Practice test Cali life insurance Part 2

If the annuitant dies during the accumulation period, who will receive the annuity benefits?

The beneficiary

The validity of coverage under a life insurance policy may not be contested, except for nonpayment of premium, after the policy has been in force for at least how many years?

2 years

Which of the following features of the Indexed Whole Life policy is NOT fixed?

Cash value growth

Which of the following is TRUE regarding the insurance amount in a credit life policy?

The creditor can only insure the debtor for the amount owed.

Which of the following describes the tax advantage of a qualified retirement plan?

The earnings in the plan accumulate tax deferred.

How long must an insurer keep records of electronic transmission to customers?

5 years

Which of the following is another term for an authorized insurer?

Admitted

What is the main purpose of the Seven-pay Test?

It determines if the insurance policy is a MEC.

According to the California Insurance Code, any agent violating the regulations relating to misrepresentation will be charged with a

Misdemeanor, a fine not to exceed $25,000, and/or a possible 1-year imprisonment.

All of the following are the responsibilities of every long-term care insurer in California EXCEPT

Provide enough business to solicit long-term care insurance.

An insured purchased a 15-year level term life insurance policy with a face amount of $100,000. The policy contained an accidental death rider, offering a double indemnity benefit. The insured was severely injured in an auto accident, and after 10 weeks of hospitalization, died from the injuries. What amount would his beneficiary receive as a settlement?

$200,000

Any insurance agent who commits a repeated violation of the Insurance Code with respect to insurance replacement will be liable for

An administrative penalty of no less than $5,000 and no more than $50,000 per violation.

All of the following statements are true of a nonqualified retirement plan EXCEPT

Contributions are tax exempt.

A key person insurance policy can pay for which of the following?

Costs of training a replacement

Which of the following will NOT be an appropriate use of a deferred annuity?

Creating an estate

Which of the following is NOT fundable by annuities?

Death benefits

Which of the following is NOT typically excluded from life policies?

Death due to plane crash for a fare-paying passenger

Which of the following best describes the policy nonrenewal?

Discontinuance of an insurance policy by the insured on the policy anniversary date.

What is the purpose of a conditional receipt?

It is intended to provide coverage on a date prior to the policy issue.

If a life insurance policy develops cash value faster than a seven-pay whole life contract, it becomes a/an

Modified endowment contract.

Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy?

Premiums are not tax deductible as a business expense.

The following are features of the Indexed Universal Life EXCEPT

Sale of this product requires a securities license.

Which of the following statements about a suicide clause in a life insurance policy is TRUE?

Suicide is excluded for a specific period of years and covered thereafter.

Not all losses are insurable, and there are certain requirements that must be met before a risk is a proper subject for insurance. These requirements include all of the following EXCEPT

The loss may be intentional.

What is the purpose of annuity riders?

To allow investors to obtain additional benefit

Which of the following is NOT a goal of risk retention?

To minimize the insured's level of liability in the event of loss

An insurer has been found guilty of a Code violation regarding replacement. The insurer then repeats the violation. What will be the minimum penalty?

$30,000

An insured had a $10,000 term life policy. The annual premium of $200 was due on February 1; however, the insured failed to pay the premium. He died on February 28. How much would the beneficiary receive from the policy?

$9,800

The term "illustration" in a life insurance policy refers to

A presentation of nonguaranteed elements of a policy.

Circulating deceptive sales material to the public is what type of Unfair Trade Practice?

False advertising

Which concept is associated with "exclusion ratio"?

Annuity payments

All of the following are true regarding a qualified annuity EXCEPT

At distribution, all amounts received by the employee are tax free.

Which of the following best describes annually renewable term insurance?

It is level term insurance.

Any insurer who engages in the insurance business and violates the Code with respect to insurance replacement shall on the first violation

Be fined a sum of $10,000.

All of the following statements are correct regarding credit life insurance EXCEPT

Benefits are paid to the borrower's beneficiary.

An insurance company and its agents must notify all applicants and policyholders of information-gathering processes utilized for written application transactions

Both of these answers are correct.

All of the following are dividend options EXCEPT

Fixed-period installments.

A Return of Premium term life policy is written as what type of term coverage?

Increasing

Which of the following is true regarding free insurance issued in this state?

It is illegal.

Which of the following statements best describes the effect the Accelerated Benefit provision would have on the benefits paid to the beneficiary?

It will decrease the benefits paid to the beneficiary.

If a life insurance policy increases significantly in face amount (death benefit) when the insured reaches a specified age, what type of policy is this?

Jumping juvenile policy

An insured and his spouse own a home. When the insured dies, the insurer pays the remaining balance on his home loan. Which type of life insurance provision/rider does this describe?

Mortgage Redemption

Regarding the taxation of Business Overhead policies,

Premiums are deductible, and benefits are taxed.

Which of the following entities may NOT be an insurer?

The Commissioner

Which of the following is true if the policyowner exercises his/her right to surrender his/her life insurance policy for its current cash value? Assume that the policyowner and insured are the same person.

The insured is no longer covered under the surrendered policy.

The insurer must be able to rely on the statements in the application, and the insured must be able to rely on the insurer to pay valid claims. In the forming of an insurance contract, this is referred to as

Utmost good faith.

During the free-look period, the premium for a variable annuity may be invested in all of the following EXCEPT

Value funds.

The annuitant dies while the annuity is still in the accumulation stage. Which of the following is TRUE?

The beneficiary will receive the greater of the money paid into the annuity or the cash value.

A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then

The benefit is received tax free.

Which of the following is NOT the consideration in a policy?

The application given to a prospective insured

When the California Insurance Code needs to be changed, the legislature must design and pass a bill. Once the bill is passed, it is presented to the Governor and becomes law if not returned to the legislature within what time frame?

A specified period of 12-30 days

Which of the following is NOT a type of Temporary Insuring Agreement?

Bridge Coverage Receipt

An individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation?

Decreasing term

Selection of coverage in employee benefits plans refers to

Employee choosing benefits.

Which of the following is TRUE regarding the annuity period?

It may last for the lifetime of the annuitant.

Under the Fair Credit Reporting Act, if the consumer challenges the accuracy of the information contained in his or her report, the reporting agency must

Respond to the consumer's complaint.

Events or conditions that increase the chances of an insured loss occurring are referred to as

Hazards

Which of the following must be disclosed in all advertisements and policies of term life insurance for individuals 55 years of age or older?

Insurance monetary value index