Life Insurance Practice Test (YBLA) Exam 1 and 2
An investor buys a life policy on an elderly person in order to sell it for a life settlement. This is an example of a. third-party ownership b. a STOLI policy (stranger oriented life insurance) c. a prearranged funeral plan d. a viatical settlement
b. a STOLI policy (stranger oriented life insurance)
which of the following riders would NOT cause the Death Benefits to increase? a. accidental Death Rider b. Payor Benefits Rider c. Guaranteed Insurability Rider d. Cost of Living Rider
b. Payor Benefits Rider
which of the following is a risk classification used by underwriters for life insurance? a. Excellent b. Standard c. Poor d. Normal
b. Standard
which of the following would be NOT be considered a form of direct response marketing ? a. an insurance company's TV commercial b. a sign in an insurer's office c. an ad in a newspaper d. a circular mailed to a city's residents
b. a sign in an insurer's office
which of the following in another term for an authorized insurer? a. legal b. admitted c. certified d. licensed
b. admitted
for how long is an insurance company allowed to defer policy loan requests? a. 30 days b. 60 days c. 6 months d. 1 year
c. 6 months
As part of the continuing education requirement, what is the minimum number of hours of continuing education specific to long-term care insurance to be completed prior to each license renewal? a. 4 b. 6 c. 8 d. 12
c. 8
an individual's tendency to be dishonest would be indicative of a a. Pure hazard b. Physical hazard c. Moral hazard d. Morale hazard
c. Moral hazard
To sell variable life insurance policies, an agent must receive all of the following EXCEPT a. a securities license b. a life insurance license c. SEC registration d. FINRA registration
c. SEC registration
The title page of the policy provides a summary of the benefits and coverages provided by the policy. All of the following information is included in the title page EXCEPT a. The premium amount and modal. b. The effective date and the termination date of the policy. c. The insured's beneficiaries. d. Type of policy, amount of coverage provided.
c. The insured's beneficiaries.
employer contributions made to a qualified plan a. may discriminate in favor of highly paid employees b. are after tax contributions c. are taxed annually as salary d. are subject to vesting requirement
d. are subject to vesting requirement
in the state of California, who selects the Insurance Commissioner and for how long? A. General election, for no more then two four-year term. B. general electron, for one six-year term C. the governor, for one six-year term D. the governor, for no more then two four-year term
A. General election, for no more then two four-year term.
the commissioner has the authority to issue a cease and desist order against any person acting as an insurance agent or broker without being licensed. The commissioner may also impose a penalty for each day the order is violated in what amount? a. $5,000 b. $2,000 c. $2000 and 6 month jail term d. $5000 and 6 month jail term
a. $5,000
what is the minimum free look for newly life insurance policies in the state? a. 10 days b. 20 days c. 30 days d. 90 days
a. 10 days
in this state, what is the primary body of laws established by the state legislature to regular the business of insurance a. California insurance code b. California administrative code c. code of ethics d. general provisions
a. California insurance code
Which authority is NOT stated in an agent's contract but is required for the agent to conduct business? a. Implied b. Apparent c. Assumed d. Express
a. Implied
Graded Premium Whole Life policy premiums are typically lower initially, but gradually increase for a period of 5 to 10 years. After the period of increase the premiums will a. be level thereafter b. continue to increase c. return to the initial premium amount d. decrease again
a. be level thereafter
If an annuitant dies before annuitization occurs, what will the beneficiary receive? a. either amount paid into the plan or cash value of the plan, whichever is the greater amount b. either the amount paid into the plan or cash value of the plan, whichever is the lesser amount c. amount paid into the plan d. cash value of the plan
a. either amount paid into the plan or cash value of the plan, whichever is the greater amount
If an insured surrenders his life insurance policy, which statement is true regarding the cash value of the policy? a. it is only taxable if the cash value exceeds the amount paid for premiums b.it is not considered to be taxable c. it is taxable only if it exceeds the amounts paid for premiums by 50% d. it is automatically taxable
a. it is only taxable if the cash value exceeds the amount paid for premiums
Using a class designation for beneficiaries means a. naming beneficiaries as a group b. not naming beneficiaries c. naming an estate as beneficiary d. naming each beneficiary by his or her name
a. naming beneficiaries as a group
Which type of life insurance policy generates immediate cash value? a. single premium b. level term c. decreasing term d. continuous premium
a. single premium
An insured purchased a 10-year level term life policy that is guaranteed renewable and convertible. What happens at the end of the 10-year term? a. the insured may renew the policy for another 10 years, but at a higher premium rate b. the insured must provide evidence of insurability to renew the policy c. the insured may only convert the policy to another policy d. the insured may renew the policy for another 10 years at the same premium rate.
