CA LIFE STATE PRACTICE EXAM PT 1(FROM EXAM FX ONLINE TEST)
Group
"Discontinuance" is a term used to describe the termination of what type of insurance?
Family Dependency Period
A family's need for income is greatest during the
60
A new insurance must be treated as a replacement if a new insurer sells a policy to a group which discontinued its group medical insurance within how many days?
60 (There is an assumption of responsibility by an insurer if they sell a new policy to a group within 60 days of discontinuane).
A new insurance must be treated as a replacement if a new insurer sells a policy to a group which discontinued its group medical insurance within how many days?
Pay dividends to the policyowner
A participating insurance policy may do which of the following?
An insurance broker
A person that DOES NOT work on the behalf of the company for which he or she does business, but rather represents the prospect, insured, or client is called
Pure risk
A situation in which a person can only lose are have no change represents
A peril
A tornado would be an example of which of the following?
Endowments
Accident and health agents may transact all of following types of insurance EXCEPT
One or more fire and casualty broker-agents can employ a solicitor simultaneously
According to California Insurance Code, the duties and requirements of solicitor, agent and broker are all distinct from one another. Which of the following is TRUE?
To delegate the power to approve a settlement.
According to the California Insurance Code, all of the following are general powers and duties of the Commissioner of insurance EXCEPT
Misdemeanor, a fine not to exceed $25,000 and/or a possible 1-year imprisonment
According to the California Insurance Code, any agent violating the regulations relating to misrepresentation will be charged with a
6 (The following must be identified: the parties to the contract; the property or persons being insured; a statement of the insurable interest that exists if the insured is not the owner; the risk(s) being covered; the time period during which the policy will be in force or continue; the stated premium or manner to calculate premium.)
According to the Code, how many separate requirements should an insurance policy have?
Fraud
Al tells a client she is guaranteed to be approved for LTC insurance if she pays the full year's premium at the time of application. The client applies for LTC insurance and writes a check for he annual premium to Al's agency. Al issues a Binder of Insurance but does not send the application to the insurer, and intentionally uses the premium for personal expenses instead. Al is guilty of
Fine three times the amount of the fraud
All of the following are possible punishments for individuals involved in fraudulent insurance claims activities EXCEPT
The financial rating of the insurer
All of the following must be specified in an insurance policy EXCEPT
The principal
An agent is a legal person who acts on behalf of
The policy may be voided if the applicant was not capable of making a buying decision at the time of application.
An agent tries to sell insurance over the phone. One of the applicants appears to be somewhat confused, but is eventually able to give enough information for the application to be completed. After the policy was issued, it was discovered that the insured have been under the influence at the time of application. Which of the following is true?
Lower premiums than a person who receives a standard risk.
An applicant who receives a preferred risk classification qualifies for
Puerto Rico
An example of foreign insurer is one formed under the laws of
The materiality of a given concealment
An importance of misrepresentation is determined by
Foreign
An insurance company that is formed under the laws of another state is know as which type of insurer?
Nonadmitted company
An insurance company that is not authorized to do business in the State of California is known as a(n)
Survivor Protection
An insurer is helping a married couple determine their children's needs, assets, and liabilities, in the event that one or both of the spouses should die. What is the term most closely associated with this?
Survivor protection
An insurer is helping a married couple determine their children's needs, assets, and liabilities, in the event that one or both of the spouses should die. What is the term most closely associated with this?
June 30th
An insurer received a claim on May 1st. On May 31st, the claim was approved in its entity. By what date can the claimant expect the payment?
The face amount of an individual insurance policy, subject to any exclusions and riders as applicable, minus any outstanding policy loans and interest payments due the insurer.
An insurer's liability shall be limited to
Institutional source
Any person or governmental entity that provides information about an individual to an agent insurance company, or insurance-support organization is known as:
Not more than $10,000, imprisonment not to exceed one year or both
Any person who knowingly and willfully obtains information about an individual from an insurance company, agent or organization supporting insurance under false pretenses shall be fined.
