2013 Code & Ethics Crash Course(Life and Health)

1

According to Proposition 103, the commissioner of insurance became an elected official. The commissioner may serve:A. As many terms for which he is electedB. One term onlyC. Two consecutive terms (8 years)D. No mention is made in the insurance code as to term limits

**note: if the commissioner dies while in office, a new commissioner is appointed by the governor to finish the term

2

The McCarran-Ferguson Act:

A. Required Ocean Marine policies to carry worker’s compB. Gave the states the right to regulate the majority of the Insurance Industry at the state levelC. Created the Good Driver DiscountD. None of the above

3

Any person capable of making a contract of insurance subject to the restrictions of the insurance code is:

A. An insurerB. A brokerC. An agentD. A solicitor

4

Who is allowed to change a policy fee?

A. An insurerB. An insurance agentC. An insurance brokerD. All of the above

5

Who has ownership of renewals?

A. An independent agentB. A captive agentC. The insurance companyD. An exclusive agent

6

When an insurer has a person that solicits, negotiates, and effects contracts on behalf of the insurer, they are considered to be a/an:

A. Agent (producer)B. SolicitorC. Captive (agent)D. Independent agent

7

Which of these best describes an “agent”?A. One who is appointed by another agent or broker, receives commissions from the employer, transacts insurance with the insurers that the employer represents and acts on behalf of the clientsB. One who is not appointed by anyone, is licensed to transact insurance with admitted insurers, receives commissions from them but acts on behalf of the clientsC. One who is appointed by any number of insurers, receives commissions from them and transacts on their behalfD. One who is appointed by any number of admitted insurers, receives commissions from them, may also receive a fee from the clients and acts on his own behalf

8

An agent who sells insurance for only one company as opposed to an agent who represents several companies is considered to be a:

A. Broker B. Independent agentC. Captive agent D. Agent

9

An insurance agent with a LIFE license can transact:

A. Auto insuranceB. Life insuranceC. Homeowners insuranceD. All of the above

10

In the California Insurance Code, there is a definition that reads in short, “…a person who offers to advise for a fee, any insured having interest in life or disability insurance contracts…” This is a:

A. An insurance broker paid on a fee for serviceB. A solicitorC. A life and disability analystD. A claims adjuster

11

As defined in the insurance code, a life agent is:

A. An insurance agentB. A brokerC. A natural person appointed to help solicit insuranceD. None of the above

12

Which of the following describes an express authority?

A. A person holding the funds or property of another person in a position of trust B. Authority of an agent that is specifically granted by the insurerC. Authority of an agent that is created when the agent oversteps actual authorityD. None of the above

13

When an agent is authorized to do business on behalf of an insurer, it is considered which of the following?

A. Express authorityB. Implied authorityC. Apparent authorityD. None of the above

14

Implied Authority is:A. Authority of an agent that is specifically granted by the insurer in the agency contract.B. Authority of an agent that the public may reasonably believe the agent to haveC. Authority of an agent that is created when the agent oversteps actual authority, and when inaction by the insurer does nothing to counter the public impression that such authority existsD. All of the above

15

Mary is a licensed insurance agent who represents ABC Insurance Company. If you were to look at the front of her office, you would see a sign that reads:

ABC Insurance CompanyMary’s Insurance Agency

If Mary performs acts that are not specifically named in her written contract with ABC Insurance Company, she is exercising her _________ authority.

A. ImpliedB. ExpressC. PrincipalD. All of the above

16

What is an apparent authority?A. Authority of an agent that is specifically granted by the insurer in the agency contract.B. Authority of an agent that the public may reasonably believe the agent to haveC. Authority of an agent that is created when the agent oversteps actual authority, and when inaction by the insurer does nothing to counter the public impression that such authority existsD. All of the above

17

Travel AD&D insurance would be sold by all of the following except:

A. Vending machinesB. Insurance agents (P&C agents)C. Credit cardsD. The insurance company

18

Which of the following best describes direct marketing?

A. Selling insurance out of a vending machine at the airport

B. Buying insurance from an agent who is appointed by an insurance companyC. Buying insurance from a brokerD. None of the above

19

How is insurance marketed through direct mail companies?

