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Final Exam: California Life, Accident, and
Health Insurance Questions And Correct Detailed Answers (Verified Answers) Already Graded A+
1. Question: What is reinsurance?
Correct Answer: An arrangement by which an insurance company transfers a portion of a risk it has assumed to another insurer.
- Question: An insurer enters into a contract with a third party to insure itself against
losses from insurance policies it issues. What is the agreement called?
Correct Answer: Reinsurance.
- Question: An insured owned by its policyholders is called a:
Correct Answer: Mutual insurer.
- Question: Which of the following statements regarding a life insurance policy dividend is
- It is guaranteed to be paid every year.
- It is considered taxable income.
- It is the distribution of excess of funds accumulated by the insurer on participating
- It is a penalty for early withdrawal.
TRUE?
policies.
Correct Answer: C
- Question: Victoria owns a life annuity and elects to receive annuity payments monthly
for the remainder of her life with "ten years certain". Her annuity will make payments: Correct Answer: For a minimum of 120 months and a maximum of the remainder of her life.
6. Question: What is a joint and survivor annuity?
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Correct Answer: Provides payments the annuity to two people. If either person dies, the same income payments continue to the survivor for life. When the surviving annuitant dies, no further payments are made to anyone.
- Question: What kind of annuity pays income to two annuitants until their deaths?
Correct Answer: Joint and survivor annuity.
8. Question: What is a common reason people purchase an annuity?
Correct Answer: To protect against the risk of outliving their financial resources.
- Question: Cindy buys a 10-year certain annuity with an installment refund. After
receiving monthly payments for 5 years, Cindy dies. How many remaining payments will the insurer make to her beneficiary?
Correct Answer: 60 payments.
10. Question: What distinguishes a deferred annuity from an immediate annuity?
Correct Answer: The time at which benefit payments start.
11. Question: Which of the following is NOT a characteristic of reinsurance?
- Transfers risk to another insurer.
- Protects against catastrophic losses.
- Increases the unearned premium reserve.
- Helps an insurer avoid capacity limits.
Correct Answer: C
- Question: Which of the following is a contract that involves one party which
- Insurance policy
- Investment portfolio
- Trust agreement
- Mortgage contract
indemnifies another when a loss arises from an unknown event?
Correct Answer: A
13. Question: What is an insurance policy?
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Correct Answer: A contract where one party promises to indemnify another against loss that arises from an unknown event.
14. Question: What are residual disability income insurance payments based on?
Correct Answer: The amount the insured's income is reduced by the disability.
- Question: Manuel is considered to be a disabled person as defined by the Americans
with Disabilities Act (ADA). As such, he is unable to perform any of the following life
activities EXCEPT:
- Walking
- Driving
- Breathing
- Seeing
Correct Answer: B
- Question: Which of the following is NOT a provision in a disability income policy?
- Deductible and coinsurance provision
- Elimination period
- Benefit period
- Waiver of premium
Correct Answer: A
- Question: Which of these statements is NOT true concerning recurrent disabilities?
- The insurer continues coverage after a new elimination period.
- It usually must occur within a specific timeframe after the original disability.
- It is considered a continuation of the prior disability.
- It is caused by the same or related injury.
Correct Answer: A
- Question: Kim is insured under a disability income insurance policy with an "own-
occupation" clause. She was recently injured in an automobile accident and can no longer
perform the tasks of her job. Kim is now considered to be:
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Correct Answer: Totally disabled.
19. Question: What percentage of eligible employees must participate in a
noncontributory group health plan before it can be put in effect?
Correct Answer: 100%.
- Question: Business Overhead Expense Insurance pays for:
Correct Answer: Business expenses when a business owner becomes disabled.
- Question: Minimum participation standards exist for group health insurance plans in
order to:
Correct Answer: Prevent adverse selection.
- Question: The problem of overinsurance is addressed in which health insurance
provision?
Correct Answer: Coordination of benefits.
- Question: What is the purpose of the coordination of benefits (COB) provision?
- Question: Who is financially liable for the payment of covered claims in a fully insured
Correct Answer: To avoid duplication of benefit payments and overinsurance when an individual is covered under more than one group health plan.
group health plan?
Correct Answer: Insurer.
- Question: The insurer has the option of terminating a health insurance policy on a date
stated in the contract. What type of policy is this?
Correct Answer: Optionally renewable.
26. Question: What is an optionally renewable policy?
Correct Answer: A provision allowing an insurer to terminate the policy on a date specified in the contract.
- Question: Bruce is involved in an accident and becomes totally and permanently
disabled. His insurance policy continues in force without payment of further premiums.Which policy provision is responsible for this?
