Download CA Life Accident and Health Exam: Insurance Contracts, Regulations, and Ethics and more Exams Nursing in PDF only on Docsity!
CA LIFE ACCIDENT AND HEALTH EXAM
2024 ACTUAL EXAM
Insurance is defined as? - Answer--A contract whereby one undertakes to indemnify another against loss, damage, or liability arising from a contingent or unknown event.
A written instrument in which a contract of insurance is set forth is the?
An agreement between the insurer and the insured, the person who is covered by the insurance, is established in a legal document referred to as a contract of insurance - Answer--policy
Loss is? - Answer--defined as reduction in the value of an asset
To be paid for a loss the insured must notify the insurer by? - Answer--making a claim
What is an insurable interest?
It must be based on? - Answer--An interest in the life of an individual by which there will be a loss if the insured dies.
Either a family relationship or on economic factors Must exist at the tie of application, not necessarily at the time of loss. If you would benefit if a person continues to live, you have an insurable interest in that person.
To "rescind" a policy means to? - Answer--void or cancel the policy flat by returning all premiums to the insured. It is as if the policy never existed and no coverage applies
What is fraud? - Answer--An intentional and fraudulent omission on the part of an insured that allows the insurer to rescind the contract
What is perjury? - Answer--A false representation on a signed claim form
Concealment is? - Answer--the neglect to communicate that which a party knows and ought to communicate
Does concealment, whether intentional or unintentional, entitle the injured party to rescind the insurance? - Answer--Yes
What is an express warranty? - Answer--A statement in a policy of a matter relating to the person or thing insured, or to the risk, as a fact
A warranty may relate to the past, the present, or the future? True or False - Answer--True
Does a violation of a material warranty on the part of either party entitles the other other to rescind the insurance contract? Yes/No - Answer--Yes
How is materiality determined? - Answer--by the probable influence of the facts upon the underwriter in forming their opinion of the disadvantages of the proposed contract
Is a particular form of words necessary to create a warranty? Yes/No - Answer--No
A representation may be? - Answer--Oral or written and be made at the time of, or before the issuance of the policy
An insurance broker means? - Answer--a person who, for compensation and on behalf of another person transacts insurance other than life insurance, but not on behalf of an insurer
An insurance broker is required to maintain the required? - Answer--surety bond and disclose in a written agreement signed by their client the amount of all broker fees being charged
Is their such a thing as a life or health insurance broker? - Answer--No
An insurance solicitor is a? - Answer--natural person employed to aid an agent or broker transacting insurance, other than life or health insurance
Can an insurance solicitor represent more than 1 agent or broker? - Answer--Yes
A life licensee is a? - Answer--person authorized to act on behalf of a life or disability insurer to transact life insurance, accident and health insurance, or life and accident and health insurance
A life settlement broker is a? - Answer--person who, on behalf of a policy owner, offers to negotiate the sale of the owner's life insurance policy to a life settlement provider
A life settlement brokers represent? - Answer--only the owner and owe a fiduciary duty to the owner to act according to their instructions.
Errors & omissions insurance protects?
It does not cover? - Answer--agents against legal liability resulting from negligence errors and omissions.
Fraudulent, dishonest or criminal acts.