a. the insured may renew the policy for another 10 years, but at a higher premium rate
an insured wants to transfer this personal insurance policy to a friend. Under what conditions would this be possible? a. the insured will need a written consent of the insurer b. it is impossible to transfer a policy c. the insured would have to surrender his policy to insurer, and his friend could then ask to buy it d. the insured can transfer the policy to his friend and then notify the insurer of the change.
a. the insured will need a written consent of the insurer
If an insured continually uses the automatic premium loan option to pay the policy premium, a. the policy will terminate when the cash value is reduced to nothing b. the face amount of the policy will be reduced by the automatic premium loan amount c. the cash value will continue to increase d. the insurer will increase the premium amount
a. the policy will terminate when the cash value is reduced to nothing
Under an extended term nonforfeiture option, the policy cash value is converted to a. the same face amount as in the whole life policy b. the face amount than the cash value c. a lower face amount then a whole life policy d. a higher face amount then whole life policy
a. the same face amount as in the whole life 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 a. utmost good faith b. reasonable expectations c. a warranty d. implied warranty
a. utmost good faith
which of the following is a key distinction between variable whole life and variable universal life products? a. variable whole life has a guaranteed death benefit b. variable universal life is regulated solely through FINRA c. variable whole life allows policy loans from the cash value d. variable universal life has a fixed premium
a. variable whole life has a guaranteed death benefit
how long must an insurer keep records of electronic transmission to customers? a. 3 years b. 5 years c. 6 years d. 1 years
b. 5 years
an insurance company is domiciled in Montana and transacts insurance in Wyoming. Which term best describes the insurer's classification in Wyoming? a. Unauthorized b. Foreign c. Alien d. Domestic
b. Foreign
The insurer may suspect that a moral hazard exists if the policyholder a. always drives over the speed limit b. is not honest about his health on an application foe insurance c. is prone to depression d. is indifferent to activities that may be dangerous
b. is not honest about his health on an application foe insurance
which of the following is another term for the accumulation period of an annuity? a. annuity period b. pay in period c. premium period d. liquidation period
b. pay in period
in a group life insurance policy, the employer may select all of the following EXCEPT a. the premium payor b. the beneficiary c. the type of insurance d. the amount of insurance
b. the beneficiary
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 a. the loss produced by risk must be definite b. the loss may be intentional c. the loss must not be catastrophic d. there must be a sufficient number of homogeneous exposure units to make losses reasonably predictable
b. the loss may be intentional
what is the minimum fine for acting as an agent for a non-admitted insurer in the transaction of insurance business? a.$100 b.$500 c. $1,000 d. $5,000
b.$500
which of the following is true regarding written binders a. both the applicant and insurer can write a binder b. binders serve as a receipt that the insurer is processing the application. No coverage applies. c. Binders prove that the insured has insurance coverage, even though the policy has not been issued yet d. binders apply only to life insurance.
