License Flash Cards
According to California Insurance Code, how must an agent publicize the right to return information to a senior citizen purchasing an annuity policy?
On the cover page of a policy jacket
A contract of indemnity is one in which
One party is RESTORED to the same financial position the party was in before the loss occurred
What is meant by referring to an insurance policy as a unilateral contract?
Only one party makes a legally enforceable promise.
Which of the following statements regarding risk is TRUE?
Only pure risks are insurable
What refund is owned when a senior citizen elects the right to return and cancel an individual variable annuity policy invested in a money market fund?
Paid premiums and policy fees
The life insurance grace period allows the insured to
Pay the premium after the due date without loss of coverage
In life insurance, the only measure of liability is the amount:
Payable as provided in the policy
Which benefits are provided by key employee insurance?
Payment to a business when an important employee dies
Which of the following information is not required to be included in a life insurance contract?
Personal judgment
Insurance policy expenses include all of the following EXCEPT
Premiums
If an insurer must have its rates accepted by the insurance Department prior to using them, the insurer would be operating in which of the following types of jurisdictions?
Prior approval
Loss retention is an effective risk management technique when all of the following conditions exist EXCEPT the
Probability of loss is unknown
Unless it is merely a statement of an expectation or belief, a representation as to the future is considered which of the following?
Promise
The Women's Health and Cancer Rights Act requires, when a group health plan provides coverage for a mastectomy, it must also provide coverage for which of the following?
Reconstructive breast surgery
Which is an agreement in which an insurer contacts with a third party to insure itself against losses from insurance policies it issues?
Reinsurance
Which type of insurance guarantees the right to renew the policy each year, regardless of health, but at an increased premium?
Renewable term
Unintentional concealment entitles the injured party to which course of action, if any?
Rescission of the contract
A situation in which there is a possibility of loss or a gain is a
Speculative risk
Which policy provision protects the insurer against possible adverse selection?
Suicide Clause
The direct distribution of insurance utilizes all of the following to promote the sale of insurance EXCEPT
Telephone call from an agent.
The direct response distribution of Insurance utilizes all of the following to promote the sales of insurance EXCEPT
Telephone call from the agent
When a corporation ceased to exist entirely, its insurance license:
Terminates unless the corporation files an application to continue to transact within 30 days
Risk can be defined as all of the following EXCEPT
The cause of loss
An elimination period in a disability income policy served the same function as
The deductible in a medical expense policy
The purchase of an insurance policy may accomplish all of the following for the insured EXCEPT
The elimination of risk
Why is having a large number of similar exposure units important to insurers?
The greater the number insured, the more accurately the insurer can predict losses and set appropriate premiums
It is considered an unfair method of competition for an agent to advertise that the insurer the agent is appointed with is
A member of the Insurance Guarantee Association
What would a person be guilty of who refuses to deliver any books, records, or assets to the commissioner once a seizure order has been executed?
A misdemeanor
Which of the following would an agent be guilty of for misrepresenting the amount of dividends a policy will pay?
A misdemeanor
Which of the following would an agent by guilty of for misrepresenting the amount of dividends a policy will pay?
A misdemeanor
A life insurance policy written after 1988 that fails to meet the seven-pay test is known as
A modified endowment contract (MEC)
According to the California Insurance Code, governing the use of life insurance policy illustrations, the term illustration means
A presentation of policy features that includes non-guaranteed elements
A person owns a life annuity. He elects to receive his annuity payments monthly for the remainder of his life with "ten years certain." The annuity will make payments
For a minimum of 120 months and a maximum of the remainder of his life
In order to qualify for Social Security retirement benefits the worker must be
Fully insured
Which of the following is not covered by the CLHIGA
Group stop loss plans
Moral hazard can be defined as the increase
Chance of a loss occurring due to an insured's dishonest tendencies
All of the following would be considered unfair trade practices EXCEPT
Committing any act of discrimination whether it be deemed fair or unfair
An attempt by an agent to deter an insured from replacing an existing life insurance policy is called
Conservation
Which report of an insurance applicant's creditworthiness and personal characteristics may influence eligibility for life and health insurance?
Consumer report
As defined in the California Insurance Code, "insurance" is a
Contract
All of the following are characteristics of reinsurance EXCEPT it
Increases the unearned premium reserve
Insureds are entitled to recover an amount NOT greater than the amount of their loss under the principle of
Indemnity
All of the following are covered by CLHIGA
Individual annuities Group term insurance Individual life insurance policies Direct group life insurance Individual (non-group) health insurance Disability income
If a life agent sells a whole life policy to a prospect on behalf of an insurer without an appointment, the
Insurer must submit a notice of appointment to the Commissioner
All of the following apply to an insurance BROKER (not insurance AGENT)
A broker represents the insured A broker can charge a fee to the insured A broker is appointed by an insurer to transact insurance
How much employer-provided group term insurance is exempt from income taxation?
$50,000
Section 1729.2 of the California Insurance Code requires insurance producer applications and licensees to notify the Insurance Commissioner in writing, within ______ days of charges in background information after an application has been submitted or a license has been issued
30
All of the following information is gathered during the personal financial planning process EXCEPT
A listing of the person's civic and professional organization memberships
How long is the free cancellation period for the life insurance offered to individuals who are 60 or older?