A. BrokersB. SolicitorsC. Salaried EmployeesD. Surplus Lines Brokers

20

All of the following are examples of direct marketing except:A. TelevisionB. InternetC. Calling ProspectsD. Radio

21

Bill, a life agent, died. When would his insurance license terminate?

A. 30 days after deathB. End of licensing year in which he diedC. Upon closing of his business in progressD. Upon death

22

When can a partnership continue if a new partner joins?A. After the DOI is notified within 30 days and the changes are approvedB. After the DOI is notified within 90 days and the changes are approvedC. ImmediatelyD. None of the above

23

A stock insurance company is:

A. An insurance company incorporated in some other state, but having its executive or home office in this stateB. An insurance company owned and controlled by

the policy holdersC. An insurance company with a stated amount of

capital stock owned by stockholders who compose the company and direct it by means of officers and directorsD. Any insurance company incorporated in and having its home office in this state

24

Which of the following is owned by its policy holders and was formed for their benefit?

A. Stock insurerB. Lloyd’s of LondonC. Mutual insurerD. reciprocal/inter-insurance exchange

25

Which of the following best describes a mutual insurance company?A. A corporation owned by individuals who contribute capital through the purchase of stockB. A corporation owned by individuals who contribute capital through the purchase of policiesC. An unincorporated society without capital stock which provides benefits to membersD. None of the above

26

When a mutual insurance company changes to a stock insurance company, it is referred to as:

A. MutualizationB. Stock splitC. Stock buy outD. Demutualization (or conversion)

27

Which of the following is true about a fraternal insurance company?

A. Membership is required in the society to purchase insurance from the societyB. The are a profit-seeking companyC. Insurance can be purchased whether or not you are a memberD. None of the above

28

Which of these may not be incorporated?

A. Mutual companyB. Stock companyC. Reciprocal or inter-insurance exchangeD. Fraternal

29

What best describes the form of a reciprocal insurer?A. They hire an accountant to manage the companyB. They hire an executive to manage the companyC. They hire an attorney in fact to manage the companyD. They hire a lawyer to manage the company

30

Which of these is a correct statement about an admitted insurer?A. It must have an office in this stateB. It must have its home office in CaliforniaC. Any insurer approved to transact insurance in

California is an admitted one, without regard to location.

D. Only insurers located outside California need to be admitted in order to transact insurance in this state

31

A surplus lines broker:

A. Acts as a life agentB. Acts as a property and casualty agentC. Places insurance with a non-admitted insurer

when the insurance cannot be procured from admitted insurers

D. Is a managing general agent for a non-admitted insurer

32

Which could be an admitted insurer?

A. A domestic insurerB. An insurer organized under the laws of CanadaC. Not organized under the laws of CaliforniaD. Either a domestic, foreign, or alien insurer

33

A person licensed as an insurance agent, life agent, insurance broker, or an insurance solicitor may legally do which of these?

A. Act as an agent for a non-admitted insurer to transact insurance in this state

B. Advertise for a non-admitted insurer in this stateC. Aid a non admitted insurer to transact insurance in this stateD. None of the above

34

If someone were transporting dangerous animals from Africa, where might he obtain insurance?

A. A foreign insurerB. An alien insurerC. A managing general agentD. A surplus lines broker

35

The California Insurance Code defines a domestic insurer as an insurer organized under the laws of:

A. The state of California, whether or not it is an admitted insurer

B. The state of California, and must be an admitted insurerC. The state of California, only when it is not an

admitted insurerD. Any state of the United States, whether or not it is an admitted insurer

36

An insurer organized under the laws of any state outside the state of California is a:

A. Domestic insurerB. Foreign insurerC. non-alien insurerD. non-admitted insurer

37

An insurer organized in Great Britain is:

A. Lloyds of LondonB. ForeignC. AlienD. Domestic

38

What is the process called whereby insurers decide which customers to insure and what coverage to offer?

A. Adverse selectionB. RatemakingC. Marketing D. Underwriting

39

The pricing of a disability policy is based on the financial loss of a certain group of people over a certain period of time. This is the pricing principle known as:

A. FrequencyB. Rapidity C. RiskD. Occurrence

40

Why is having a large number of similar exposure units important to insurers?A. The greater the number insured, the more premium is collected to offset fixed costs.B. The insurer increases its market share with every

insuredC. The greater the number of insured, the greater amount of premium collected to help cover lossesD. The greater the number insureds, the more accurately the insurer can predict losses and set appropriate premiums

41

The mathematical rule that states that as the number of individual but similar exposure units increases, the easier it is to predict losses is which of the following?