c. Binders prove that the insured has insurance coverage, even though the policy has not been issued yet
all of the following could own group life insurance EXCEPT a. an alumni group b. debtor group c. a group needing low-cost life insurance d. a group sponsored by an employer
c. a group needing low-cost life insurance
which of the following documents delivered to the policyowner includes information about premium amounts, cash values, surrender values, and death benefits for specific policy years? a. a privacy notice b. a buyer's guide c. a policy summary d. a notice regarding replacement
c. a policy summary
For variable products, underlying assets must be kept in a. a money market account b. a general account c. a separate account d. a revenue account
c. a separate account
what is a material misrepresentation? a. any misstatement by the producer b. concealment c. a statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company d. any misstatement made by an applicant for insurance
c. a statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company
the two types of assignments are a. complete and partial b. complete proportionate c. absolute and collateral d. absolute and partial
c. absolute and collateral
An insured pays a $100 premium every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered loss. What characteristic of an insurance contract does this describe? a. adhesion b. conditional c. aleatory d. good health
c. aleatory
which of the following would qualify as an implied warranty in an insurance contract? a. contract's legal purpose b. statements in the policy c. an oral representation by the applicant d. the applicant's signature
c. an oral representation by the applicant
which of the following statement regarding Business Overhead Expense policies is NOT true? a. any benefits received are taxable to the business b. leased equipment expenses are covered by the plan c. benefits are usually limited to six months d. premiums paid for BOE are tax-deductible
c. benefits are usually limited to six months
which of the following annuity riders ensures that the owner will receive from an annuity at least the amount paid for the annuity? a. guaranteed minimum accumulation b. guaranteed lifetime earning c. guaranteed lifetime withdrawal d. guaranteed minimum income
c. guaranteed lifetime withdrawal
which of the following annuity riders ensurers investors will receive a set amount of income annually? a. guaranteed lifetime earning b. guaranteed lifetime withdrawal c. guaranteed minimum accumulation benefit d.guaranteed minimum accumulation benefit
c. guaranteed minimum accumulation benefit
When an agent does not hold any active appointments with an insurer, what happens to the agent's license? a. it must be renewed with a new appointment b. it expires c. it become inactive d. it must be returned to the department on insurance
c. it become inactive
Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary? a. single life b. fixed-amount c. life income with period certain d. joint and survivor
c. life income with period certain
Under a pure life annuity, an income is payable by the company a. for a guaranteed period of time, whether or not the annuitant survives to the end of that period b. for as long as either the annuitant or a named beneficiary is alive. c. only for the life of the annuitant d. until the principal and interest are exhausted
c. only for the life of the annuitant
which nonforfeiture option provides coverage for the longest period of time? a. paid up option b. accumulated at interest c. reduced paid-up d. extended term
c. reduced paid-up
a 403(b) plan, commonly referred to as a TSA, is available to be used by a. postal employees b. self-employed persons c. teachers and not-for-profit organizations d. government workers
c. teachers and not-for-profit organizations
which of the following types of policies allows for a flexible premium and a variable investment component? a. variable whole life insurance b. whole life insurance c. variable universal life insurance d. guaranteed issue variable life insurance
c. variable universal life insurance
to which of the following products does the Replacement Regulation apply? a. credit life insurance b. converting an existing policy with the same insurer c. whole life insurance d. group annuities
c. whole life insurance
which of the following statement regarding the taxation of Modified Endowment Contracts is FALSE? a. policy loans are taxable distributions b. accumulations are tax deferred c. withdrawals are not taxable d. distributions before age 59 1/2 incur a 10% penalty on policy gains
c. withdrawals are not taxable
An insured decides to surrender his $100,000 Whole Life policy. The premiums paid into the policy added up to $15,000. At policy surrender, the cash surrender value was $18,000. What part of the surrender value would be income taxable? a. $50,000 b. $18,000 c. $15,000 d. $3,000
d. $3,000
which of the following is a feature of a variable annuity? a. payments into the annuity are kept in the company's general account b. interest rate is guaranteed. c. securities license is not required d. benefits payment amounts are not guaranteed
d. benefits payment amounts are not guaranteed
