Life Insurance Test 1
*To be fully insured for Social Security benefits, a worker must credited with: A) 40 quarters of coverage B) 50 quarters of coverage C) 30 quarters of coverage D) 20 quarters of coverage
A) 40 quarters of coverage
Which retirement plan is often used to distribute a portion of an employer's favorable financial experience to employees? A)Profit sharing plans B)Keogh plan C) Simplified employee pension plan D) Tax sheltered plan
A)Profit sharing plans
Who will ultimately be held responsible for the information on an agent's website? A) The DOI B) The agent C) The webmaster D) The insurer that the agent represent
B) The agent
*All of the following are qualified retirement plans EXCEPT: A) Profit sharing plans B) Keogh plans C) Deferred compensation plans D) Tax sheltered annuities
C) Deferred compensation plans
The women's Health & Cancer Rights Act requires that when a group health plan provides coverage for a mastectomy it must also provide coverage for which of the following? A) Pregnancy B) Hormone replacement therapy (HPT) C) Reconstructive breast surgery D) All of the above
C) Reconstructive breast surgery
The usual amount of death benefit in an industrial life insurance policy is: A) $10,000 to $25,000 B) $50,000 to $100,000 C) less than $2,000 D) $100,000
C) less than $2,000
All of the following might opt for a self insured medical and disability policy EXCEPT: A) Fraternals B) Co-ops C) Labor unions D) Individuals
D) Individuals
What is Medicare Part D? A) Hospitalization coverage B) Long term care coverage C) Physician' care coverage D) Prescription drug coverage
D) Prescription drug coverage
*In a Worker's Compensation contract, Part one provides payments for which of the following? A) Sums the employer is legally required to pay according to the Master Servant doctrine B) Sums the employer is legally required to pay under State Workers' Compensation Laws C) Sums the insured is legally required to pay in order to upgrade working conditions and safety requirements at the insured location D) Sums the insured is legally required to pay under State Common Laws resulting from work related injuries
B) Sums the employer is legally required to pay under State Workers' Compensation Laws
*Transferring ownership rights from the current owner to another person is known as: A) Reinstatement B) Assignment C) Nonforfeiture D) Subrogation
B) Assignment
Which of the following is NOT a characteristic of a contributory group insurance plan? A) The member pays all of the cost B) The policy owner pays all of the cost C) The member pays a portion of the cost D) The employer pays aportion of the cost
B) The policy owner pays all of the cost
A life insurance application is important for all of the following reasons EXCEPT: A) The application becomes a part of the policy, if a copy is attached. B) Statement made in the application are required to be true to the best of the applicant's knowledge C) The application contains essential information before the insurer will issue the policy D) The beneficiary must sign the application before the insurer will issue the policy
D) The beneficiary must sign the application before the insurer will issue the policy
The insurance code requires insurance companies selling term life insurance to individuals 55 or older must inform the consumers that: A) Benefits and limitation should be considered prior to purchase B) Passing a physical exam is a requirement for benefits C) Meeting with a licensed agent is a requirement for purchase D) Some consumers may not be eligible for benefits
A) Benefits and limitation should be considered prior to purchase
In a 7 years vesting schedule, what percentage of employer contribution must be vested after 3 years? A) 0% B) 20% C) 30% D) 80%
B) 20%
an elimation period in a disability income policy served the same function as: A) The reinstatement period in a life policy B) The deductible in a medical expense policy C) The grace period in a life insurance policy D) The pre-existing conditions period in a medical expense policy
B) The deductible in a medical expense policy
If an insurer inadvertently is found guilty of unfair practices while issuing, renewing and servicing a policy, the insurer could be prosecuted for how many violations? A) 4 B) 3 C) 1 D) 0
C) 1
The MINIMUM number of employees for group life insurance in California is A) 10 B) 50 C) 2 D) 100
C) 2
If a child is incapable of self sustaining employment due to mental retardation, how long way coverage continue under an employer's group life insurance plan? A) Until age 23 B) Until age 21 C) As long as the child is dependent upon the employee due to the handicap D) As long as the insurer allows the coverage to continue
C) As long as the child is dependent upon the employee due to the handicap
when one person applies for an insurance policy on the life of another the application must be signed by both the applicant and the person whose life is to be insured. The proposed insured's signature on the application indicates that he or she: A) Agrees to pay the premiums on the policy if the policy owner fails to do so. B) Guarantees the truth of all statements made in the application. C) Consents to the issuance of insurance on his or her life that will owned and controlled by someone else. D) Relinquishes some ownership rights with respect to the beneficiaries.