A. Insurable interest standardB. Contract lawC. The law of large numbersD. Materiality

42

In California, a rate will not remain in effect if it is considered to be any of the following except?

A. Inadequate B. Unfairly discriminatoryC. Impartial D. Excessive

43

What is one of the main factors used by the commissioner to determine whether a rate is excessive or unfairly discriminatory? A. The degree of competition within the stateB. Complaint history of the insurer by its policy

holdersC. Whether the rate mathematically reflects the

insurance company’s investment incomeD. Length of time the insurer has been admitted

to do business in the state44

Which of the following describes an insurer who has enough financial resources only to provide for all it liabilities and reinsurance of its outstanding risks?

A. GuaranteedB. InsolventC. SolventD. Non-participating

45

An insurer must have money in reserves to cover its liabilities and reinsure its outstanding risks. In addition to this, the code requires a company to have:

A. $1,000,000B. No additional limits are required by the codeC. Assets equivalent to paid in capitalD. 20% above its reserves

46

If a company has a poor rating, the agent can guarantee his client that the company will not become insolvent.

A. TrueB. False

47

According to the CA insurance code, an insurance policy must specify all of the following except:

A. The perils insured againstB. The financial rating of the insurerC. The property or life being insuredD. The policy period

48

The purpose of the California Life and Health Insurance Guarantee Association (CLHIGA) is:A. It helps small insurers with less capital to compete with larger insurersB. To protect life policy holders and/or insureds

when any insurer becomes insolventC. To guarantee that any promises made by any

insurer’s sales or marketing units are filledD. (subject to certain limitations) to protect life

and health policy holders and/or insureds when member insurers become insolvent

49

Which is NOT covered by CLHIGA?

A. Individual life insuranceB. Group term insuranceC. Employer self-fund planD. Individual annuities

50

The CLHIGA does not cover:

A. Individual health insuranceB. Stop loss group coverageC. Individual termD. None of the above

51

Who are members of CLHIGA?

A. Non-admitted companiesB. All foreign insurance companiesC. Admitted companiesD. None of the above

52

What classes of insurance are exempt from the California Insurance Guarantee Association (CIGA)?

A. Worker’s compB. Auto insuranceC. Life and annuityD. Plate glass insurance

53

Concerning the Insurance Guaranty Fund:

A. It cannot be used in agent’s advertisingB. An agent cannot tell the insured that should

the insurer become insolvent, the fund will guarantee the policyC. An agent cannot say that the insurance company’s assets are backed by the fundD. All of the above

54

The retention limit is:

A. The maximum risk an agent will accept on a policyB. The maximum risk that the insurance department will allow an insurer to acceptC. The maximum risk a company will accept on a

policyD. The minimum risk required by the DOI

55

When an insurance company works with another insurer because it has exceeded its retention limit on a risk, this would be an example of:

A. CoinsuranceB. Reinsurance C. Joint marketingD. Risk sharing

56

A type of insurance where one insurer transfers loss exposures from policies written for its insureds to another insurer is known as?

A. CoinsuranceB. ReinsuranceC. Captive InsuranceD. Reciprocal Insurance

57

Insurers may purchase reinsurance for a variety of reasons. Which of the following is not a good example of the use of reinsurance. Insurer purchases reinsurance:

A. Only on the below average business submitted to them, keeping the good business for themselves

B. To avoid capacity problems by reducing the amount of unearned premiumC. To more safely insure an exceptionally large accountD. For protection from catastrophic exposure such

as hurricanes or earthquakes58

A person who acts in a capacity that requires an active license without having a valid license is guilty of a:

A. FraudB. Misdemeanor C. Felony D. Misrepresentation

59

An insurer’s violation of the federal law regarding in the transaction of insurance can result in fines up to:

A. $100,000B. $15,000C. $40,000D. $50,000

60

According to the CA Department of Insurance, which term is mandatory?

