Life: Section II. Life Insurance1/ All of the following are true regarding annuities EXCEPT:A/They may be used as a life insurance settlement optionB/The contract owner and the annuitant must be the same personC/They are not suitable as short term investmentsD/They are purchased by those who are worried about outliving their savings

2/ A person who receives a bonus at work and elects to use the money to buy an annuity that will start paying monthly payments right away has purchased a:A/ Flexible premium deferred annuityB/ Single premium immediate annuityC/ Flexible premium immediate annuityD/ Single premium deferred annuity

3/The source of dividends paid to the owners of participating life insurance policies issued by mutual insurers is:A/ Earned surplusB/ Unallocated claims reservesC/ Paid-in capitalD/ Unearned premium deposits

4/ Which of the following describes the tax implications of investing in a Roth IRA?Tax deductible contributions / taxable distributionsNon-deductible contributions / taxable distributionsNon-deductible contributions / tax free distributionsTax deductible contributions / tax free distributions

5/ Social security provides protection for all of the following EXCEPT:Poor investmentsDeathDisabilityRetirement

6/ Which of the following completes the application for life insurance?BeneficiaryApplicantPolicyownerInsured

7/ All of the following are true regarding participating life insurers EXCEPT:The IRS has ruled that any dividends paid are a tax free return of premiumThey are known as mutual insurersThey are owned by their stock holdersThey may pay dividends out of their accumulated surplus

8/ All of the following are true regarding mutual insurance companies EXCEPT:They have no capital stockThey are corporationsThey may pay dividends to their policyholdersThey issue non-participating policies

9/ When a policyowner uses the cash value in their policy to buy a lesser amount of permanent life insurance, they have exercised which non-forfeiture option:Extended term1-year termReduced paid-upPaid-up additions

10/ If an employer offers employees the option of voluntarily increasing their group life coverage to an amount that is more than the group life policy normally covers, who is responsible for paying the premium for the elective coverage?All employees, including those who are not enrolledThe employerThose employees who elect to increase coverageThe cost is shared by the employer and the employees

11/ Agents must send all of the following to the replacing insurer when replacing life insurance EXCEPT:A statement signed by the agent as to whether or not replacement is involvedA statement signed by the applicant as to whether replacement is involvedA copy of the replacement noticeCopies of all printed communications used for presentation to the applicant

12/ All of the following are true regarding key person life insurance EXCEPT:The premium is tax deductible for the employer as a business expenseDeath benefits are payable to the employer tax freeThe employer is the policyowner and the beneficiaryThe employee is the insured

13/ If a corporation and a shareholder enter into an agreement that requires the corporation to buy the shareholder's shares upon his or her death, they have entered into:A split dollar planA key person agreementA buy/sell agreementA partnership agreement

14/ An individual who obtains a 30 year mortgage and would like insurance coverage which would pay off the mortgage in the event of his or her death and no more and no less, would purchase:Decreasing termLevel termVariable lifeWhole life

15/ Which of the following best describes the entire contract clause as it relates to life insurance?The policyThe policy and the application, if attached at issueVerbal statements made by the agentThe application

16/ The person upon whose life a life insurance policy is based is known as the:BeneficiaryApplicantInsuredPolicyowner17/ In the case of a variable annuity sold to a senior citizen in this state for which the owner has directed that the premium be invested in the mutual funds underlying the contract during the 30-day cancellation period, cancellation during that period entitles the owner to a refund of:All premiums paidThe account value, minus a 10% penaltyAll premiums paid, minus a surrender chargeThe account value

18/ Which of the following would not be considered to be ordinary life insurance?GroupDecreasing termWhole lifeLimited pay

19/ If the beneficiary of a life insurance policy wants $1,000 per month for as long as the money lasts, they should choose the ________ settlement option.Life incomeFixed amountFixed periodInterest only

20/ The department of an insurer that is responsible for classifying risks is:ActuarialUnderwritingClaimsSales

21/ If the beneficiary of a life insurance policy wants to take the proceeds over a 5 year period, they should select the ______ settlement option.Fixed amountInterestFixed period

22/ Which risk classification will have the highest premium?DeclinedNon-standardPreferredStandard23/ If an insured's medical conditions indicate that more information is needed, the underwriter will:Exclude those conditionsReject the applicationAdd a premium surchargeOrder an attending physician's statement24/ Life insurance policies and annuities sold to persons age 65 or older must contain an examination period of _30___ days after receipt of the policy for purposes of review, at which time the applicant may return the contract for a full refund of premium.