C) Consents to the issuance of insurance on his or her life that will owned and controlled by someone else.
Sales material promoting term life insurance to individuals 55 or older must provide the consumer all of the following formation EXCEPT: A) Basic versus supplemental benefits B) Termination based on age C) Conversion options D) Potential premium changes based on age
C) Conversion options
If an employer wants to provide their own coverage, but does not have the staff or expertise to administer the coverage. Which option is available? A) Establish an individual policy for each employee B) Establish a fully funded plan and hire a third party administrator C) Establish a self funded plan and hire a third party administrator D) Establish a fully insured, self administered plan
C) Establish a self funded plan and hire a third party administrator
*When premium payment on a whole life insurance policy are being waived because the person whose life is insured is totally disabled, the actual effect on the policy's cash value will be to: A) Reduce the tabular cash value each year by the amount of premiums waived on account of disability B) Adjust the value to those of life insurance coverage on a reduced paid up policy C) Provide for the continued increased in the cash value during the period of disability D) Maintain the cash value at a constant amount until the disability ceases
C) Provide for the continued increased in the cash value during the period of disability
*IF an insurer indicated that an illustration will be used, they must do which of the following? A. Send the form to the Commissioner for approval. B. Update and revise the policy number. C. Send a summary status report to the policy owner annually. D. Send a summary status report to the policy owner at least every 6 months.
C. Send a summary status report to the policy owner annually.
Which contract promises to pay the owner a guaranteed minimum income for as long as the individual lives? A) A survivor ship policy B) An annuity certain C) A whole life policy D) A life annuity
D) A life annuity
All of the following are considered insurance transaction EXCEPT: A) An agent provides a quotation at the alient's request B) An agent binds coverage and delivers a policy to an insured C) A bulk mailing is sent by an agency to nearby addresses. D) An agency installs new premium accounting software
D) An agency installs new premium accounting software
Non participating life insurance policies provide all of the following, EXCEPT: A) Settlement options B) Guaranteed premiums C) Death benefits D) Dividends
D) Dividends
Persistence in group health insurance is important for all of the following reasons EXCEPT: A) Initial acquisition expenses may cause an insurer to lose money in the first few years the group insurance contract is in force. B) Underwriters are concerned with the length of time a group insurance contract remains on the company's books C) Only through renewal fees can an insurer recapture the acquisition expenses. D) Employees tend to utilize insurance benefits at a greater each each year the contract is in force.
D) Employees tend to utilize insurance benefits at a greater each each year the contract is in force.
*The rule regarding life insurance policy illustrations are intended to ensure of all following EXCEPT: A. Ensure that illustration are understandable by prescribing standard formats to be followed when illustrations are used. B. Ensure that illustrations do not misled purchasers of life insurance are specified. C. Ensure that the disclosures that are required in connection to illustrations are specified. D. Ensure that the illustration specifies that both guaranteed and non-guaranteed elements will continue unchanged of all years shown.
D. Ensure that the illustration specifies that both guaranteed and non-guaranteed elements will continue unchanged of all years shown.