$150,000
Anyone convicted of committing an insurance fraud may be fined up to
15 days
Applicant Ann writes a letter to Agent Dan to receive more information about a claim that is currently being settled. Within what span of time must Agent Dan respond?
His appointment will expire
Arnie worked for Evermore Life Insurance for many years and became their top selling agent. However while Arnie was out of the country enjoying his earnings, he forgot to send in his renewal for his life license and his license expired. In addtion to Arnie's license expiring, what else will happen to Arnie?
Company A is the primary insurer, and Company B is the reinsurer
Company A enters into a reinsurance agreement with a Company B, where Company B reinsures Company As policies. Which of the following is true?
Handling insurer funds in a trust capacity
Concerning insurance, the definition of fiduciary responsibility is
A mutual insurer becomes a stock company.
De-mutualization happens when
Reinsurer
During the process of reinsurance an insurance company that has its property risks reinsured by another provider is called
Dividends (Dividends are the return of premiums in mutual policies)
Each of the following factors are used in determining insurance rates EXCEPT
Hazards
Events or conditions that increase the chances of an insured loss occurring are referred to as
$500 per incident and $100 additionally for every month he continues such action.
Expect when performing the role of a surplus lines broker, any agent that acts to solicit business for a nonadmitted insurer shall be guilty of a misdemeanor and shall be fined
Without receiving written consent from an insurance regulatory authority
Federal law makes it illegal for any individual convicted of a crime involving dishonesty or break of trust to work in the business of insurance affecting interstate commerce
At the time of application for a policy on the insured
For an insurance contract to be valid in the State of California, when must insurable insterest exist?
At the time of application for a policy on the insured.
For an insurance contract to be valid in the State of California, when must insurable interest exist?
The uncertainty or chance of loss
For the purpose of insurance, risk is defined as
5 days
If a consumer request additional information concerning an Investigative Consumer Report, how long does the insurer or reporting agency have to comply?
ABC Insurance Services (The fictitious name cannot indicate that the licensee is an underwriter or insurance company).
If a licensee conducts insurance business under a name, other than their true name, the fictitious name must be approved by the commissioner. Which of the following names may be approved for use?
Charge a higher premium
If an applicant for a life insurance policy is fount to be a substandard risk, the insurance company is most likely to
Authorized
If an insurer meets the State's financial requirements and is approved to transact business in the same state, it is considered to be
21
If the Department of Insurance request information from an agent regarding a claim, this must be provided within how many days?
Birthplace
If the information is used only for identification and not for underwriting purposes, which of the following information about the applicant may be listed on the life insurance application?
The Commissioner has all of these powers.
In a conservation or liquidation effort, what powers does the commissioner have?
When an insurer approves a pre-paid application
In forming an insurance contract, when does an acceptance usually occur?
A bill must be approved by both houses of the California legislature.
In order for the California Insurance Code to be changed in any way, what is required?
6 ( the code is organized into six main divisions: 1) general provisions & rules 2) classes of insurance 3) insurance commissioner 4) civil disorders 5) insurance adjusters 6) repeals
In order to cover all aspects of insurance law and regulations, the Code is organized into how many main divisions?
Direct response system
In which distribution system must the potential client take the initiative and respond to an advertisement through a telephone or mail contact with the insurer?
A written instrument in which a contract of insurance is set forth
Insurance policy is
Stock
Insurers are classified according to the legal form of their ownership. The type of insurer organized to return a profit to the stockholder is
He/she holds a certificate of registration issued by the Commissioner
No person can act as an administrator in this state other than an adjuster that is licensed for the kinds of business for which he/she is acting as an administrator, unless
They have a valid license for the type of insurance being transacted
People may discuss the terms and effects of an insurance contract, inquire as to another person's need for insurance, or assist a persons to obtain insurance when
Representations
Statements made by an applicant for an insurance policy which are true to the best of the applicant's knowledge are referred to as:
Possible fraudulent claims by an insured
The Claims Department would be responsible for investing which of the following?