25/ When using the needs approach to determine how much life insurance a client should buy, producers should consider all of the following EXCEPT:Children's college expensesFuture earnings potentialFuneral and burial expenses26/ List in order from the lowest annual premium to the highest:Modified, ordinary, limited pay, single premiumOrdinary, modified, single premium, limited paySingle premium, limited pay, modified, ordinaryLimited pay, ordinary, modified, single premium

27/ The incontestability clause in a life insurance policy protects the insured by preventing an insurer from denying a claim:Before the policy has been in effect for a specified period of timeAfter the policy has been in effect for a specified period of timeAt any time, unless fraudulentAfter a specified period of time, unless fraudulent

28/ A life settlement broker represents which of the following in a life settlement transaction:A life settlement providerThe policyownerThe insurerA financial institution

29/ All of the following are dividend options on a participating life insurance policy EXCEPT:Paid-up additions1-year termCashMonthly income

30/ All of the following are true regarding group life conversion EXCEPT:The employee may convert to any policy issued by the group insurer, except termDeath during the conversion period is covered by the group policyThe employer will pay the entire cost of the new policyProof of insurability is not required

31/ The source of dividends paid to the owners of participating life insurance policies issued by mutual insurers is:Paid-in capitalUnearned premium depositsUnallocated claims reservesEarned surplus

32/ Which mode of premium payment would have the highest overall annual cost?QuarterlySemi-annualMonthlyAnnual

33/ On group life insurance, dependent children may be covered up to age:26, 21,18,19

34/ The transfer of risk to an insurance company is an effective risk management technique when:The amount and frequency of future losses are unknownThe worst possible loss is smallFuture losses are predictableThe insured wants to retain the risk

35/ The person upon whose life an annuity is based is known as the:OwnerBeneficiaryAnnuitantInsured

36/ All of the following are true regarding dividends paid by a mutual life insurance company EXCEPT:They are legally defined as a return of premium and are not taxableThey are paid out of the insurer's accumulated surplusThey must be paid in cashThey are not guaranteed

