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XCEL SOLUTIONS: CHAPTER 7 - LIFE INSURANCE UNDERWRITING AND POLICY ISSUE
(CALIFORNIA)
“The California Insurance Code defines "policy" as a(n) - CORRECT ANSWER written
contract"
"The cost of services charged by the Health Insurance Counseling Advocacy Program (HiCap) is -
CORRECT ANSWER no cost"
"Which word implies permissiveness according to the California Insurance Code? - CORRECT
ANSWER May"
"Which of the following does the California Insurance Code NOT require an insurance policy to
specify? - CORRECT ANSWER Insurer's financial rating"
"How many "activities of daily living" must an insured be UNABLE to perform in order to meet
the chronically ill requirement of a Long-Term Care policy? - CORRECT ANSWER Minimum of
two activities of daily living"
"Which of the following is NOT considered to be an unfair claims settlement practice? -
CORRECT ANSWER Advising a claimant to hire an attorney"
"A person who asserts a right of recovery under an insurance policy is called - CORRECT
ANSWER claimant"
"According to the PPACA, an adult can be covered by a parent's health care plan until what age?
- CORRECT ANSWER Age 26"
"According to the California Insurance Code, what is "insurance"? - CORRECT ANSWER A
contract"
"The free-look period for life insurance policyowners age 60 or older is - CORRECT ANSWER
30 days"
"Which of the following is NOT considered to be an act of insurance solicitation? - CORRECT
ANSWER Publishing a magazine where one of the advertisers is an insurer"
"Paul has an existing annuity and is sold a new one, in which the new policy holds no greater
financial benefit to him than the existing contract. This is considered a(n) - CORRECT
ANSWER unnecessary replacement"
"The California Insurance Code requires that an insurer must have enough assets to cover its
liabilities a - CORRECT ANSWER Its paid-in capital"
"When an insurer has met the qualifications necessary to transact business in California, it is
said to be - CORRECT ANSWER admitted"
"How long must life agents keep their transaction records? - CORRECT ANSWER 5 years"
"Life insurance surplus must be distributed to policyowners at what frequency? - CORRECT
ANSWER Annually"
"The California Life and Health Insurance Guarantee Association covers all of these types of
policies EXCEPT - CORRECT ANSWER Self-funded plans"
"MRMIP is a - CORRECT ANSWER state program that offers health coverage to California
residents who are not able to obtain coverage due to pre-existing conditions" "Both the Federal and state governments jointly finance which health insurance entitlement
program? - CORRECT ANSWER Medi-Cal"
"In what order are people on the MRMIP waiting list allowed to enroll? - CORRECT ANSWER
Based on the date an individual's application is received"
"Who does a life settlement broker represent? - CORRECT ANSWER Individual wanting to
sell their life policy to a third party"
"According to the California Insurance Code, how is the word "may" interpreted? - CORRECT
ANSWER Permissive"
"According the the _____ each I'm sure they must conform with state And federal laws
regarding the dissemination of an applicants for insureds private information - CORRECT
ANSWER Information and privacy protection act"
"The total premium is a combination of earned premium and - CORRECT ANSWER Unearned
Premium" "Which report contains information regarding an individual's general reputation and credit
standing? - CORRECT ANSWER Consumer report"
"When does the producer Give a premium receipt for a life insurance application - CORRECT
ANSWER When the initial premium has been collected with the application"
"Which of these documents is signed by policy delivery that certifies no change in health has
occurred original application date - CORRECT ANSWER Good health statement"
"The initial premium for a life insurance policy is typically paid in what way? - CORRECT
ANSWER It is typically obtained by the producer and forwarded to the insurer"
"Period of time for which a policy remains in existence is known as - CORRECT ANSWER
Policy term" "During the underwriting process, all of these may be utilized to help determine a life insurance
applicant's insurability EXCEPT a(n) - CORRECT ANSWER eye examination"
"Which of the following is permitted in the sale of life insurance? - CORRECT ANSWER
Replacement"
"Premium is a term used to describe the - CORRECT ANSWER Initial payment and
subsequent periodic payments to keep the policy in force" "Which of these is not considered the responsibility of a producer in the underwriting writing