A. OathB. May C. WarrantyD. Shall

61

According to the CA Department of Insurance, which term is permissive?

A. OathB. May C. WarrantyD. Shall

62

The Commissioner may investigate the qualifications of an applicant for a license. He then:A. May deny a license after a hearing if the applicant has knowingly made a misstatement in the application for the licenseB. May deny a license without a hearing if the applicant is lacking integrityC. Shall deny a license without a hearing if the applicant as previously conducted any business in a dishonest mannerD. Shall not deny a license if the applicant has had a

license suspended or revoked for cause in the past 5 years

63

The Insurance Commissioner may, without a hearing, deny a license application if the applicant has:1. Committed a felony as shown by a final judgment of conviction2. Committed a misdemeanor specifically denounced by the insurance code3. Had a previous license application denied for cause within the past 5 years4. Has a previous license suspended or revoked for cause within the past 5 years

A. 1 and 2B. 2 onlyC. 2, 3, and 4D. all of the above

64

The insurance commissioner may investigate the applicant for an insurance license and deny it if the applicant has been convicted of:1. A felony2. A misdemeanor denounced by the insurance code3. Any misdemeanor4. A public offense having as one of its elements a fraudulent act or an act of dishonesty

A. 1&2B. 1, 2 & 3C. 1, 2 & 4D. All of the above

65

An applicant for an insurance license had another professional license revoked. What would the commissioner most likely do?

A. Nothing, it did not involve insuranceB. Deny the application without a hearingC. Take it under advisementD. Deny after a hearing

66

All of the following are valid reasons for the insurance commissioner to deny the application for an insurance license except:

A. Applicant does not have a good business reputationB. Applicant is not properly qualified to performC. Applicant does not have a California business addressD. Applicant lacks integrity

67

An applicant for an insurance licenses does not fully qualify for and receive that license before the pending application expires. If he still desires to be licensed, what must he do?

A. File another application onlyB. Pay only the feesC. Pay all feed again and pay a penalty feeD. File another application and pay fees again

68

If an applicant has filed an incomplete application with the commissioner of insurance, what must he do:

A. Wait and re-file after 60 daysB. Submit an amended application with any amended filing feesC. Start the process over by filing a new applicationD. Ask for a hearing

69

“Transact” as applied to insurance includes:1. Solicitation2. Negotiations before execution of a contract of insurance3. Execution of a contract of insurance4. Transaction of matters after the execution of the contract and arising out of it

A.2 and 4B. 1, 2, and 3C. 1, 3, and 4D. All of the above

70

When may an applicant for a license transact insurance?

A. When the insurance company appoints themB. When the license is issued and the applicant

has been appointed by an insurerC. They can transact once they pass the examD. when the exam is passed and all fees are paid

71

When may an agent transact for an insurance company?

A. When the agent receives the action notice of appointment

B. When the commissioner receives the notice of appointmentC. When the appointing company signs the action notice of appointment. D. At the beginning of the fiscal year.

72

What must an insurer who accepts an application from an agent who is not appointed by that company do, if they subsequently will issue a policy based on that application?

A. The agent must become an employee of that insurer within 30 days or re-submit the

application B. Add the agent’s name on the company’s list of approved agentsC. Send the agent an employment approval notice within 30 days of policy issuanceD. Forward to the insurance commissioner a notice of appointment within 14 days of receipt of the application

73

Effective Jan 1, 2011, A new Life/Health or Property & Casualty Agent will need to take continuing education courses to renew their license. The requirement is:

A. 24 hours per two-year license termB. 25 hours per year during the first four 12-month intervals C. 30 hours during the first 24-month intervalsD. No continuing education is required

74

If you do not receive a notice of renewal for your license:

A. You have a 3 month grace periodB. You are excused from renewalC. It is your responsibility to renew whether or not you receive a noticeD. Your license will renew automatically and you

will be billed later within a certain time

75

When a licensed agent submits a renewal application with applicable fees on or before the expiration date:

A. The agent will be able to transact if a receipt for payment is returned prior to the license expiration dateB. The agent will be able to transact for up to 60 days after the specified expiration dateC. The agent will be able to transact if the agent goes in person to the insurance department to receive a temporary extension of the licenseD. The agent will be able to continue to transact after a 30-day extension to transact without receipt is requested and approved

76

When is a permanent insurance agent’s license, life insurance agent’s license or a solicitor’s license inactive?