30 days
All of the following apply to an insurance broker (NOT insurance agent) EXCEPT:
A broker acts o behalf of an insurer
Any situation that presents the possibility of a loss is known as
A loss exposure
What refund is owed when a senior citizen elects the right to return and cancels an individual variable annuity policy invested in a mutual fund?
Account value
An insurer entitled to transact business by complying with the California Insurance Code is known as an
Admitted carrier
A contract in which one party promises to indemnify another against loss that arises from an unknown event is
An insurance policy
All of the occurrences listed below are examples of an insurable event as defined by the California Insurance Code EXCEPT
An insured suffers a financial loss in the state lottery
How often MUST an insurer file the National Association of Insurance Commissions (NAIC) financial statement?
Annually
When must insurance records of the insurance agents and brokers be available to the Insurance Commissioner?
At all times.
In a noncontributory group disability income insurance plan, what is the tax treatment of benefits received by an employee
Benefits are included in the employee's gross income
How can partners guarantee a market for their share of the business in the event of death?
Buy-sell agreement
Upon notification of a claim, a claimant must be given access to the California Fair Claims Settlement Practices resolution by all of the following means EXCEPT
By interview appointment with the agent of record
The additional premium charged by an insurer for adding the accidental death benefit to a whole life policy
Does not affect the policy's cash value
All of the following are benefits of insurance EXCEPT it
Eliminates fraudulent losses
All of the following are covered by the CLHIGA, EXCEPT
Employer self-funded plans
If you have been convicted of a misdemeanor and that misdemeanor conviction is later expunged pursuant to California Penal Code Section 1203.4, which of the following is true?
Even though your misdemeanor conviction was expunged, you must still disclose your misdemeanor conviction on your individual application for an insurance license
When a family policy covers children, all of the following are true EXCEPT
Evidence of insurability is required to convert coverage for children to permanent insurance
After receiving care by a physician, how is patient notified of Medicare's decision to cover it?
Explanation of your Medicare Part B benefits
An agent who is acting as an insurance agent, broker, solicitor, life agent, accident and health, or bail agent acts in which capacity when handling premiums or return premiums for an insured?
Fiduciary
According to the California Insurance Code, an insurance policy must specify all of the following EXCEPT the
Financial rating of the insurer
Which of the following replace the universal life's purely fund cash value with a facility for the policy owner to select the investment media in which the cash value is placed?
Flexible premium variable life
Which policy covering two or more individuals pays the face amount only when the first person dies?
Joint life policy
A person authorized by and on behalf of an insurer who transacts life, disability or life and accident and health insurance is defined as a
Life agent
Who are the members of the Medical Information Bureau?
Life and Health insurers
Who are members of the Medical Information Bureau?
Life and health insurers
Which two insurance products are commonly used to fund buy-sell agreements?
Life insurance and disability insurance
In insurance terminology, "indemnity" means
Make whole
An agent who violates the laws governing life insurance policy illustrations is subject to all of the following EXCEPT
Mandatory termination of all insurer appointments
As authorized by the California Insurance Code, the Insurance Commissioner has provided standards for names used by life insurance agents. Under these standards which, if any, of the following are automatically acceptable for Mary Brown, a holder of the CLU designation?
Mary Brown Insurance Services
All of the following qualify as "background information" as defined in Section 1729.2 of the California Insurance Code, EXCEPT
Misdemeanor charges filed, not resulting in a conviction
It is Federal offense for an insurance agent to do all of the following EXCEPT
Misrepresent facts on an insurance application
What is the definition of premium?
Money an insured pays an insurer to obtain the benefits provided in the policy
Which component of a life insurance premium is based on the insured's age and gender?
Mortality
Which type of insurance policy provides a death benefit that matches the projected outstanding debt on an individual's home?
Mortgage redemption
According to the California Insurance Code, the Commissioner can disapprove a licensee's request to use a fictitious name for any of the following reasons EXCEPT that the
Name is the licensee's actual name
When are parties to a contract REQUIRED to communicate information solely based on personal judgment for a matter in question?
Never
All of the following statements about aleatory contracts are true EXCEPT
The insured and insurer contribute equally to the contract
What rule is used to determine the importance of a representation?
The materiality of concealment
In group life insurance, who is issued a certificate of insurance?
The participant
Making an insured whole by restoring them to the same condition as before a loss is an example of
The principle of indemnity
The required contents of a policy include all of the following EXCEPT
The probability of loss
According to California insurance code, an illustration used to sell life insurance must include all of the following information EXCEPT:
The probability that illustrated non-guaranteed scenarios will occur.
Which policy provision allows an insured to continue coverage under a previously lapsed policy?
The reinstatement provision
What does the statement "life insurance created an immediate estate" mean?
The total death benefit is paid whenever the insured dies
What does the phrase "life insurance created an immediate estate" mean?
The total death benefit will be paid to a beneficiary on the death of the insured.
Which of the following is a requirement of a contract?
There must be an offer and acceptance of the contract terms
All of the following are requirements of contract EXCEPT
There must be equal consideration between the parties
What is the goal of the underwriting process?
To avoid selecting a disproportionate number of bad risks
The insurer's department with PRIMARY responsibility for the risk selection process is called
Underwriting
The process by which an insurer decides whether to issue requested insurance is called
Underwriting
Which type of insurance coverage has both a savings element and a flexible premium option?
Universal life
According to the California Insurance Code, if an insurer's certificate of authority is revoked, the Commissioner can proceed with any of the following actions EXCEPT
Using Guarantee Funds to pay salaries