process - CORRECT ANSWER Choosing final approval date"
"Which of these is not a factor in the underwriting process application - CORRECT ANSWER
National origin"
"All of these are duties of a producer when delivering an insurance policy except - CORRECT
ANSWER Leave a conditional receipt with client"
"A preferred life insurance premiums be obtained by an applicant exhibiting all of these factors
except - CORRECT ANSWER Living in the mountains"
"Mike recently lost sight in both eyes. He has a policy that pays a lump sum benefit for this
injury. What type of insurance does Mike have? - CORRECT ANSWER accidental death and
dismemberment" "Laura has an employer-based preventative health care plan that focuses on an enrollee's
problems, such as drug abuse or stress. These plans are called - CORRECT ANSWER wellness
programs"
"Trade association groups that are eligible for group medical benefits normally are - CORRECT
ANSWER in the same industry"
"Which parties are directly involved in a group accident and health insurance contract? -
CORRECT ANSWER employer and insurer"
"What is the name of the period of time during which a new employee is ineligible for group
Health insurance coverage? - CORRECT ANSWER probationary period"
"In a disability buy-sell agreement, the policies funding the agreement are owned by the -
CORRECT ANSWER business entity"
"For employees covered in multiple states under a group health plan, jurisdiction rules cannot
alter - CORRECT ANSWER COBRA laws"
"The health insurance premiums paid for by each partner in a partnership is considered to be -
CORRECT ANSWER 100% tax deductible"
"Notice of information practices must be given to a policyholder at least - CORRECT
ANSWER every 3 years"
"Fair Credit Reporting Act - CORRECT ANSWER a federal law passed in 1970 that provides an
insurer with the right to receive additional information with regard to applicants for insurance coverage"
"Field underwriter - CORRECT ANSWER the agent or producer completing the applicant's
application for insurance"
"Free-look Period - CORRECT ANSWER If the policy owner decides to return the contract to
the insurer during this period, they will receive a full premium refund"
"Inspection Report - CORRECT ANSWER a report that contains general information
regarding the health, habits, finances, and reputation of an applicant."
"Insurable Interest - CORRECT ANSWER describes the financial or emotional relationship
between two or more parties justifying one owning a life insurance policy on the other"
"Medical Information Bureau - CORRECT ANSWER a service organization that collects
medical data on life and health insurance applicants for member insurance companies"
"Policy Summary - CORRECT ANSWER summarizes the basic terms of an insurance policy,
including the conditions, coverage limitations, and premiums."
"Replacement - CORRECT ANSWER a legal activity where a producer convinces a prospective
client to lapse or surrender a life or health policy and purchase a new one"
"Representations - CORRECT ANSWER the applicant's statements on the application are
considered _________ and not warranties. A ________ need only be substantially accurate to the best of the applicant's knowledge."
"Risk Classification - CORRECT ANSWER describes the underwriting category into which risk
is placed depending upon the applicant's susceptibility to injury, illness, or death"
"Special Class - CORRECT ANSWER describes an applicant who cannot qualify for a standard
policy, but may secure one with a rider waiving the payment for a loss involving certain existing health impairments."
"Standard Risk - CORRECT ANSWER describes a person who, according to a company's
underwriting standards, is considered an average risk and insurable at standard rates"
"Substandard Risk (Impaired Risk) - CORRECT ANSWER describes an applicant whose
physical condition does not meet the usual minimum standards"
"Underwriter - CORRECT ANSWER a person who identifies, examines, and classifies the
degree of risk represented by a proposed insured in order to determine whether or not coverage should be provided and, if so, at what rate."
"Underwriting - CORRECT ANSWER the analysis of information obtained from various
sources pertaining to an applicant for insurance and the determination of whether or not the insurance should be issued as requested, offered at a higher premium, or declined."
"Warranties - CORRECT ANSWER must be absolutely and literally true."