A. When it is not renewedB. When no company or employer has an appointment in force for the licensee, but renewal fees are paidC. During a time that the licensee has written only personal or controlled insuranceD. Any of the above

77

An agent held one appointment with an insurance company. The appointment was terminated. What is correct?

A. The license is active until the end of the termB. The license is inactiveC. The agent must be re-appointed by the same companyD. The agent is required to have another action notice of appointment filed within 30 days

78

An agent’s appointment to sell insurance on behalf of an insurer is subject to cancellation if:

A. The agent does not renew his licenseB. The insurer is under investigation for fraudC. The insurer is not admittedD. The agent’s fiduciary account is closed

79

If a licensee wants to terminate and surrender his license, what must he do?

A. Destroy the original licenseB. Destroy the original and notify the commissionerC. Deliver the license to the commissionerD. Nothing

80

If a licensee wants to terminate his license and the license is in the possession of the insurer or the licensee’s employer, what must he do?

A. Tell the employer he wants to terminate the licenseB. Write the insurer with whom he has an appointmentC. Make the surrender by written notice to the commissionerD. Nothing

81

If an agent moves, he should advise the commissioner of his change of address:

A. Within 90 days of movingB. Within 90 days of licensing renewalC. ImmediatelyD. It is not necessary

82

Every licensee must include his license number on his business card in:

A. A larger type than the company nameB. The same size type as the company nameC. A smaller type than any telephone number, address, or fax numberD. The same size type, and font, as any telephone number, address, or fax number

83

When advertising on the internet in CA, an agent or broker must provide all the following except:

A. Name of the licenseeB. Office addressC. Expiration date of the licenseD. License number

84

When advertising on the internet, all of the following are required except:

A. His/her name as it appears on his/her insurance licenseB. His/her license numberC. The state of his/her domicile and principal place of businessD. His/her telephone number

85

John Jones holds individual licenses as an insurance agent and broker. He employs two solicitors in his agency. Which of these names is acceptable for his use under the regulations adopted by the insurance commissioner?

A. John Jones insuranceB. John Jones and associatesC. John Jones Insurance ServicesD. All of the above

86

Records of an agent or broker must be available to the commissioner:

A. At all timesB. Only after written notice from the commissionerC. 15 days after the license is issuedD. Never

Note: Not showing records to the commissioner will result in a misdemeanor

87

How long must an agent maintain records sold in CA?

A. 10 yearsB. 6 yearsC. 5 yearsD. 2 years

88

If an agent fails to provide documentation to the insurance commissioner after already being given a warning, it would result in:

A. A felonyB. A misdemeanorC. Another warningD. Termination of license

89

Records of an agent/broker must be stored in which of the following?

A. Primary/principal officeB. Any locationC. Storage as long as it is approved by the commissioner D. Any of the above

90

When working in insurance, in connection with sales or loans, violating the legal provision specified by California law is considered a:

A. FelonyB. MisdemeanorC. FraudD. All of the above

91

According to the California Insurance Code, the penalty for failure to comply with a Notice of Seizure order is:

A. No specific fine. There are just guidelines for the insurance commissioner to followB. $1,000 flat fineC. $1,000 fine and imprisonment for up to one year D. $1,000 fine and/or imprisonment for up to one year

92

In insurance terms, a representation can be considered:

A. An absolute factB. An implied warrantyC. An express warrantyD. None of the above

**note: this is an when an agent gives a statement to the insured

93

What is a representation that fails to correspond with its stipulations or assertions?

A. FatalB. FraudC. FrivolousD. False

94

What is an express warranty?

A. A factB. A statement, provision, or promise contained in a document that is signed by the insured.

95

If there is an inadvertent misrepresentation of a material fact, what are the options of the injured party?

A. Prove that the misrepresentation was materialB. As it was inadvertent, the injured party can do nothingC. Rescind the contractD. None of the above

96

What can an insurer do when a fraudulent and intentional omission is committed on the part of the insured proving a warranty false?

A. Have the insured imprisoned for up to 6 monthsB. Rescind the contractC. Force the insured to pay a fineD. Force the commissioner to fine and imprison the

insured

97

When may a representation be withdrawn?