which of the following elements in an indexed universal life policy is tied to an index? a. death benefit b. face amount c. premiums d. cash values
d. cash values
When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is a. aleatory b. personal c. unilateral d. conditional
d. conditional
If an insured changes his payment plan from monthly to annually, what happens to the total premium? a. stays the same b. doubles c. increases d. decreases
d. decreases
when an employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy, this is called a(n) a. key person policy b. fraternal association c. aleatory contract d. executive bonus
d. executive bonus
an individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy? a.dividend options b. guaranteed renewable option c. nonforfeiture options d. guaranteed insurability option
d. guaranteed insurability option
which of the following life insurance policies does NOT build cash value? a. universal Life b. variable life c. whole life d. guaranteed universal life
d. guaranteed universal life
Harry has just received his life insurance policy. In reviewing the title page, Harry was able to ascertain the following information EXCEPT a. his children have been covered by a child rider b. he had purchased a 20 year renewable term insurance policy in the face amount of $150,000 c. his total annual premium amount d. his spouse had been assigned the primary beneficiary
d. his spouse had been assigned the primary beneficiary
which of the following is true regarding a policy with a face value less than $100,000? a. an insured cannot return the policy b. it it's returned during the free look period, the contract will be cancelled, but the insurer will retain the premium paid. c. the policy can be cancelled with full refund of premium at any time d. if it's returned during the free look period, the agreement will be void.
d. if it's returned during the free look period, the agreement will be void.
the type of term insurance that provides increasing death benefits as the insured ages is called a. flexible term b. interest- sensitive term c. age-sensitive term d. increasing term
d. increasing term
which of the following is NOT a license in the state of California? a. Life only agent b. Solicitor c. insurance agent d. life broker
d. life broker
according to California insurance code, term "shall" describes what kind of actions? a. permissive b. implied c. directive d. mandatory
d. mandatory
which of the following individuals must have insurable interest int he insured? a. beneficiary b. underwriter c. producer d. policy owner
d. policy owner
a situation in which a person can only lose or have no change represents a. speculative risk b. adverse selection c. hazard d. pure risk
d. pure risk
an applicant buys a non-qualified annuity, but dies before that starting date. For which the following beneficiaries would the interest accumulated in annuity NOT be taxable? a. charitable organization b. dependents c. annuitant d. spouse
d. spouse
which of the following is NOT true regarding the annuitant? a. the annuitant's life expectancy is taken into consideration for the annuity b. the annuitant receives the annuity benefits c. the annuitant must be a natural person d. the annuitant cannot be the same person as the annuity owner
d. the annuitant cannot be the same person as the annuity owner
which of the following is NOT required on an illustration used in the state of a life insurance policy? a. generic name of policy b. name of insurer c. underwriting or rating classification upon which the illustration is based d. the name of the primary and secondary beneficiaries
d. the name of the primary and secondary beneficiaries
whose responsibility is it to make certain that an application for insurance is filled out completely and correctly? a. the beneficiary of the applicant b. the insurance company c. the applicant d. the producer
d. the producer
all of following are true regarding the guaranteed insurability rider EXCEPT a. the insured may purchase additional coverage at the attained age. b. the insured may purchase additional insurance up to amount specified in the base policy c. it allows the insured to purchase additional amounts of insurance without proving insurability only at specified dates or events d. this rider is available to all insureds with no additional premium
d. this rider is available to all insureds with no additional premium
the Waiver of Cost of insurance rider is found in what type of insurance? a. whole life b. joint and survivor c. juvenile life d. universal life
d. universal life
the main difference between immediate and deferred annuities is a. how the annuity is purchased b. the number of insureds c. the amount of each payment d. when the income payment begin
d. when the income payment begin
to which of the following products does the Replacement Regulation apply? a. Group annuities b. Credit life insurance c. Converting an existing policy with the same insurer d. whole life insurance
d. whole life insurance
If a life insurance policy has an irrevocable beneficiary designation, a. the beneficiary can only be changed with written permission of the beneficiary b. the beneficiary cannot be charged for at least 2 years c. the owner can always change the beneficiary at will d. the beneficiary cannot be changed