It is a misdemeanor for a person to act as an agent for a non-admitted insurer except for a? - Answer-- surplus lines broker
No insurer shall offer any kind of insurance as an inducement to the purchase or rental of any real or personal property or services without any separate charge to the insured for such insurance? T/F - Answer--True
Every licensee shall file with the __________ their true name and all fictitious names under which they conduct business - Answer--Commissioner
Fictitious names may not be too similar to a name already on file, many not mislead the public or imply the licensee is an insurer - Answer--True
When does a licensee need to notify the Commissioner of any change in their email, residence, principal business, or mailing address? - Answer--Immediately
A licensee who advertises on the Internet must disclose their? - Answer--Name, State of domicile, principal business address and license number
Agents who write personal lines of insurance must tell clients at the time of application or receipt of premium the? - Answer--effective date of coverage
If the applicant has committed a felony as shown by a plea of guilty, no contest or by conviction the Commissioner may? - Answer--without a hearing deny a license application
An insurer must file a notice of? - Answer--Appointment with the Commissioner appointing a licensee as the insurer's agent
Individuals acting as solicitors shall have filed what on their behalf? - Answer--a notice of appointment from an agent or broker
Licensees are allowed to commingle fiduciary funds and remit them to the person so entitled or maintain such funds in a trustee bank account in this state separate from any other account? T/F – Answer—True
Surplus lines must post a _________________ as condition of licensure? - Answer--surety bond in favor of the people of this state in the sum of $50,000 as a condition of licensure
Surplus lines brokers shall annually by ________ pay to the commissioner a premium tax of ______ of their gross premiums written. - Answer--March 1st
3%
Any person capable of making a contract may be an insurer, subject to the restrictions imposed by the ________ - Answer--CA Insurance Code
The CIC defines a "person" broadly to include? - Answer--individuals, associations, organizations, partnership,, business trusts, limited liability companies or corporations
De-mutualization is? - Answer--a process whereby a mutual insurer becomes a stock insurance company
A __________ shall be obtained from every insurer or person entitled to such funds authorizing the maintenance and retention of any earnings accruing on trustee bank account funds. - Answer--Written
_________________ may offset funds due an insured for return premiums against amounts due them from the same insured for unpaid premiums due on the same or any other policy - Answer-- Property/casualty agent or brokers
Life-only agents or accident and health agents must complete ____ hours of continuing education each 2-year renewal period. - Answer--
Property and casualty broker-agents must complete ____ hours of continuing education each 2-year renewal period. - Answer--
Agents who are licensed for all lines of insurance, life, health, and property and casualty, must complete ____ hours of continuing education each 2 year renewal period, not 48 - Answer--
The _______ requires agents to always place their customer's interest first. - Answer--code of ethics
The __________ and the ________ identify many unethical and/or illegal practices, but they are NOT a complete guide to ethical behavior. - Answer--California Insurance Code (CIC)
California Code of Regulations (CCR)
Agents shall not sue or authorize the use of _______ to obtain information in connection with an insurance transaction? - Answer--pretext interviews
________ may be used for the purpose of investigating a claim where there is a reasonable basis for suspecting criminal activity, fraud or material misrepresentation - Answer--Pretext interviews
_____________ are not required to participate in any of the Insurance Guarantee Funds that were created by CA law to pay the claims of insolvent (bankrupt) insurers. - Answer--Surplus lines
A ___________ may place insurance with a non-admitted insurer only if insurance cannot be procured from admitted insurers in this state. - Answer--Surplus lines
________ cannot be written for the purpose of obtaining a rate lower than the lowest rate charged by an admitted insurer. - Answer--Surplus lines
Surplus line brokers must conduct a diligent search among admitted insurers before placing the coverage with a non-admitted insurer. T/F - Answer--T
What is the HIPAA Privacy Rules? - Answer--establish national standards for the use and disclosure of "protected health information"
The Commissioner may understate "conversation" proceedings when? - Answer--an insurer has been found to be in such poor financial condition that its further transaction of business will be hazardous to policy holders
An insurer is considered to be "insolvent" when? - Answer--they are unable to meet their financial obligations when they are due
An insurer cannot escape the condition of insolvency by? - Answer--being able to provide for all its liabilities and for reinsurance of all its outstanding risks
The Paid-in Capital of an insurer is defined as the? - Answer--amount by which the value of its assets exceeds the sum of its liabilities
It is a misdemeanor to refuse to deliver any books, records, or assets to the Commissioner once seizure order has been executed in an insolvency proceeding. True/False - Answer--True
As used in the CIC, the word "shall" means? - Answer--mandator and the word "may" is permissive
The affidavit of the person who mails a notice, stating the facts of such mailing, is? - Answer--prima facie evidence that the notice was mailed
The first party claimant means? - Answer--any person asserting a right under an insurance policy as a named insured, other insured or beneficiary
A third party claimant means? - Answer--any person asserting a claim against any person or the interest insured under any insurance policy
What is tort law? - Answer--A tort is a civil injury
Ex of torts include negligence, trespass, assault, batter, invasion of privacy, libel, and slander.
What is most common tort?
What is definition? - Answer--Negligence
Failure to act as a reasonable person would in the same set of circumstances
Liability insurance may be purchased to protect insured from legal liability that may result as a result of a tort? T/F - Answer--True
What are the four basic elements of a contract?