*As defined by the California insurance code, "insurance" is a: A) Peril B) Contract C) Risk D) Gamble
B) Contract
*In order to quality for Social Security retirement benefits the worker must be: A) Fully insured B) Disability insured C) Currently insured D) Partially insured
A) Fully insured
Which of the following statements defines partial disability? A) An employee who loses sight in one eye because of an accident on the job B) A disabled employee while he is working part time and receiving lost income under the company's long term disability benefit C) An employer contributing half of the disability benefit to an employee out on long term disability D) The prorated income an employer pays an injured employee out on short term disability
B) A disabled employee while he is working part time and receiving lost income under the company's long term disability benefit
In a noncontributory group disability income insurance plan, what is the tax treatment of benefits received by an employee? A) Benefits are deducted from the employee's gross income B) Benefits are included in the employee's gross income C) Benefits are received free of income tax D) Benefits are tax-deductible for the employer
B) Benefits are included in the employee's gross income
When an insurance agent advertises on the internet for insurance transacted in the State of California, all of the following information must provided EXCEPT: A) The agent's license number B) The agent's business phone number C) The state of his or her domicile and principal place of business D) The true name under which he is licensed, and all approved fictitious names
B) The agent's business phone number
Who pays the premiums for voluntary group life insurance benefits made available through an employer? A) The employer B) The employee C) The insurer D) There is no problem charged for voluntary group life insurance
B) The employee
*The insured is totally and permanently disabled. The insured's policy continues in force without the payment of a premium because the policy contains a: A) Reinstatement provision B) Guaranteed insurablity provision C) Waiver of premium provision D) Grace period provision
C) Waiver of premium provision
The following expensed are important characteristics is a Major Medical policy EXCEPT: A) Deductible B) Maximum amounts C) Coinsurance D) Capitation fee
D) Capitation fee
*Life insurance illustration showing premiums, valued, credits or charges that are not determined at issue are demonstrating A. Non-guaranteed elements B. supplemental illustrations C. Guaranteed elements D. Minimum assumed expenses
D. Minimum assumed expenses
Which policy is a saving instrument designed to first accumulate funds and then systematically to liquidate the funds A)Term life B) Disability income insurance C) Deferred annuity D) Mortgage insurance
C) Deferred annuity
A beneficiary wants to let the death benefit accumulate and receive only the monthly investment proceed. Which settlement option should be chosen? A) Fixed period option B) Interest option C) Fixed amount option D) Cash option
B) Interest option
According to California Insurance Code, how must an agent publicize the right to return information to a senior citizen purchasing an annuity policy? A) By word of mouth during the sale B) On the cover page of a policy jacket C) In a frequently asked question brochure D) In a written form signed by the applicant
B) On the cover page of a policy jacket
When is the automatic loan provision activated? A) At the end of the incontestability period B) At the end of the free look period C) On the premium due date D) At the end of the grace period
D) At the end of the grace period
All of the following may be named as exclusions in a group disability income policy EXCEPT: A) Pre-existing conditions B) Self inflicted injuries C) Participation in a felony D) Pregnancy
D) Pregnancy
In disability insurance the benefit waiting period is also known as the: A) Qualification period B) Maximum benefit period C) Short term period D) Elimination period
D) Elimination period
*A parent who lives at home is being cared for by an adult daughter on a full time basis. Which of the following would provide care if the daughter needs a period of separation? A) Adult day care B) Respite care C) Home care D) Intermediate care
B) Respite care
Which of the following contacts provides benefits that fluctuate automatically with investment results? A) Variable life insurance B) Universal life insurance C) Continuous premium whole life insurance D) Adjustable life insurance
A) Variable life insurance
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? A) Variable life B) Adjustable life C) Flexible premium variable life D) Variable annuity
C) Flexible premium variable life
In a 7 year vesting schedule, what percentage of employer contributions must be vested after 7 years? A) 40% B) 60% C) 80% D) 100%
D) 100%
All of the following apply to an insurance broker (not insurance agent), EXCEPT: A) A broker represents the insured B) A broker can change a fee to the insured C) A broker is appointed by an insured to transact insurance D) A broker acts on behalf of an insurer
D) A broker acts on behalf of an insurer
In a group life insurance policy, who are the parties to the contract? A) The insurer and the employers B) The insurer and the employees C) The employer and the employees D) The employees and their dependents
A) The insurer and the employers
*What does the phrase "life insurance created an immediate estate" mean? A) The total death benefit will be paid to a beneficiary on the death of the insured B) The death benefit will always be paid to the estate of the insured C) The total premium must be paid to the insurer D) The policy creates cash value