A. At any time as long as all parties agreeB. It cannot be withdrawnC. Only before the insurance is in effectD. Only after the policy is in effect

98

Neglecting to communicate that which a party knows, and ought to communicate, so that the other party may make a sound decision is known as:

A. ConcealmentB. Material informationC. BoycottingD. None of the above

99

What information can a party to a contract of insurance be allowed not to communicate according to California law?

A. Information which the other party already knowsB. Information not specifically asked by an agent and company, even if it’s considered relevantC. Information which is material to the contractD. Information which cannot be proven but is material

100

Under which circumstances does a party involved in a contract of insurance need to communicate information based solely on his judgment?

A. NeverB. Only when askedC. only when relevant to the matter in questionD. always

101

What rule is used to determine the importance of a representation?

A. The law of adhesionB. The law of aleatory contractsC. The materiality of concealmentD. The insurable interest standard

102

In the California Insurance Code there is a definition that reads… “a person shall not make any representation or comparison of insurers or policies to an insured which is misleading, for the purpose of inducing him to lapse, forfeit, change or surrender his insurance on a temporary or permanent plan.” This is called

A. MisrepresentationB. TwistingC. ConcealmentD. Opinion

103

Any transaction that involves purchasing a life insurance policy and terminating an existing policy is known as:

A. ReplacementB. ReinsuranceC. ReinstatementD. Assignment

104

The purpose of replacement rules regarding life insurance is:

A. To protect the interest of insurers against fraudB. To protect the rights of the insurance agent to collect commissionsC. To protect the interests of life insurance purchasers by establishing standards of conduct to be observed in replacement transactionsD. None of the above

105

An agent who replaces an existing life insurance contract must do all of the following except:

A. Submit a copy of the replacement notice to the applicant

B. Submit a copy of the replacement notice to the existing insurer

C. Submit a copy of the replacement notice to the replacing insurer

D. Obtain a signed statement from the applicant as to whether insurance is to be replaced

106

Section 770 of the California Insurance Code:A. Gave the states the right to regulate the majority of the insurance industry at the state levelB. States that no one engaged in the business of financing real or personal property can make such financing agreement contingent upon the placing of insurance business with a specified agent or brokerC. Required Ocean Marine policies to provide Worker’s CompD. None of the above

107

In the state of California:

A. Twisting is an approved practiceB. Providing free insurance coverage as an inducement for completing the transaction is not legalC. Life and health premiums may not be related to

the age of the insuredD. A life solicitor’s license has the same licensing requirements as a life agent’s license

108

A developer has arranged with an insurance company to offer a free annuity to help sell his retirement homes in Sun City. This practice is:

A. IllegalB. UnethicalC. OKD. Not regulated

109

In order to sell Mr. Smith a policy, an agent splits her commission with him. This practice is known as:

A. TwistingB. RebatingC. ReplacementD. Misrepresentation

110

An act which requires a reporting agency to take action of a consumer complains about inaccurate information is:

A. EPOB. Medical Information ActC. Fair Credit ActD. Cobra

111

One of the goals of the Information and Privacy Act is to make sure personal information collected is handled in confidence and not given to those who have no right to use it.

A. TrueB. False

112

The insurance company is required to disclose to a client what information it is gathering for market research even though it is partly used for insurance purposes.

A. TrueB. False

113

When an agent accepts premium from the insured and uses the money for personal gain, it is considered:

A. TheftB. FraudC. ConcealmentD. Misrepresentation

* ”Commingling”, and “Misappropriation of funds” are theft too.

114

All of the following might make an agent act unethically except:

A. Being mostly concerned about earningsB. Associating with unethical agentsC. Being pressured as production is not up to

quotaD. Placing clients’ interests first

115

Which of the following is not a prohibited practice?A. Advising a client not to obtain the services of

an attorneyB. An insurance organization advising its members not to place business with an insurer offering a line of insurance directly to the publicC. Advising a client of the statute of limitationsD. All of the above

116

Which of the following would not be an unfair trade practice?

