Free Insurance Licensing CA-Life-Accident-and-Health Practice Exam with Questions & Answers | Set: 5

In long-term care (LTC) policies, Activities of Daily Living (ADLs) are basic tasks that are essential for self-care. These typically include bathing, dressing, eating, toileting, transferring (moving from one place to another), and maintaining continence. These ADLs are used to determine the eligibility for benefits under an LTC policy. Bathing is specifically listed as one of these ADLs. Breathing, driving, and working are not considered ADLs in the context of LTC policies.

The incorrect statement about Medicare is that Medicare Part C covers long-term care. Medicare Part C, also known as Medicare Advantage, provides an alternative way to receive Medicare benefits and includes all services covered under Part A and Part B. However, it does not cover long-term care, which is generally not covered by Medicare. Long-term care includes services such as custodial care in a nursing home or assisted living facility, which are typically covered by Medicaid or private long-term care insurance.

Nearly every life insurer in the United States belongs to the Medical Information Bureau (MIB). The MIB is a cooperative data-sharing service that helps insurers assess risk and prevent fraud by providing underwriting information through a shared database of medical and health-related information collected during previous insurance applications.

The human life value concept in financial planning is centered around an individual's economic value, which is primarily derived from their income. This method assesses the present value of future income that an individual is expected to earn and contribute to their dependents. Key factors considered in this approach include the person's age, income, expenses, and the number of years they are expected to continue working. This concept helps in determining the amount of life insurance needed to replace the individual's income in the event of their premature death.

The California Insurance Code mandates that certain elements must be specified in an insurance contract, including the risks insured against. This requirement ensures clarity regarding what perils or events are covered by the policy. Other elements that must be specified include the parties involved, the premium amount, and the coverage period, but not necessarily the insurer's financial rating or additional coverages.References: California Insurance Code, Section 381.

 Risk Avoidance: This involves taking steps to eliminate exposure to a risk entirely, such as not engaging in potentially hazardous activities.

 Examples: Avoiding risks can include not owning a dangerous pet or avoiding traveling by airplane.

 Not Risk Avoidance: Increasing liability limits on an auto policy is an example of risk management, not avoidance. It acknowledges the risk and seeks to mitigate potential financial impacts rather than eliminate the risk entirely.References: California Insurance Code Sections 675-679 discuss various aspects of risk management and avoidance within insurance contexts.