A) The total death benefit will be paid to a beneficary on the death of the insured
Negotiating and insurance policy means which of the following? A) Issuing an insurance binder B) Promising a commission rebate to an existing insured if she renews C) Cold calling prospective insureds and asking if they would life a quote D) Accepting a premium payment
B) Promising a commission rebate to an existing insured if she renews
Which non forfeiture option uses an existing policy's cash value to purchase a paid up policy with a lower face value than the original policy? A) Extended term policy B) Reduced paid up insurance option C) Extended paid up insurance option D) Cash surrender value option
B) Reduced paid up insurance option
Which of the following statement about life insurance policy provisions is correct? A) Provisions worded in an ambiguous manner will be interpreted in favor of the insurance company by the courts. B) All policy provisions are designed to protect the policyholder C) Certain provisions are prohibited by law from appearing in a life contract D) State laws mandate the actual wording for policy provisions
C) Certain provisions are prohibited by law from appearing in a life contract
*From lowest to highest, which is the correct order of initial premiums for the insurance policies? A) Single premium, modified premium, ordinary life B) Modified premium, single premium, ordinary life C) Modified premium, ordinary premium, single premium D) Ordinary life, modified premium, single premium
C) Modified premium, ordinary premium, single premium
The law of most states requires that a cash surrender benefit be provided in all of the following types of life insurance policies EXCEPT: A) Limited payment whole life B) 10-year convertible term policy C) continuous premium whole life D) Life paid-up to age 65 policies
B) 10-year convertible term policy
What refund is owed when a senior citizen elects the right to return and cancels and individual variable annuity policy invested in a mutual fund? A) Account value minus closing fees B) Account Value C) Paid premiums D) Paid premiums plus a surrender fee
B) Account Value
*Under a disability insurance policy, an insured is eligible for a waiver of premium benefit: A) During delayed retirement B) After total disability C) After the age 65 D) During maternity leave
B) After total disability
An insurer owned by a parent company that provides insurance to cover the parent company's loss exposures is a: A) Reciprocal insurer B) Captive insurer C) Mutual Insurer D) Stock Insurer
B) Captive insurer
*The insurance term used for an insurer who has not complied with the requirements to obtain a certificate of authority from the California Insurance Commissioner is: A) Alien B) Nonadmitted C) Domestic D) Lloyd's
B) Nonadmitted
All of the following are covered by the CLHIGA, EXCEPT: A) Individual annuities B) employer self-funded plan C) Group term insurance D) Individual life insurance policies
B) employer self-funded plan
In California, an insurer organized under state laws of Nevada is considered: A) A nonadmitted insurer B) An illegal insurer C) An alien insurer D) A foreign insurer
D) A foreign insurer
*According to California Insurance Code, an illustration used to sell life insurance must include all the following information EXCEPT: A) Generic policy name and form number B) Name and address of the producer C) A label that identifies it's as an illustration D) The probability that illustrated non-guaranteed scenarios will occur
D) The probability that illustrated non-guaranteed scenarios will occur
*A product provides annuity benefits that may vary according to any separate account or accounts maintained by the insurer. This describes: A) Variable life B) Adjustable life C) Flexible premium variable life D) Variable life
D) Variable life
Which statement is included in all qualified long-term care policies? A) this contact covers pre-existing conditions B) this contact provides comprehensive long-term care C) this contact provides benefits only after prior hospitalization D) this contact may qualify you for federal and state tax benefits
D) this contact may qualify you for federal and state tax benefits
*Nonpreprinted illustrations selling nonguaranteed individual life and annuity policies must include a statement the following information.. A) The illustration is an illustration only and not a prediction of actual performance B) The illustrated interest rate is subject to change by the insurer C) The probability stated as percentage, that illustrated nonguaranteed scenarios will occur. D) The policyholder can except to receive the illustrated interest rate.
A) The illustration is an illustration only and not a prediction of actual performance
*Violating the Federal law that prohibits certain acts in the business of insurance is punishable by a fine up to: A)$2,000 B) $8,000 C) $50,000 D)$100,000
C) $50,000
*All of the following conditions must be met to qualify for residual disability benefits under a disablity income policy EXCEPT: A) Currently earns at least 20% B) Is able to work full or part time C) Continues to be under a physician's care D) Qualifies for Social Security disability benefits
D) Qualifies for Social Security disability benefits
An agent who sell long-term care insurance owes his policyholders and prospective clients all of the following EXCEPT: A) Duty of honest B) Duty of good faith C) Fair dealing D) Sincerity
D) Sincerity
All of the following are required to be included in life insurance illustrations, EXCEPT: A. The name of the insured. B. The page number showing its relationship to the total number of pages in the illustration. C.The page number D. A statement that the benefits in the illustration are guaranteed.
