Practice exam C

an applicant with above average exposures to loss is usually issued a a. preferred policy b. rated policy c. standard policy d. term policy

standard policy

Which type of policy pays the death benefit when the second insured dies? equity index life joint life life paid-up at age 65 survivorship life

survivorship life

the growth of cash values within an annuity are a. tax deferred b. tax free c. taxed each year as ordinary income d. only taxed during the accumulation period

tax deferred

If the Department of Insurance requests information from an agent regarding a claim, the information must be provided within how many days? A. 15 B. 21 C. 31 D. 90

21

Once a life settlement has been executed and by all parties and the owner has received all disclosures, how long does the owner have to rescind the contract a. 15 days b. 30 days c. 60 days d. it cannot be rescinded

30 days

when does the right rescission for a life insurance policy begin? date of application policy issue date date of medical exam date of policy delivery

Date of policy delivery

An applicant who is visually impaired has what type of hazard? A. Physical B. Moral C. Morale D. Legal

Physical

who is the first in line to receive the death benefit from a life insurance policy tertiary beneficiary revocable beneficiary contingent beneficiary primary beneficiary

Primary beneficiary

adverse selection is potential for an insurer to experience a. underwriting profits b. underwriting laws c. investment gain d. a disproportionate losses

a disproportionate losses

the main purpose of underwriting is to protect the insurer against fraud adverse selection temporary insurance exposure

adverse selection

what type of policy renews each year but the premium increased according to the insureds attained age? a. limited-pay b. increasing term c. level term d. annual renewable term

annual renewable term

which life annuity benefit option is often used for short term needs? a. life with 10 year certain b. annuity certain c. cash refund life d. pure life

annuity certain

all of the following are considered to be business uses of life insurance EXCEPT a. accumulation units b. stock shares c. mutual fund shares d. annuity units

annuity units

the provisions that allow an insurer to deduct premiums from the policy's cash value to prevent the policy from lapsing is a(n) A. incontestability clause B. automatic premium loans C. reinstatement provision D. return of premium payments

automatic premium loans

a return of premium insurance policy consists of a. level premium b. increasing term c. decreasing term d. cash value

cash value

what is NOT guaranteed with a variable whole life policy death benefit premium cash value period of protection

cash value

to prevent people from taking advantage of minors or the insane a contract must have which element? A. offer and acceptance B. competent parties C. advice and consent D. legal purpose

competent parties

the term that refers to unequal values given between two parties in a contract is a. aleatory b. conditional c. adhesion d. unilateral

conditional

which of the following is true regarding the blackout period? A. it begins when the youngest child reaches 16 years of age B. it starts when a disability begins C. It is a social security benefit administrated by insurance companies

it begins when the youngest child reaches 16 years of age

When an agent does not hold any active appointments with an insurer, what happens to the agent's license? a. it expires b. it becomes inactive c. it must be returned to the department of insurance d. it must be renewed upon a new appointment

it expires

buy - sell agreements are usually funded by a. joint life insurance b. joint and survivor life annuity c. survivorship life insurance d. decreasing term insurance

joint life insurance

a reduction in the value of an asset is called a(n) A. exposure B. loss C. hazard D. peril

loss

the specific event that causes a loss is a/an a. peril b. hazard c. indemnity d. exposure

peril

the primary purpose of an inspection report is to assess an applicants A. family history B. personal characteristics C. education level D. health profile

personal characteristics

what type of risk allows both gains and losses? pure exposure speculative hazards

speculative

a beneficiary receives monthly payments from the fixed amount installment option, how is the income taxed the interest portion of the payment is taxed, the principle is not the entire payment is received taxed free the principe portion of the payment is taxed, the interest is not

the interest portion of the payment is taxed, the principal is not

An agent is a legal Entity who acts on behalf of himself/herself the policyowner the principle the applicant

the principal

Insurance is the most common and effective method of handling risk by using which type of risk management? a. reduction b. sharing c. retention d. transfer

transfer

the administration penalty for an insurers first violation of the replacement provisions of the california code is A. $2,500 B. $5,000 C. $10,000 D. $30,000

10,000

individual annuities issued to seniors 65 and older must be given how many days to return the contract for a full refund? 10 20 30 45

30 days

an employee usually has how long after termination from a group plan to exercise the conversion option? a. 10 days b. 31 days c. 60 days d. 90 days

31

If changes need to be made to an application, the producer should make the change and submit it to the insurer initial the change and send it to the insurer have the applicant initial the change and send to the insurer erase the incorrect information and make the change

Have the applicant initial the change and send to the insurer

What information is NOT required prior to making a recommendation for the purchase of an annuity? A. Sources of income B. Age C. Health status D. Liquid net worth

Health status

Which annuity settlement option would result in the highest monthly income payment straight life refund life life with 10 year certain life with 20 year certain