a. the beneficiary can only be changed with written permission of the beneficiary
Signing and dating a delivery receipt for a life insurance policy helps to establish all of the following timeframes EXCEPT a. the grace period b. the incontestability period c. the free-look period d. the right of rescission
a. the grace period
Any insurer who engages in the insurance business and violates the Code with respect to insurance replacement shall on the first violation a. be fined a sum of $10,000 b. be fined a sum no less then $30,000 and no more than $300,000 c. have his/her license suspended d. be fined a sum of $1,000
a. be fined a sum of $10,000
which of the following is TRUE about class designation? a. beneficiaries are not identified by name b. beneficiaries must be part of the insured's immediate family c. it is not allowed d. it determines the succession of beneficiaries
a. beneficiaries are not identified by name
all of the following statements are correct regarding credit life insurance EXCEPT a. benefits are paid to the borrower's beneficiary b. the amount of insurance permissible is limited per borrower c. premiums are usually paid by the policyowner d. benefits are paid top the creditor
a. benefits are paid to the borrower's beneficiary
the insured provides a proof of claim to the a. insurer b. insured c. commissioner d. guarantee association
a. insurer
which of the following types of insurance policies is most commonly used in credit life insurance? a. equity indexed life b. decreasing term c. increasing term d. whole life
b. decreasing term
when an individual purchase insurance, what risk management technique is he or she practicing? a. sharing b. retention c. transfer d. avoidance
c. transfer
which of the following is a key distinction variable whole life and variable universal life products? a. variable whole life has a guaranteed death benefit b. variable universal life is regulated solely through FINRA c. variable whole life allows policy loans from cash value d. variable universal life has fixed premium
a. variable whole life has a guaranteed death benefit
The risk of loss may be classified as a. named risk and un-named risk b. high risk and low risk c. pure risk and speculative risk d. certain risk and uncertain risk
c. pure risk and speculative risk
which of the following is true regarding taxation of dividends in participating policies? a. dividends are taxable only after a certain amount is accumulated annuity b. dividends are taxable in some life insurance policies and nontaxable in others c. dividends are considered income for tax purposes d. dividends are not taxable
d. dividends are not taxable
What type of insurance would be used for a Return of Premium rider? a. level term b. decreasing term c. annually renewable term d. increasing term
d. increasing term
A deceptive act or practice committed by a person with the intent to secure an unfair advantage or unlawful gain is known as a. Fraud b. Transacting without a license c. Misinformation d. Misrepresentation
a. Fraud
an insurer receives a claim on May 1st. On May 31th, the claim was approved in its entirely. By what date can the claimant expect the payment? a. June 30th b. July 10th c. June 3rd d. June 10th
a. June 30th
the protection of the insurer from adverse selection is provided in part by a. a profitable distribution of exposures b. reducing costs c. a drop in applicants d. a reduction in coverage
a. a profitable distribution of exposures
An insured receives an annual life insurance dividend check. What term best describes this arrangement? a. cash option b. reduction of premium c. annual dividend provision d. accumulation at interest.
a. cash option
a young father would like a life insurance policy to provide coverage for all five family members at the lowest cost. Which type of policy would he mostly likely buy? a. family protection policy b. universal life policy c. family income policy d. level term policy
a. family protection policy
which of the following statements is TRUE about the policy assignment? a. it transfer rights of ownership from the owner to another person b. it is the same as a beneficiary designation c. it permits the beneficiary to designate the person to receive the benefits d. it authorizes an agent to modify the policy
a. it transfer rights of ownership from the owner to another person
If an agent wishes to sell variable life policies, what license must the agent obtain? a. securities b. adjuster c. surplus lines d. personal lines
a. securities
When a life insurance policy stipulates that the beneficiary will receive payments in specified installments or for a specified number of years, what provision prevents the beneficiary from changing or borrowing from the planned installments a. spendthrift provision b. settlement option c. accelerated benefit provision d. loan provision
a. spendthrift provision
what happens when a policy is surrendered for its cash value? a. the policy can be converted to term coverage b. coverage ends and the policy cannot be reinstated. c. coverage ends but the policy can be reinstated at any time. d. the policy can be reinstated by paying back all policy loans and premiums.