A. Advising clients not to obtain the services of an attorney

B. Advising clients not to place business with a company offering a line of insurance directly to the publicC. Charging males and females different rates for life or annuity contracts according to the mortality table that is segregated by sexD. Advising clients that an insurer is protected from

insolvency by the California Insurance Guarantee Association

117

All of the following are considered unfair claim practices except:

A. Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed and submitted by the insuredB. Misrepresenting to claimants any pertinent facts or policy provisions which relate to the coverage at issueC. Failing to acknowledge and act reasonably promptly on communications relative to policy claimsD. Directly advising a claimant to obtain the services of an attorney

118

The code allows insurers to ask the birthplace of an applicant if it is used to identify and not discriminate against the applicant.

A. TrueB. False

119

One of the major responsibilities of an agent is to help the underwriter reduce risks and select risks to insure.

A. TrueB. False

120

Male and female premium rates can differ according to the mortality table and is allowed by the code.

A. TrueB. False

121

An insurer may not refuse to insure, refuse to continue to insure, or limit the amount, extent or kind of coverage available, or charge a different rate for the same coverage of a physically or mentally impaired person except when based on sound actuarial principles or related to actual and reasonable anticipated experience.

A. TrueB. False

122

According to the code, all insurers must maintain a department to investigate:

A. Possible abuses of rating lawsB. Possible arsonC. Possible fraudulent claims from insureds D. Possible fraud by insurers

123

According to the CA Department of Insurance, committing fraud is considered:

A. A misdemeanorB. A felonyC. A forgivenessD. An infraction

124

According to the California Insurance Code, what must appear on a Notice of Claim form given to an insured?

A. Telephone number of the DOIB. Information regarding the Arson BureauC. Information regarding an Insurance Claims Analyst BureauD. A notice stating that any person who knowingly presents a false or fraudulent claim is guilty of a crime and may be subject to fines and confinement in state prison

125

The code prohibits pretext interviews. An exception would be:

An adjuster in trying to settle a claim does a pretext interview as there is a substantial reason to suspect fraud.

A. TrueB. False

126

Any person who meets with a senior at the seniors home, is required to deliver a notice in writing to the seniors home. They must receive this notice how many hours prior to the initial meeting?

A. 12 hours prior to the meetingB. 6 hours prior to the meetingC. No notice is requiredD. No less than 24 hours

Note : The notice must be in 14-point type

127

A binder is:

A. A temporary agreement between the injured party and the insurance company

B. A temporary agreement between the insured and the agent

C. A temporary agreement between the insurer and the agent

D. A temporary agreement between the insured and the insurance company

128

A binder provides temporary coverage until a policy is issued. The amount a binder can be written for is:

A. $10,000B. $100,000C. $500,000D. $1,000,000

*note: binders are good for up to 90 days

129

According to the Code, a Binder is deemed a valid insurance policy for the purpose of providing that the insured has coverage for each of the following types of insurance except:

A. Life insuranceB. Marine insuranceC. Auto insuranceD. Fire insurance

*Life has no binders

130

An insurance company must submit rates to the DOI to have them approved before they can use them. This is called:

A. Prior approvalB. Reinsurance C. underwritingD. Coinsurance

131

Worker’s Comp

132

Which of the following is true about workers compensation?

A. It is regulated by the state and federal governmentB. It is regulated by the federal governmentC. It is regulated by the state governmentD. It is regulated by the department of corporations

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In a state where employers only can by workers compensation insurance through a state run fund, it is referred to as:

A. Pre-determinationB. monopolisticC. Competitive D. None of the above

134

Generally, what is required by the workers compensation law?

A. It is compulsory for employers to secure liability for worker’s compensationB. Employers are required to carry a worker’s compensation policy issued by an insurance companyC. Employers of injured workers are required demonstrate that they are able to pay damages to the insured party or his estateD. A standard form workers compensation policy is required

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Benefits under worker’s compensation would include:

A. Rehabilitation B. Medical costsC. Loss of timeD. All of the above

136

Worker’s compenation will not provide coverage for which of the following?

A. A salesperson travelling to meet with a clientB. Injuries arising from working in a factoryC. A worker getting a common coldD. All of the above

137

A safe place to work, safe equipment, reasonably competent fellow workers, and enforement of safety laws all apply to:

A. Common law obligationsB. Common law defenseC. Tort lawD. Defense against neglegence

138

Under workers compensation medical payments, which is correct?

