California Life Prep

Based on Human Life Value Approach, which of the following is NOT used to calculate an individual's life value? a)Insured's annual expenses. b)Effect of inflation on income over time. c)Predicted needs of the family after the insured's death. d)Insured's current and future income.

Predicted needs of the family after the insured's death.

All of the following statements concerning dividends are true EXCEPT a)Dividend amounts are guaranteed in the policy. b)Lower insurance company costs generate higher dividends. c)They stem from favorable underwriting experience. d)Favorable investment results generate higher dividends.

a)Dividend amounts are guaranteed in the policy

The premium of a survivorship life policy compared with that of a joint life policy would be a)Lower. b)Higher. c)As high. d)Half the amount.

a)Lower

All of the following are true regarding insurance policy loans EXCEPT a)Policy loans can be made on policies that do not accumulate cash value. b)The amount of the outstanding loan and interest will be deducted from the policy proceeds when the insured dies. c)The policy will terminate if the loan plus interest equals or exceeds the cash value of the policy. d)Policyowners can borrow up to the full amount of their whole life policy's cash value. The policy loan option is only found in policies that contain cash value.

a)Policy loans can be made on policies that do not accumulate cash value.

Which of the following will be included in a policy summary? a)Premium amounts and surrender values b)Copies of illustrations and application c)Comparisons with similar policies d)Primary and secondary beneficiary designations

a)Premium amounts and surrender values

Which of the following insurance options would be considered a risk-sharing arrangement? a)Reciprocal b)Stock c)Mutual d)Surplus lines

a)Reciprocal

An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date? a)The date of medical exam b)The date of policy delivery c)The date of issue d)The date of application

a)The date of medical exam

Which of the following is true regarding an application for a large amount of insurance? a)The insurer might require a medical examination by a professional. b)The insurer will accept a non-medical application. c)The applicant must submit a statement of good health. d)The agent, and not the applicant, will complete all of the medical information.

a)The insurer might require a medical examination by a professional.

If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a a)Nonforfeiture option. b)Guaranteed insurability rider. c)Paid-up additions option. d)Cost of living provision.

b)Guaranteed insurability rider.

An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the company do? a)Pay the full death benefit and refund excess premium b)Pay a reduced death benefit c)Pay the full death benefit d)Pay nothing; there was a misrepresentation on the application

b)Pay a reduced death benefit

Which of the following is NOT true about a joint and survivor annuity benefit option? a)The surviving annuitant may receive reduced payments. b)Payments stop after the first death among the annuitants. c)A period certain option may be included. d)This option guarantees income for two or more recipients.

b)Payments stop after the first death among the annuitants.

A domestic insurer issuing variable contracts must establish one or more a)Annuity accounts. b)General accounts. c)Separate accounts. d)Liability accounts.

c)Separate accounts

A small hardware store owner is involved in a car accident that renders him totally disabled for half a year. Which type of insurance would help him pay for expenses of the company during the time of his disability? a)Key person insurance b)Disability buy-sell agreement c)Business disability policy d)Business overhead expense policy

d)Business overhead expense policy

All of the following are features and requirements of the Living Needs Rider EXCEPT a)It is usually available at no additional charge. b)The remainder of the policy proceeds is payable to the beneficiary at the insured's death. c)It provides funds for medical and nursing home expenses to a terminally ill insured. d)Diagnosis must indicate that death is expected within 3 years.

d)Diagnosis must indicate that death is expected within 3 years.

Variable Whole Life insurance is based on what type of premium? a)Increasing b)Flexible c)Graded d)Level fixed

d)Level fixed

Which of the following can surrender a deferred annuity contract? a)Only the insurance company for nonpayment of premiums b)The beneficiary after the owner's death c)A deferred annuity cannot be surrendered. d)Only the annuity owner

d)Only the annuity owner

Which Universal Life option has a gradually increasing cash value and a level death benefit? a)Juvenile life b)Term insurance c)Option B d)Option A

d)Option A

Which of the following is NOT correct regarding false statements by a person engaged in the business of insurance? a)Omissions of material fact on insurance application are fraud. b)False statements about financial condition of an insurer are unlawful. c)Statements made with the intent to deceive are unlawful. d)Oral statements cannot be considered fraud.

d)Oral Statements cannot be considered fraud

Which of the following can an insured submit to the insurer that would provide evidence of a claim and illustrate how severe the loss is? a)Statement of claim b)Petition for remittance c)Notification of loss d)Proof of claim

d)Proof of claim

To sell variable life insurance policies, an agent must receive all of the following EXCEPT a)FINRA registration. b)A securities license. c)A life insurance license. d)SEC registration.

d)SEC registration

All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT a)Any type of insurance policy may be used. b)The employer pays a bonus to a selected employee to fund the policy. c)It is considered a nonqualified employee benefit. d)The policy is owned by the company. The policy is owned by the employee.

d)The policy is owned by the company.