D. A statement that the benefits in the illustration are guaranteed.
Insurance solicitation includes all of the following activities EXCEPT: A) Publishing a newspaper in which one of the advertisers is an insurance agent B) Coverage and rate quotations C) Recommending other insurance products D) Bulk mailings introducing an agency
A) Publishing a newspaper in which one of the advertisers is an insurance agent
Rehabilitation benefits in a disability income policy may cover all of the following EXCEPT: A) Six months' rent for a new office B)Total family living expenses while the insured learns a new career C) Training expenses for new career D) Consultant's fee to set up the books for a new office
A) Six months' rent for a new office
Disability income insurance payment are based on: A) an amount agreed upon by the insurer and the insured B) The amount the insured's income is reduced by the disability C) The amount necessary to induce the insured to go back to work D) The amount needed to continue the insured's standard of living
A) an amount agreed upon by the insurer and the insured
Insurers offering individual life insurance policies or annuities to senior citizens that use non guaranteed elements in illustration must provide a statement to that effect. Which of the following correct regarding this statement? A. Non-guaranteed elements must be in bold print. B. Guaranteed and non-guaranteed elements must be in bold print, at the discretion of the agent. C. Guaranteed elements must be in bold print and non-guaranteed element must be in plain type D. All the statement must be in plain type.
A. Non-guaranteed elements must be in bold print.
when a corporation ceased to exist entirely, its insurance license: A) IS suspended temporarily B) become temporarily C) Terminates unless the corporation files an application to continue to transact within 30 days D) Teminates
C) Terminates unless the corporation files an application to continue to transact within 30 days
*How long is the life insurance policy grace period? A) 2 weeks B) 1 week C) 1 Month D) 2 Months
C) 1 Month
After recieving care by a physician, how is a patient notified of Medicare's decision to cover it ? A) Notice from the Social Security Adminstration B) Physician's billing statement C) Statement from the Medicare supplement provider D) Explanation of Your Medicare Part B Benefits
D) Explanation of Your Medicare Part B Benefits
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? A) Premiums paid plus a surrender fee B) Account value including closing fees C) Premiums paid minus policy fees D) Paid premiums and policy fees
D) Paid premiums and policy fees
Which of the following allows employees to share in the financial success of the company? A) Tax-sheltered annuity B) Simplified employee pension plan C) Keogh plan D) Profit sharing plan
D) Profit sharing plan
The federal tax treatment of key employment insurance is characterized by the fact: A) Premium payments fully reduce the earnings and profits account so the Accumulated earning credit is not impaired for purposes of the accumulated earning tax. B) The proceeds of a key employee insurance policy are subject to federal taxes if the key employee's spouse is the beneficiary C) Key employee insurance premium payments generally qualify as a reasonable business need for purposes of the accumulated earnings tax. D) Premiums for key employee insurance are deductible.
C) Key employee insurance premium payments generally qualify as a reasonable business need for purposes of the accumulated earnings tax.