37/ Which of the following life insurance settlement options enables the beneficiary to conserve the proceeds of a life insurance policy?Fixed amountInterest onlyLump sum38/ If a client has to multiply the value of an accumulation unit by the number of units he or she owns in the separate account in order to determine the value of his or her annuity, he or she must have a(an):Equity indexed annuityTax sheltered annuity Variable annuityFixed annuity39/ Employee stock ownership plans (ESOP) invest in:Guaranteed investment accountsMutual fundsThe stock of the employerBonds issued by the employer40/ The owner of a life insurance policy may do all of the following EXCEPT:Take a loanChange the dividend scaleAssign or transfer ownership in the policyChange the beneficiary41/ All of the following are true regarding key person life insurance EXCEPT:The employer is the policyowner and the beneficiaryThe premium is tax deductible for the employer as a business expenseDeath benefits are payable to the employer tax freeThe employee is the insured42/ All of the following are true regarding participating life insurers EXCEPT:They may pay dividends out of their accumulated surplusThe IRS has ruled that any dividends paid are a tax free return of premiumThey are known as mutual insurersThey are owned by their stock holders43/ The greater the number of similar exposure units insured, the easier it will be to predict future claims based upon the law of:Diminishing returnsIndemnificationLarge numbersAdverse selection44/ The premium that an employer pays for group life insurance coverage for an employee that exceeds $50,000 in coverage is:Taxable as income to the employerTaxable as income to the employeeTax deductible for the employerTax deductible for the employee45/ Group life insurance policies may exclude all of the following EXCEPT:AviationMilitaryWarAccidents46/ All of the following are true regarding mutual insurance companies EXCEPT:They are corporationsThey issue non-participating policiesThey may pay dividends to their policyholdersThey have no capital stock47/ A retirement plan where contributions are based upon the success of the company is known as a:Profit sharing planSimplified employee pension (SEP)401kRoth IRA48/ Which of the following annuity benefit payment options would generate the highest monthly payments to the contract owner upon annuitization?Joint life10 year period certainRefund lifePure or straight life49/ In the case of a variable annuity sold to a senior citizen in this state for which the owner has directed that the premium be invested in the mutual funds underlying the contract during the 30-day cancellation period, cancellation during that period entitles the owner to a refund of:All premiums paidThe account value, minus a 10% penaltyAll premiums paid, minus a surrender chargeThe account value50/ All of the following are true regarding social security disability income benefits EXCEPT:Individuals must meet the own job definition of total disabilityIndividuals must have fully insured statusThey are not meant to replace the full value of a person's earningsThe disability must be expected to last at least 12 months or to result in death51/ When making a life settlement, a policyowner will permanently transfer all rights of ownership in the policy to another party by making a(n):Irrevocable beneficiary designationCollateral assignmentConversion of ownershipAbsolute assignment52/ Which type of term life insurance has a level face amount but a premium that increases each year as the insured gets older?DecreasingLevelConvertible Renewable53/ A client who wants life insurance protection and cash values that fluctuate in value based upon the performance of a separate account should purchase:Universal lifeVariable annuityVariable lifeIndexed life54/ Under social security, being fully insured entitles a worker and family to full benefits. To achieve fully insured status, an individual must attain at least ____ quarters of coverage.40 20 13 1055/ Which of the following would not be considered to be ordinary life insurance?Decreasing termGroupWhole lifeLimited payThe source of dividends paid to the owners of participating life insurance policies issued by mutual insurers is:Unearned premium depositsEarned surplusUnallocated claims reservesPaid-in capital56/ A client who wants life insurance protection and cash values that fluctuate in value based upon the performance of a separate account should purchase:Indexed lifeUniversal lifeVariable annuityVariable lifeAccident and Health: Section II. Accident and Health Insurance (49 questions)1/ California has a compulsory workers compensation law. Employers may satisfy the requirements of this law by providing coverage in any of the following ways EXCEPT:Purchasing a policy from a private workers' compensation insurerSelf-insuringPurchasing a commercial general liability policy from a private insurerPurchasing a policy from the California State Compensation Fund2/ How will the Patient Protection and Affordable Care Act (PPACA) affect Medi-Cal:It's role in providing health insurance to low income individuals will be diminishedFewer will be enrolled because all individuals must buy health insuranceThe number of individuals enrolled will remain unchangedMore will be enrolled because all children, parents and childless adults who have family incomes up to 133% of the federal poverty level will become eligible3/ A basic major medical insurance plan will cover all of the following EXCEPT:Physician visitsPrivate NursesHospital expensesSurgical expenses4/ All of the following are true about MRMIP coverage EXCEPT:Subscribers must pay an annual deductible and co-paymentsSubscribers must pay a monthly premiumServices are delivered through licensed health insurancePre-existing conditions are covered right away5/ Which of the following provisions are designed to prevent an insured from collecting more than they lost when they are covered by two group medical expense plans:Contribution clauseCo-paymentCo-insuranceCoordination of benefits6/ Third party administrators handle claims on behalf of:Indemnity plansReimbursement plansSelf-funded planService plans7/ Part II of every workers' compensation policy must provide coverage for which of the following benefits:Loss of incomeDeathMedical and rehabilitationEmployer liability8/ Part A of original Medicare provides coverage for those who are terminally ill and have six months or less to live, which is known as:Hospice careHome health careSkilled nursing facility careHospital care9/ All of the following are true regarding "morbidity" tables EXCEPT:They measure the probability of deathThey are based upon the law of large numbersThey measure the probability of sicknessThey measure the probability of injury10/ The Employee Retirement Income Security Act (ERISA) requires that employee benefit plans be managed for the benefit of:ProvidersParticipants and beneficiariesEmployersInsurers11/ All of the following are true regard Medicare EXCEPT:Part C provides coverage for long-term careIndividuals are automatically eligible for Part A on their 65th birthdayPart D covers prescription drugsPart B covers doctor's services12/ Entities that provide both health care services and health care coverage are known as:Dual choice plansPreferred provider organizationsExclusive provider organizationsHealth maintenance organizations13/ Regarding surviving spouse benefits under social security, the time interval between the date survivor benefits end and the date benefits resume is known as the _________ period:EliminationProbationaryBlackoutWaiting14/ All of the following are characteristics of group major medical expense insurance policies, EXCEPT:CapitationHigh limitsDeductibleCo-insurance15/ Under the Patient Protection and Affordable Care Act (PPACA), children may be covered on their parents medical expense insurance plan up to the limiting age of:182623 2116/ All of