COAL - Answer--1. Agreement, offer and acceptance
- Competent
- Legal purpose
- consideration
What is consideration? - Answer--the exchange of value
What is contract of adhesion? - Answer--states that if the insurance contract language is vague or unclear, any ambiguity will be construed in favor of the insured, since that person had no change to change it when they bought it
What is personal contract? - Answer--insurance contracts concern an individual insured, not the insured's property
It is the person holding the interest in the property who is indemnified in the event of a loss
Although the ownership of a life insurance policy may be assigned to another party, property and casualty policies generally are not assigned to someone else who acquires the property, since they follow the insured, not the property
What is concealment? - Answer--Neglect to communicate that which a party knows, and ought to communicate
Whether intentional or unintentional it entitles the injured party to rescind insurance
What does not need to be communicated in a contract? - Answer--Known information
information that should be known
information which the other party waives
information that is excluded by a warranty and not material risk
information that is excepted from insurance and not material to the risk
information based on personal judgement
What is warranty? - Answer--a statement in a policy of a matter relating to the person or thing insured, or to the risk as a fact, is an express warranty thereof
A warranty is either express or implied? T/F - Answer--True
Every express warranty made at or before the execution of a policy shall be contained in the policy itself, or in another instrument signed by the insured and referred to in the policy, as making a part of it. T/F - Answer--True
What is risk? - Answer--possibility (uncertainty) that a loss might occur and is the reason that people buy insurance
If a certain event happens - accident, sickness or death loss occurs
Insurance is designed to provide for such losses, while not providing the insured with the possibility of gain
What is pure risk? - Answer--change of loss, with no possibility of gain
Example: you house might burn down, you might wreck your car or you might get sick
Type of risk that may be transferred to an insurance compay
What is speculative risk? - Answer--Creates a risk situation and offers the opportunity for gain as well as the possibility of loss.
This is the type of risk insurance will not cover
What is peril? - Answer--a cause of loss.
Newer property insurance policies now use the phrase cause of loss instead of the phrase perils insured against.
Life insurance policies insure against the peril of death,
What is the definition of the law of large numbers? - Answer--allows an insurance company to predict the expected losses of a group
the larger the number of separate risks of a like nature combined into one group, the more predictable the number of future losses of that group within a given time period
What is loss exposure? - Answer--condition that could result in a loss
What are the four risk management techniques? - Answer--1. Risk Avoidance: Elimination of the risk at any cost
- Loss Control: Reduce frequency of loss
- Risk Retention: finance some of all of the losses yourself (through things like deductibles, coininsurance and waiting periods
- Risk Transfer: A formal arrangement between an insured and insurer
In order to identify potential risk situations, producers and insurers need information which may be derived from a variety of sources, these include? - Answer--1. Application - provides general information about the applicant, the risk being insured, and pass losses
- Physical examination or inspections - reveal hazards related to the health of the applicant
- Consumer credit reports - which may include info about the applicant's finances, background habits and reputation
What is the doctine of utmost faith? - Answer--states that all parties to the contract can rely upon the statements of the other party
An insurer organized in California and selling in CA is considered an? - Answer--Domestic insurer
An insurance company based in Utah that is selling in CA is a? - Answer--Foreign insurer
An insurance company that has enough reserves to pay for all its liabilities is referred to as a? - Answer-- solvent insurer
The State Insurance Guarantee Fund provides protection to policy holders whose insurer becomes? - Answer--insolvent (Financially impaired)
An insurance company that is based in Canada and doing business in Ca is an? - Answer--alien insurer
If the insurer discovers the insured has violated a material warranty? - Answer--they can rescind the contract (void the policy)
An intentional concealment entitles the injured arty the option to? - Answer--rescind the contract
Neither party to a contract of insurance is bound to communicate, even upon inquiry, information of? - Answer--his own judgement upon the matters in questions
Providing free insurance coverage in connection with the sale of services as an inducement for completing the transaction is? - Answer--not legal
A representation in an insurance contract qualifies as an? - Answer--implied warrarnty
The materialilty of concealment is the rule used to? - Answer--determine the importance of misrepresentation
A representation is false when the facts fail to correspond with? - Answer--assertions or stimpulations
The financial rating of the insurer is ______ to be specified in the insurance policy - Answer--not required
Claims forms are required to include the following statement related to fraudulent claims: - Answer-- Any person who knowingly presents a false or fraudulent claim for the payment of a loss is guilty of a crime and may be subject to fines and confinement in state prison