When and agent takes an application or receives premium money for an application, including a health policy, the insurance code specially requires the agent to disclose to the insured or applicant: A) The due date(s) of the remaining premium owed B) Each and every covered peril C) The effective date of coverage, if known, or the circumstance under which coverage will be effective D) The renewal date of the policy
C) The effective date of coverage, if known, or the circumstance under which coverage will be effective
*The payor rider on a juvenile life policy provides that if the payor dies or becomes disabled befiore the insured juvenile reaches the age specified on the policy: A) The insurer will make all future policy payment B) The insurer will lend money to keep the policy in force C) The insurer will make the payments until the insured juvenile reaches the specified age-usually twenty-one or twenty-five D) The insured's estae will make the premium payments
C) The insurer will make the payments until the insured juvenile reaches the specified age-usually twenty-one or twenty-five
In which of the following qualified pension plans are benefits linked to the employee's years of service and/or amount of compensation? A) Defined benefit plan B) Keogh plan C) Defined contribution plan D) Tax-Sheltered annuity
A) Defined benefit plan
According to the California Code of Regulations governing the settlement of claims, which of the following action is fair and equitable in settling a claim? A) Delaying a decision in order to investigate B) Making an offer that is unreasonably low C) Requiring information that is not material D) Basing an offer on a claimant's nationality
A) Delaying a decision in order to investigate
In a 7 year vesting schedule, what percentage of employer contributions must be vested after 5 years? A) 20% B) 40% C) 60% D) 80%
C) 60%
Who must sign a statement acknowledging that a life insurance policy is to be replaced by an applicant? A) The agent B) The applicant and the beneficiary C) The applicant and the agent D) The applicant
C) The applicant and the agent
*In life insurance, the only measure of liability is the amount: A) Payable as provided in the policy B) Of liability against the life insured C) Of insurable interest in the life insured D) Payable to the beneficiary's interest in the life insured
A) Payable as providied in the policy
*IF an insurer knowingly allows one of the its agent to misled a member of the public in order to induce the person to change their existing insurance, the Commissioner may: A) Suspend the insurer's certificate of authority for the class of business involved B) Impose a $1,500 C) Imprison the agent for up to 5 years D) Allow the insurer to continue the practice
A) Suspend the insurer's certificate of authority for the class of business involved
*All of the following are eligible for dependent coverage under an employer's group life insurance policy EXCEPT: A) All unmarried children under age 21 B) The employee's spouse C) All unmarried grandchildren under age 21 D) Children attending an educational institution under age 23
C) All unmarried grandchildren under age 21
In the state of California: A) Life and health rates may not be related to the age and sex of the insured. B) Twisting is an approved practice. C) Providing free insurance coverage in connection with an inducement to completing the transaction is prohibited. D) A life solicitor's license has the same licensing requirements as a life agent's license.
C) Providing free insurance coverage in connection with an inducement to completing the transaction is prohibited.
*Qualified events that would result in the loss of coverage under COBRA include all of the following EXCEPT: A) Retirement of an employee B) The termination of an employee for gross misconduct C) Reduction of an employee's hours D) The death of a covered employee
C) Reduction of an employee's hours
*What are the tax consequences when an employer provides an employee with more than $50,000 of coverage under the employer's group life insurance plan? A) The employer must pay a penalty for violating the IRS's excess coverage rule B) There are no tax consequences for providing group life coverage in excess of $50,000 C) The cost of the coverage in excess of the first $50,000, will be included as income and appear on the employee's W2. D) Employers are not allowed to provide group life coverage that exceeds $50,000 of coverage for any single employee
C) The cost of the coverage in excess of the first $50,000, will be included as income and appear on the employee's W2.
The California Insurance Code that provides an applicant the right to cancel an insurance policy by returning it only applies to polices with a face amount of: A) Less than $10,000 B) Equal to $10,000 C) Greater than $100,000 D) Equal to $100,000
A) Less than $10,000
What does the term non medical life insurance mean? A) No physical examination is required B) The results of a previous medical examination can be used C) The application does not include medical questions D) No medical questions are asked by the medical examiner
A) No physical examination is required
violating the Federal law that prohibits certain acts in the business of insurance is punishable by imprisonment for up to: A) 8 years B) 10 to 15 years C) 1 year D) 3 years
B) 10 to 15 years
Which of the following is not covered by the CLHIGA A) Direct group life insurance B) Individual(Non group) Health Insurance C) Group stop loss plans D) Disability income
C) Group stop loss plans
Preprinted illustration used to sell non guaranteed individual annuity and life policies must show: A) Non guaranteed values in bold print B)Guaranteed values in bold print and non guaranteed valued in standard print, at the election of the agent C)All values in standard print D) Guaranteed values in bold print and non guaranteed values in standard print
A) Non guaranteed values in bold print
*What is the difference between a conditional premium receipt and a binding premium receipt? A) ONLY a conditional receipt always provides insurance that is effective from the date the receipt is given B) The applicant must be insurable in order to have coverage ONLY under the binding receipt C) Premiums must be paid to receive ONLY a conditional receipt D) ONLY a binding receipt always provides insurance that is effective from the date the receipt is given.
D) ONLY a binding receipt always provides insurance that is effective from the date the receipt is given.