b. coverage ends and the policy cannot be reinstated.
which of the following is TRUE about credit life insurance? a. debtor is the policy beneficiary b. creditor is the policyowner c. debtor is the annuitant d. creditor is the insured
b. creditor is the policyowner
In the Executive Bonus plan, who is the owner of the policy, and who pays the premium? a. company is the owner, and the company pays the premium. b. executive is the owner, and the executive pays the premium c. company is owner, but the executive pays the premium d. board of directors is the owner, and the board of directors pays the premium.
b. executive is the owner, and the executive pays the premium
all of the following are dividend options EXCEPT a. paid-up additions b. fixed-period installments c. accumulated at interest d. reduction of premium
b. fixed-period installments
an insured has the right to return the new insurance policy for a full refund during the a. grace period b. free look period c. settlement period d. probationary period
b. free look period
which of the following is NOT true regarding the accumulation period of an annuity? a. it is also as the pay-in period b. it would not occur in a deferred annuity c. it is the period during which the annuity payment earn interest d. it is the period over which the owner makes payments into an annuity
b. it would not occur in a deferred annuity
the written instrument, in which a contract of insurance is set forth, is known as the a. right of agency b. policy c. binding clause d. insuring clause
b. policy
Pertaining to insurance, what is the definition of a fiduciary responsibility? a. offering additional coverage to clients b. promptly forwarding premiums to the insurance company c. helping insured to file claims d. performing reviews of insured's coverage
b. promptly forwarding premiums to the insurance company
According to the California Insurance Code, which of the following can be classified as an insurable event? a. extreme levels of loss b. pure risks c. unpredictable losses d. speculative risks
b. pure risks
Events in which a person has both the chance of winning or losing are classified as a. retained risk b. speculative risk c. insurable d. pure risk
b. speculative risk
the annuity owner dies during the accumulation period without naming a beneficiary. Annuity's cash value exceeds premiums paid. Which of the following is TRUE? a. the cash value will be paid to the state government b. the cash value will be paid to the annuitant's estate c. the premium value will be paid to the annuitant's estate. d. all benefits will be forfeited
b. the cash value will be paid to the annuitant's estate
An annuitant dies before the effective date of a purchased annuity. Assuming that the annuitant's wife is the beneficiary, what will occur? a. the premiums will decrease b. the interest will continue to accumulate tax deferred c. the interest will become immediately taxable d. the premiums will increase
b. the interest will continue to accumulate tax deferred
which of the following best describe what the annuity period is? a. the period of time from the effective date of the of contract to the date of its termination b. the period of time during which accumulated money is converted into income payments c. the period of time from the accumulation period to the annuitization period d. the period of time during which money is accumulated in an annuity
b. the period of time during which accumulated money is converted into income payments
in term of parties to a contract, which of the following does NOT describes a competent party? a. the person must be mentally competent to understand the contract b. the person must have at least completed secondary education c. the person must be under the influence of drugs and alcohol. d. the person must be of legal age.
b. the person must have at least completed secondary education
An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries? a. one of the beneficiaries will receive 1/3 and other 2/3 of the proceeds when the insured dies. b. the surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive c. the beneficiary will receive 2/3 of the lump sum front, and the remaining 1/3 will be paid over time. d. the beneficiary will receive 2/3 of the total benefit, with the final 1/3 payable when the first beneficiary dies.