Analyzing a contract of insurance
The code defines the term "transact" as all of the following EXCEPT
Insurer
The insured provides a proof of claim to the
If the representation is false in a material point
The key factor of representation that allows the injured to rescind the contract is
Fiduciary responsibility
The requirement that an agent not co-mingle insurance monies with their own funds is known as
Avoidance
The risk management technique that is used to prevent a specific loss by not exposing yourself to that activity is called
California Administrative Code of Regulations
The set of regulations issued by the California Insurance Commissioner that identifies the standards for the insurance code an how it is to be administered is
Preferred risks and poor risks are balanced, with average risks in the middle.
To achieve the profitable distribution of exposures,
File a surety bond with the Commissioner
To make sure that an agent's license stays active, the agent of an insurer must see that all of the following are done EXCEPT
Nothing. The code gives Tom legal immunity
Tom is licensed insurance agent. While at lunch, he overhears a conversation that leads him to believe a person is committing Worker's Compensation fraud. If tom makes a written report to a law enforcement agency and the person is investigated, but it turns out that tom was mistaken, he can be sued for
Partner A buys a policy on Partner B in the amount of $75,000 naming Partner A as beneficiary.
Two equal partners in a business worth $150,000 are using a Cross Purchase plan to protect against the death of each other. Which of the following statements would be correct?
Pure risk
Units with the same or similar exposure to loss are referred to as
Speculative
Wagering on a sporting event is known as what type of risk?
The way each is compensated
What is the main difference between a life agent and a life analyst?
To provide protection for the clients by requiring producers to maintain professional standards of conduct.
What is the purpose of the California laws regulating production agencies?
Insurance
What mechanism allows individuals to transfer their risk of loss to a larger group?
Negligence
What other term is used to refer to unintentional torts?
Reasonable
When a discontinued policy contained a death benefit, what term is used in the CIC to describe the length of the applicable extension of benefits?
The larger the group
When are the group's reported losses more likely to become equal to the statistical probability of loss?
Conditional
When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is
In the investigation of a claim suspected as a fraudulent
When would the insurer be allowed to use the information obtained through a pretext interview?
30 days
Whenever the Commissioner has reason to believe that a person is engaging in any unfair methods of competition, he or she has the power to serve a notice of hearing. The hearing must be held no later than how many days after the notice has been served?
Actuarial
Which of the following departments is responsible for developing mortality and morbidity tables?
The company
Which of the following entities does a producer represent?
Race
Which of the following factors is NOT considered by an underwriter when determining the premium rates for an individual seeking insurance?
The loss must be catastrophic.
Which of the following is NOT a characteristic of pure risk?
Employment with an insurance company
Which of the following is NOT a required licensing qualification for a Life and Disability Insurance Analyst in this state?
Speculative risk
Which of the following is an example of an uninsurable risk?
Not paying a claim based on research of the medical history of a hospitalized patient who has filed the claim
Which of the following is the illegal act of post claims underwriting?
Admitted
Which of the following is the most precise synonym for an "authorized" insurer?
The purpose of the act is to protect the consumer's right to privacy by making certain that underwriting data is confidential, accurate, relevant, and properly used.
Which of the following is true of the Fair Credit Reporting Act?
Independent agent
Which of the following persons represents several insurance companies but owns the records of the policies sold?
Premium
Which of the following terms describes the fee a person pays an insurance company to receive coverage?
Retrocession
Which of the following terms describes the phenomenon of reinsurance companies reinsuring risks for other reinsurance companies?
Insurance broker (insurance broker refers to a person who, for compensation & on behalf of a person other than an insurer, transacts insurance other than life)
Which of the following terms would be used for someone who transacts fire insurance on behalf of the insured, and for compensation?
Substandard risk
Which of the following types of risk will result in the highest premium?
Indemnity
Which provision states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost?
Apparent
Which type of authority is based on the actions, words, or deeds of the principal?
Marketing Department
Who is responsible for advertising, promoting, and distributing an insurer's products to the public?
General election, for no more than two four year terms
n the state of California, who selects the Insurance Commissioner and for how long?