"Which of the following is NOT covered by the Family and Medical Leave Act (FMLA)? -
CORRECT ANSWER Traveling overseas with a spouse"
"Which of the following acts is NOT a Federal offense committed by an insurance agent? -
CORRECT ANSWER Misrepresentation on an insurance application"
"Which of the following is NOT a primary objective of insurance regulation? - CORRECT
ANSWER Interpret policy provisions"
"Which type of jurisdiction requires an insurer to have its rates accepted by the Insurance
Department prior to using them? - CORRECT ANSWER Prior approval"
"What is the purpose of the Pre-Existing Condition Insurance Plan (PCIP)? - CORRECT
ANSWER PCIP was created by the PPACA for people rejected by private health insurers due to
pre-existing conditions"
"According to PPACA, what is a health benefits exchange? - CORRECT ANSWER An entity to
which individuals and small businesses can have access to affordable health coverage" "What is required after a life agent sells an insurance policy to an applicant without being
appointed by the insurer? - CORRECT ANSWER Notice of appointment must be submitted to
the Commissioner"
"An agent's attempt to stop the replacement of an existing life insurance policy is known as -
CORRECT ANSWER conservation"
Mike applied for life insurance and was issued a conditional receipt. He is later found to be
insurable and is issued a policy. When does his coverage become effective? - CORRECT
ANSWER Date of issuance of the conditional receipt"
"An applicant submits a life insurance application where an investigative consumer report is
used in the underwriting process. Which of these statements is true? - CORRECT ANSWER
Applicant has a right to receive a copy of the report" "And employer provides a non-contributory disability income group plan to its employees. How
would be treated for tax purposes - CORRECT ANSWER As taxable income"
"When a producer submits an application that discloses personal information regarding the
applicant, who supplies the privacy notice? - CORRECT ANSWER producer"
"On health insurance applications statements made on the application are considered -
CORRECT ANSWER Representations"
"What must be given to a life insurance application when the agent receives an application and
the initial premium - CORRECT ANSWER Conditional receipt"
"K is the insured and P is the sole beneficiary on a life insurance policy. Both are involved in a fatal accident where K dies before P. Under the Common Disaster provision, which of these
statements is true? - CORRECT ANSWER Proceeds will be paid to ps estate"
"A sign to get health statement would be collected by a producer at the time of - CORRECT
ANSWER Policy delivery"
Which of the following statements is NOT true concerning the relationship between group
health insurance plans and Medicare? (assuming the business has more than 20 employees) -
CORRECT ANSWER group health coverage is NOT available for workers over the age of 65"
"Typically, working individuals age 65 or over must be - CORRECT ANSWER offered the same
Health benefits as the younger employees"
"A certificate of coverage for a group health policy is best described as - CORRECT ANSWER
proof of coverage for the employee"
"Nonqualified medical expense distributions from a Health Savings Account (HSA) have a tax
penalty of - CORRECT ANSWER 20%"
"What is the federal income tax liability of a death benefit paid from a health insurance policy
to a named beneficiary? - CORRECT ANSWER benefits are not taxable"
"Which of the following statements BEST describes a double indemnity provision in travel
accident insurance? - CORRECT ANSWER benefits are doubled under certain circumstances
stated in the policy"
"Which of the following is NOT a function of accident and health insurance? - CORRECT
ANSWER pays a death benefit as a result of natural causes"
Adverse Selection - CORRECT ANSWER the tendency of a disproportionate number of poor
risks to seek or buy insurance or maintain existing insurance in force"
"Backdating - CORRECT ANSWER the practice of making the effective date of a policy earlier
than the application date"
"Binding Receipt (Unconditional Receipt) - CORRECT ANSWER one of the types of receipts
given by an insurance company upon the completion of an insurance application if the initial premium is collected with the application"
"Buyer's Guide - CORRECT ANSWER a pamphlet that describes and compares various forms
of life or health insurance. This guide must be provided to a consumer by the producer when the latter is attempting to solicit insurance"
"Conditional Receipt - CORRECT ANSWER a form customarily required to be signed by the
agent and given to the prospective owner at the time a new application is completed."
"Consumer Report (Investigative Consumer Report) - CORRECT ANSWER a detailed
background investigation that may include an interview with coworkers, friends, and neighbors about an applicant's character, reputation, lifestyle, etc"
"Credit Report - CORRECT ANSWER a summary of an insurance applicant's credit history
(credit score, debt levels, repayment history, and assumed creditworthiness, etc.), made by an independent organization that has investigated the applicant's credit standing."
"Declined Risk - CORRECT ANSWER describes an individual whose application for coverage
was rejected by an insurance company"