b. the surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive
If an applicant for a life insurance policy and person to be insured by the policy are two different people, the underwriter would be concerned about a. which individual will pay the premium b. whether an insurable interest exists between the individuals c. the gender of the applicant d. the type of policy requested
b. whether an insurable interest exists between the individuals
an insured purchase a variable life insurance policy with a face amount of $50,000. Over the life of the policy, stock performance declined and the cash value feel to $10,000. If the insured dies, how much will be paid? a. $10,000 b. $40,000 c. $50,000 d. $60,000
c. $50,000
an insured has a $10,000 term life policy. The annual premium of $200 was due on February 1; however, the insurer failed to pay the premium. He died on February 28. How much would the beneficiary receive from the policy? a. $0 b. $200 c. $9,800 d. $10,000
c. $9,800
In addition to penalties, fines, and possible imprisonment for violating the provision relating to misrepresentation, the Commissioner may suspend the license of such person for a period up to a. 6 months b. 1 year c. 3 years d. 5 years
c. 3 years
If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? a. 10 days b. 3 days c. 5 days d. 7 days
c. 5 days
Any insurance agent who commits a repeated violation of the Insurance Code with respect to insurance replacement will be liable for a. a criminal penalty of up to $10,000 b. a penalty not to exceed $1,000 per violation c. an administrative penalty of no less then $5,000 and no more than $50,000 per violation. d. an administrative penalty of no less then $30,000 and have his/her license revoked.
c. an administrative penalty of no less then $5,000 and no more than $50,000 per violation.
all of the following are requirement of eligibility for Social Security disability income benefits EXCEPT a. fully insured status b. waiting period of 5 months c. being age 65 d. inability to perform any gainful work
c. being age 65
An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated? a. representation b. adhesion c. consideration d. good faith
c. consideration
which of the following is NOT a legitimate use of annuities by businesses? a. providing deferred compensation for employees b. providing an investment vehicle c. creating a tax shelter d. funding employee retirement plans
c. creating a tax shelter
which of the following best describes the policy nonrenewal? a. voiding of a policy due to misrepresentation on the application. b. revocation of one's insurance policy by the insurer. c. discontinuance of an insurance policy by the insured on the policy anniversary date d. return of the policy after a 10 days free look
c. discontinuance of an insurance policy by the insured on the policy anniversary date
which of the following is TRUE about the 10 day free look period in a Life Insurance policy? a. it applies only to term life insurance policies b. it is optional on all life insurance policies c. it begins when the policy is delivered d. it begins when the application is signed
c. it begins when the policy is delivered
an individual tendency to be dishonest would be indicative of a a. pure hazard b. physical hazard c. moral hazard d. morale hazard
c. moral hazard
Regarding the taxation of Business Overhead policies, a. premiums are not deductible, but benefits are deductible b.premiums are not deductible, but expenses paid are deductible c. premiums are deductible, and benefits are taxed d. premiums are not deductible, and benefits are taxed
c. premiums are deductible, and benefits are taxed
all of the following are the responsibilities of every long term care insurer in California EXCEPT a. establish marketing procedures to assure excessive insurance is not sold or issued b. submit to the commissioner a list of all agents authorized to solicit individual consumers for the sale of long term care insurance c. provide enough business to solicit long term care insurance d. establish marketing procedures to assure that any comparison policies will be fair and accurate
c. provide enough business to solicit long term care insurance
the price of insurance for each exposure unit is knowns as a. insurable interest b. premium c. rate d. consideration
c. rate
a corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then a. IRS has no jurisdiction b. the benefit is received as taxable income c. the benefit is received tax free d. the benefit is subject to the exclusionary rule
c. the benefit is received tax free
which of the following does NOT need to be identified in an insurance policy? a. a statement of insurable interest b. the first named insured c. the insurer's financial rating d. the stated periodic premium
c. the insurer's financial rating
all of the following are requirements for life illustrations EXCEPT a. they must identify nonguaranteed values b. they must differentiate between guaranteed and projected amounts c. they must be part of the contract d. they may only be used as approved