the following are true regarding the Medical Information Bureau (MIB) EXCEPT:Applicants have the right to see any information the MIB holds on themInsurers may not refuse to accept an application solely due to information in an MIB reportMIB reports are based upon information supplied by doctors and hospitalsMIB information is reported to underwriters in coded form17/ Which of the following coverages provided by a workers' compensation policy is written without dollar or time limits:SurvivorsDisability incomeMedicalDismemberment18/ Under the Patient Protection and Affordable Care Act (PPACA), health plans cannot limit or deny benefits or deny coverage for a child younger than age ____ because the child has a pre-existing condition that developed before the child applied to join the plan:2321191819/ Continuation of employee group medical expense coverage is permitted under Cal-COBRA under all of the following circumstances EXCEPT:For a dependent child who reached the limiting ageFor a dependent spouse, upon divorcing a covered employeeFor dependents, upon the death of a covered employeeFor a covered employee who was terminated for gross misconduct20/ Part I of a workers' compensation policy contains:Employer's liabilityThe conditions and exclusionsThe coverage required by state lawOther States coverage21/ Under social security, eligible dependent children and an eligible surviving spouse under the age of 60 may be entitled to survivors benefits upon the death of a "currently insured" worker who has at least ____ quarters of coverage earned during a ____ quarter period which ends with the calendar quarter in which the covered person dies, becomes eligible for retirement benefits, or became disabled:36; 7212; 246; 1318; 3622/ On "participating" health insurance policy issued by a mutual insurance company, dividends paid to policy holders are:Not taxable since the IRS treats them as a refund of a portion of the premium paidGuaranteedTaxable as ordinary incomePaid at a fixed rate every year23/ All of the following are factors that insurers consider in calculating health insurance rates EXCEPT:Investment returnMortalityMorbidityExpenses24/ To be eligible for the MRMIP, an individual must meet all of the following requirements EXCEPT:Be a permanent resident of CaliforniaBe not eligible for COBRA or Cal-COBRAHave been denied, uprated or terminated by an insurer due to a pre-existing conditionBe enrolled in Medicare25/ The Patient Protection and Affordable Care Act (PPACA) requires health plans to provide rebates to consumers for the amount of the premiums spent on clinical services and quality that is less than ____% for plans in the individual market place:5065758026/ Insurers offering Medigap policies in California must offer Medicare supplement:All 10 standardized plansPlan 'A' onlyPlans 'A' and 'DPlans 'A' and either Plan 'C' or 'F'27/ The federal Consolidated Omnibus Budget Reconciliation Act (COBRA) applies to groups of ____ or more employees:21052028/ All of the following are true regarding a non-contributory employer group medical expense insurance policy EXCEPT:The employer is the master policyholder100% of the eligible employees must enrollPremiums must be paid entirely by the employeesEmployees receive certificates of insurance summarizing their coverage29/ All of the following are eligible for Medicare EXCEPT:People age 65 or olderPeople of any age whose income is less than 133% of the federal poverty levelPeople under 65 with certain disabilitiesPeople of any age with end-stage renal disease (ESRD)30/ Medical expense insurance policies often contain a provision which states that during the first 12 months after the policy's effective date, there is no coverage for a pre-existing sickness that recurs. This provision is known as:A probationary periodAn exclusionAn elimination periodAn impairment rider31/ Which of the following policies provides seamless coverage for accidents and sickness incurred both on and off the job:24 Hour coverageComprehensive major medicalWorkers compensationDisability income32/ The California major risk medical insurance program (MRMIP) was created to provide health insurance to California residents who are unable to obtain coverage in the individual health insurance market. The MRMIP is funded primarily by:Tobacco taxesProperty taxesPremium taxesSales taxes33/ All of the following are factors used to develop a morbidity table EXCEPT:IntelligenceGenderAgeOccupation34/ A worker must have "fully insured" status under social security to qualify for all of the following benefits EXCEPT:SurvivorsDeathDisabilityRetirement35/ On a major medical insurance policy, the amount that an insured must pay on a claim before the insurer will pay is known as:DeductibleInside limitCo-insuranceCo-payment36/ After the deductible is met, Medicare part B will pay ____% of the Medicare approved amount for the medical service provided:50100208037/ All of the following are parts of Medicare EXCEPT;Part D Medi-CalPart C Medicare AdvantagePart B - Medical InsurancePart A - Hospital Insurance38/ A period of time that must pass before a new employee is eligible for the employer's group medical expense insurance is known as the:Waiting periodElimination periodProbationary periodEligibility period39/ A health insurer's net profits, less any dividends paid out to policyholders, is known as their:Earned surplusLegal reservesUnder writing profitNet worth40/ Which of the following parts of Medicare is known as the "managed care" option:Part C Medicare AdvantagePart A HospitalsPart B MedicalPart D Prescription drugs41/ On a major medical insurance policy, when the dollar amount of the insured's share of the co-insurance reaches a certain point, the insured no longer has to share in the claim expenses. This feature is known as:Stop-lossCoordination of benefitsCo-insuranceDeductible42/ To attain "fully insured" status under social security, an individual must have worked and contributed to social security for at least ____ calendar quarters:1006204043/ An individual's MRMIP premium is based upon all of the following EXCEPT:Nature of their pre-existing conditionsNumber of dependents enrolledWhere they live within the stateAge44/ Although a "fully insured" worker is entitled to retirement benefits under social security as early as age 62, they must be at least age ____ to automatically become eligible for Medicare:59 60656645/ At times, the MRMIP may have a waiting list due to limited funding. An individual's placement on the waiting list is based upon:The date their completed application was receivedThe date their prior coverage was terminatedThe severity of their pre-existing conditionTheir date of birth46/ An applicant for health insurance completes an application, indicating that they have been treated for various medical conditions in the past. If the underwriter needs more information regarding these past treatments, they will most likely order a(n):Attending physicians statementAgents reportInvestigative consumer reportMIB report47/ All of the following are true regarding the California Health Benefit Exchange EXCEPT:In 2014, vouchers will be available to individuals with incomes between 133% and 400% of the federal poverty levelThe Exchange will make it easier for individuals to buy health insuranceHealth plan and insurer participation in the Exchange is voluntaryIn 2014, tax credits and subsidies will be available to individuals with incomes between 133% and 400% of the federal poverty level48/ All of the following are true regarding an HMO Gatekeeper EXCEPT:They are usually specialists in their fieldThey must authorize all care, except in emergenciesThey may charge a co-payment per office visitThey are also known as primary care physicians49/ What feature contained in a major medical expense policy is designed to discourage the use of emergency room treatment:DeductibleInpatient screeningCo-insurancePre-admission test

