an annuity when money is withdrawn during the accumulation phase? A) Taxes are deferred on withdrawn amounts, but a flat penalty is charged B) Taxes are deferred on withdrawn amounts C) Withdrawn amounts are taxed on a last in, first out basis D) Withdrawn amounts are taxed on a first in, last out basis - CORRECT ANSWER C) Withdrawn amounts are taxed on a last in, first out basis When money is withdrawn from the annuity during the accumulation phase the amounts are taxed on a last in first out basis (LIFO). Therefore, all withdrawals will be taxable until the owner's cost basis is reached. After all of the interest is received and taxed the principal will be received with no additional tax consequences Which of the following is NOT allowed under the no-loss/no-gain provision? A) Payment of claims B) Free Look/Right of Rescission C) Pre-existing Condition Exclusion D) Insurance with other Insurers - CORRECT ANSWER C) Pre-existing Condition Exclusion When a health policy is replaced for a client with an ongoing claim, the no-loss/no-gain provision does not allow the insurer to apply the pre-existing condition exclusion. The new policy must automatically take over payment of the claim immediately Which of the following is true regarding commissions for Medicare supplement policies? A) Restrictions only apply to MGAs B) Restrictions only apply to monetary compensation C) They are not permitted D) They are permitted up to a certain amount for each policy - CORRECT ANSWER D) They are permitted up to a certain amount for each policy An agent or other representative that is involved in the sale of Medicare supplement policies may receive commissions as long as the first year commission does not exceed 200% of the commissions paid for selling or servicing the policy in the second year. Commission regulation rules apply to both monetary and non-monetary compensation First Dollar Coverage refers to a type of insurance which A) Requires that the insured pay the first billing from the medical provider, after which the insurer begins making payments B) Has no deductibles C) Is always primary, regardless of other coverages for the same loss D) Has a delayed deductible - CORRECT ANSWER B) Has no deductibles First dollar coverage is provided with no deductible. The insurer pays the full amount of the loss, up to the policy limit When an employee covered under a health reimbursement account changes employers, the HRA A) Returns to the insurer B) Is split between the employee and employer C) Stays with the employer D) Follows the employee - CORRECT ANSWER C) Stays with the employer HRAs remain with the originating employer and do not follow an employee to new employement What us the benefit of choosing extended term as a nonforfeiture option? A) It can be converted to a fixed annuity B) Is has the highest amount of insurance protection C) It matures at age 100 D) It allows for coverage to continue beyond maturity date - CORRECT ANSWER B) It has the highest amount of insurance protection Under this option the insurer uses the policy cash value to convert to term insurance for the same face amount as the former permanent policy. The duration of the new term coverage lasts for as long as a period as the amount of cash value will purchase An insured is hospitalized with a back injury. Upon checking his disability income policy, he learns that he will not be eligible for benefits for at least 30 days. This indicates that his policy is written with a 30-day A) probationary period B) waiver of benefits period C) elimination period D) blackout period - CORRECT ANSWER C) elimination period The elimination period is the time immediately following the start of a disability when benefits are not payable. This is used to reduce the cost of providing coverage and eliminates the filing of many claims Which of the following is true about the requirements regarding HIV exams? A) Prior informed oral consent is required from the applicant B) HIV exams may not be used as a basis for underwriting C) The applicant must give prior informed written consent D) Results pay be disclosed to the agent and underwriter - CORRECT ANSWER C) The applicant must give prior informed written consent A separate written consent form must be obtained prior to an HIV exam. HIV exam results may be disclosed to underwriters, but not agents Medi-Cal is designed to provide health insurance primarily for persons who are A) Between the age 21 and 65 B) Not offered medical insurance by their employer C) Low-Income and uninsured D) Substandard risks - CORRECT ANSWER C) Low-Income and uninsured Medi-cal exists to provide coverage to low-income or uninsured people in California A provision in a life insurance policy that provides for the early payment of some portion of the policy face amount should the insured the insured suffer from a terminal illness or injury is called A) Viatical Settlement provision B) Automatic premium loan provision C) Waiver of maturity provision D) Accelerated Benefit provision - CORRECT ANSWER [Show More]

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