c. they must be part of the contract
which of following is NOT a goal of risk retention? a. to increase control of claim reserving and claims settlements b. to fund losses that cannot be insured c. to minimize the insured's level of liability in the event of loss d. to reduce expenses and improve cash flow
c. to minimize the insured's level of liability in the event of loss
what is the purpose of a fixed- period settlement option? a. to provide a guaranteed income of life b. to provide a guaranteed amount of money each month c. to provide a guaranteed income for a certain amount of time d. to settle the insurance company's liability
c. to provide a guaranteed income for a certain amount of time
in a survivorship life policy, when does the insurer pay the death benefit? a. half at the first death, and half at the second death. b. if the insured survives to age 100 c. upon the last death d. upon the first death
c. upon the last death
An Internal Revenue Code provision that specifically provides for an individual retirement plan for public school teachers is a(n) a. Keogh Plan b. Roth IRA c. SEP d. 403(b) Plan (TSA)
d. 403(b) Plan (TSA)
Who is a third-party owner? a. an insurer who issues a policy for two people b. an employee in a group policy c. an irrevocable beneficiary d. a policyowner who is not the insured
d. a policyowner who is not the insured
the full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective? a. as of the policy delivery date b. as of the first of the month after the policy issue c. as of the policy issue date d. as of the application date
d. as of the application date
which of the following would describe a legal document which would dictate who can buy a deceased partner's share of a business and for what amount? a. profit and loss agreement b. key person agreement c. split dollar agreement d. buy-sell agreement
d. buy-sell agreement
what does "liquidity" refer to in a life insurance policy? a. the death benefit replaces the assets that would have accumulated if the insured had not died b. the policyowner receives dividend check each year c. the insured receives payment each month in retirement d. cash value can be borrowed at any time
d. cash value can be borrowed at any time
which of the following reports will provide the underwriter with the information about an insurance applicant's credit? a. inspection report b. agent's report c. any federal report d. consumer report
d. consumer report
all of the following statement are true of a nonqualified retirement plan EXCEPT? a. increase of funds are not taxed until received b. contributions grow tax deferred c. they do not qualify for special tax treatment by IRS d. contributions are tax exempt
d. contributions are tax exempt
what happen when a policy is surrendered for its cash value? a. coverage ends but the policy can be reinstated at any time b. the policy can be reinstated by paying back all policy loans and premiums c. the policy can be converted to term coverage d. coverage ends and the policy cannot be reinstated
d. coverage ends and the policy cannot be reinstated
which of the following is NOT fundable by annuities? a. cash accumulation for any reason b. a person's retirement c. estate liquidation d. death benefits
d. death benefits
what is the term for a sales campaign conducted through the mail? a. direct-mail b. mass marketing c. advertising d. direct- response
d. direct- response
Under a straight life annuity, if the annuitant dies before the principal amount is paid out, the beneficiary will receive a. guaranteed minimum benefits b. the amount paid into the annuity c. the remainder of the principal d. nothing, the payments will cease
d. nothing, the payments will cease
which of the following is most common way to transfer risk? a.increase control of claims b. lesson the possibility of loss c. name a beneficiary d. purchase insurance
d. purchase insurance
In case of a loss, the indemnity provision in insurance policies a. allows the insured to collect 20% more than the actual loss. b. pays the insured a percentage of the loss above and beyond the loss c. pays the insured as much as 95% of the loss d. restores an insured person to the same financial state as before the loss
d. restores an insured person to the same financial state as before the loss
Events in which a person has both the chance of winning or losing are classified as a. insurable b. pure risk c. retained risk d. speculative risk
d. speculative risk
what happens if deferred annuity is surrendered before the annuitization period? a. the owner will only receive a refund of premium b. the insurer can only apply the surrender value toward another annuity c. deferred annuities cannot be surrender prior to the annuitization period d. the owner will receive the surrender value of an annuity
d. the owner will receive the surrender value of an annuity
the rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called a. guaranteed insurability b. waiver of cost insurance c. payor benefit d. waiver of premium
d. waiver of premium