Straight life

a condition or situation that increases the chance of an insured loss occurring is called hazard risk loss speculation

hazard

Pure death protection is provided by which type of life insurance policy a. term life b. whole life c. variable life d. universal life

universal life

Which policy offers a level death benefit or an increasing death benefit option? a. adjustable life b. universal life c. graded premium life d. survivorship life

universal life

the waiver of cost of insurance rider is found on which of the following policies? A. whole life B. term life C. variable life D. universal life

universal life

which life insurance policy is characterized by flexible premiums? A. variable life B. equity indexes life C. universal life D. limited pay life

universal life

the policy and copy of the application, along with any riders and amendments are called the a. whole contract b. complete contract c. entire contract d. primary contract

entire contract

which of the following would NOT constitute replacement when new life insurance is purchased a. causing a lapse of an existing policy b. changing a policy to a reduced paid-up insurance c. changing a policy to extended term insurance d. converting term insurance within the same company

converting term insurance within the same company

which is NOT a required element of a contract agreement legal purpose consideration counter offer

counter offer

a deferred annuity can be purchased with all of the following premium payment options EXCEPT a. single b. level c. flexible d. deferred

deferred

all of the following are methods of managing risk exposure EXCEPT a. avoidance b. retention c. reduction d. elimination

elimination

the beneficiary of a key person policy is the key person employer key persons spouse employee

employer

which transaction would NOT be appropriate for a 1035 exchange? whole life policy to a fixed annuity whole life policy to a universal life policy variable annuity to a whole life policy fixed annuity to a variable annuity

Variable annuity to a whole life policy

a life insurance policy with premiums that gradually increase for a specific period of years then remain level is a. ordinary life b. limited-pay life c. modified whole life d. graded premium whole life

graded premium whole life

which characteristics below would NOT prevent an insurer from accepting an insurance risk? a. catastrophic loss exposure b. group of homogeneous exposure units c. the market value is difficult to determine d. predictable loss

group of homogeneous exposure units

when assessing a consumers need for life insurance by focusing on an individual's future stream of income, the producer is using the A. needs approach B. estate creation C. lump-sum needs D. human life value approach

human life value approach

The clause that protects the proceeds of a life insurance policy from creditors after the death of the insured is known as the a. spendthrift clause b. common disaster clause c. incontestability clause d. beneficiary clause

spendthrift clause

each of the following is a typical characteristic of group life insurance EXCEPT a. evidence of insurability is usually required b. the master policy is issued to the sponsor of the group c. the plan has a grace period d. there is a conversion privilege for terminated employees

evidence of insurability is usually required

which type of agent authority is stated in the agents contract? a. implied b. assumed c. express d. apparent

express

which settlement option offers a level benefit until all proceeds are paid? a. fixed amount b. fixed period c. life income d. interest only

fixed amount

which provision keeps the policy enforce when premiums are less than 30 days past due? grace period free look period reinstatement insurability clause

grace period

according to the california insurance code, every applicant must notify the commissioner of any change in email or mailing address A. immediately B. within 10 days c. within 30 days d. within 90 days

immediately

representations in insurance contracts qualify for a. expressed warranties b. implied warranties c. agreements d. guarantees

implied warranties

a payer benefit rider is used to keep what type of policy in force? a. juvenile insurance policy b. term life policy c. whole life policy d. permanent policy

juvenile insurance policy

insurance that pays a death benefit to a corporation due to a financial loss because of the death of an employee who has specialized knowledge is called A. key person insurance B. buy-sell agreement C. split dollar plan D. deferred compensation plan

key person insurance

When money is withdrawn from an annuity during the accumulation phase the amounts are taxed on what basis? a. first in, last out b. last in, first out c. capital gains d. exclusion ratio calculations

last in, first out

the principal that states that larger the number of exposure units, the more predictable the number of future losses will be is known as law of large numbers adverse selection predicable loss factor future loss equation

law of large numbers

which element of contract law requires that contracts must be enforceable in court and show insurable interest? a. acceptance b. consideration c. legal purpose d. indemnity

legal purpose

the settlement option that may provide payments that exceed the proceeds of the policy and the interest earned is a. life income b. fixed period c. fixed amount d. interest only

life income

which life insurance rider will reduce the death benefit payable to the beneficiary? a. accidental death b. long-term care c. disability income d. waiver of premium

long-term care

all of the following are characteristics of whole life EXCEPT a. builds cash value b. premiums are level c. endows at age 100 d. lower premiums than term

lower premiums than term

the concept that states that all parties to a contract are entitled to all information needed to make an informed decision a. legal purpose b. materiality c. indemnity

materiality

What enables insurers to estimate the average frequency of future losses and set rates for life insurance? a. medical information bureau reporting b. morbidity tables c. mortality tables d. risk classifications

medical information bureau reporting

transaction insurance without a license is considered a(n) a. felony b. misdemeanor c. class A violation d. act of negligence

misdemeanor

a life settlement broker a. places property & casualty insurance with non-admitted carriers b. negotiates life settlement contracts between an owner and provider c. sells single premium immediate annuities to seniors d. assists beneficiaries in filing a claim on a life insurance policy

negotiates life settlement contracts between an owner and provider

when there is insufficient cash surrender value in the policy, this rider prevents the policy from terminating a. waiver of cost insurance b. guaranteed insurability c. cost of living d. no-lapse guarantee

no-lapse guarantee

an accelerated (living) benefit provision allows a terminally ill insured to a. pay extra premiums b. receive the face amount of the policy c. receive a portion of the death prior to death d. reduce the policy premiums

receive a portion of the death prior to death

an example of a former risk-sharing arrangement would be a reciprocal insurance exchange mutual insurer stock exchange plan split dollar plans

reciprocal insurance exchange

when an insurance contract is cancelled in favor of another insurer it is called a. solicitation b. twisting c. controlled business d. replacement

replacement

if an individual commits suicide within 6 months after purchasing an insurance policy, the insurer will a. pay nothing b. return the premiums paid c. pay the face value less the suicides deduction d. pay the face value

return the premiums paid

The premiums for a variable annuity are invested in the general account separate account investment account qualified account

separate account