Accident and Health: Section III. Long Term Care (4 questions)1/ Which of the following is true regarding "qualified" long-term care policies:They may have state and federal tax advantagesBenefits are taxableBenefit triggers are less restrictive than which may be allowed in non-qualified policiesPremiums are always tax deductible2/ All of the following are true regarding long-term care policies sold in California EXCEPT:They must include coverage for inflation protectionThey must be guaranteed renewableReplacement policies may not result in an increase in premiums and a decrease of benefitsCommissions are limited on replacement policies3/ Which two of the following are considered to be activities of daily living in most long-term care policies:Eating and dressingHearing and seeingWalking and runningBathing and sleeping4/ A "comprehensive" long-term care policy must provide coverage for:Both institutional care and home careHome care onlyNursing and residential facilities onlyAcute care in the hospitalAccident and Health Section IV: Health and Disability Insurance (4 questions)1/ In order to be considered to be "totally disabled' under social security's definition, an individual must meet all of the following criteria EXCEPT:Mandatory 12 month waiting periodBe unable to perform any gainful workFully insured statusDisability must be expected to last at least 12 months or to result in death2/ On disability income insurance, another name for the "waiting" period is the _______ period:EliminationEligibilityProbationaryEnrollment3/ Insurers may change which of the following on a guaranteed renewable health insurance policy:Rates by classIndividual ratesNo changes are permittedCoverage4/ All of the following are true regarding California's Health Insurance Counseling and Advocacy Program (HICAP) EXCEPT:They sell long-term care insuranceThey serve Medicare beneficiaries and their familiesThey provide free assistance, education and consumer advocacy programsTheir volunteers provide unbiased confidential individual counseling throughout the state