A. There is a time limit for medical payments but no dollar limitB. There is a dollar limit but no time limitC. There is both a time limit and a dollar limitD. There is no time or dollar limit on medical payments

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When a person is eligible to receive worker’s compensation benefits, what percentage of his salary would he receive?

A. 50%B. 66 2/3% C. 75% D. 80%

140

Under the workers compensation laws, which of the following defines an employee?

A. Any person in the service of an employer only under written contract and only when lawfully employedB. Any person in the service of any employer under any appointment, expressed, implied, oral or written, and lawfully employedC. Any person in the service of an employer under any appointment, expressed or implied, oral or written, whether lawfully or unlawfully employedD. Any volunteer, except relatives, to the second degree,

under any appointment expressed, or implied, oral or written

141

A movie company concerned about injuries to its actors would protect them with:

A. SuretyB. Worker’s CompensationC. General LiabilityD. Group health insurance

142

Worker’s Compensation laws require the employer to pay benefits to a worker who is injured in the course of his employment. The employee is covered

A. Only if the injury is the result of the employer’s fault or negligence B. If the injury is the fault or negligence of the employer or any other employeeC. Without regard to fault of negligence of the

employer or any other person.D. None of the above

143

An employee tripped over his shoelace at work and suffered an injury. This injury would be covered by:

A. Commercial general liabilityB. Disability insuranceC. Worker’s CompensationD. Premises and operations coverage form

144

Worker’s Compensation will cover:

A. Illnesses that are common for people to get, such as colds or fluB. Injury while driving to workC. Worker who is hit by a car on his lunch breakD. Injury or illness in the course of working

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Worker’s Compensation does not cover:

A. Illnesses that are common for people to get such as colds or the fluB. A work injury off the company premisesC. A diseases picked up as a result of workD. An injury due to the employee’s negligence

146

Part 1 of Worker’s Compensation will cover:

A. Retirement benefitsB. All sums the insurer is legally obligated to pay

under common lawC. All sums the insurer is required to pay by state lawD. All costs of the employee required by state fund

147

Worker’s Compensation Part 1 covers:A. Insurer’s promise to pay all compensation and other benefits required by state law for a work related accidentB. The employer’s liabilityC. The insured’s obligation to inform the insurer

at once and provide all necessary informationD. Premiums the insured must pay and the necessary records that must be kept for premium computation

148

Under Worker’s Compensation, a disability that is a permanent physical impairment leaving the individual incapable of performing the previous regular occupation, but capable of performing some other type of work is a:

A. Permanent total disabilityB. Permanent partial disabilityC. Temporary total disabilityD. Temporary partial disability

149

A woman has a non-occupational disability policy. While driving an auto for her employer, she is in an auto accident and had to be hospitalized. Her non-occupational policy refuses to pay as:

A. non-occupational policies do not dover the individual while in an auto

B. non-occupational policies will not pay benefits if the individual has to be hospitalizedC. The non-occupational policy does not pay, as this situation should be covered by Worker’s CompensationD. non-occupational policies should cover this situation

150

Which of the following are true about the state compensation insurance fund?

A. It is a public enterprise that competes with other carriersB. It regulates the ratesC. It sets the standards for the insurersD. None of the above

151

To what does 24-hour coverage refer?

A. It is medical coverage which provides around the clock protection

B. It is the joint issuance of a worker’s compensation policy with a disability insurance policy or other medical coverage for non-occupational injuries and illnessesC. It refers to the fact that a person needs 24 hour

nursing careD. It means that there is a waiting period of 24 hours before coverage begins

152

Twelve months ago a man slipped and fell down a flight of stairs at his workplace. As a result he has a paralysis from which he is not expected to recover. This 46 year old person will probably be able to collect disability income benefits from:

A. MedicareB. Worker’s CompensationC. MedicaidD. Social Security

153

If a partially disabled worker returns to work for a new employer and sustains an injury similar to the previous injury, which of the following would be true with respect to the second injury fund?

A. The previous employer would be required to pay the benefits for the second injury.

B. The current and previous employers would share in the costs of the benefit

C. The current employer would pay the benefits for the current injury and the second injury fund

would pay for the difference between the partial and total disability benefits.D. None of the above

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