LIFE INSURANCE
Chapter: Life Insurance The youngest possible age for an "elder" is A 55. B 60. C 65. D 70.
C 65.
An intentional or unintentional concealment entitles the affected party to which of the following? A Estoppel. B Waiver of concealed conditions. C Subrogation of a contract. D Rescission of a contract.
D Rescission of a contract. Correct! Concealment, whether intentional or unintentional, entitles the affected party to rescind the insurance policy.
Chapter: Life Insurance What is the maximum amount of coverage that may be extended to the insured's dependents under a group life insurance policy? A 100% of the insurance on the life of the insured employee B 75% of the insurance on the life of the insured employee. C 50% of the insurance on the life of the insured employee D 30% of the insurance on the life of the insured employee
A 100% of the insurance on the life of the insured employee Correct! In group policies, insurance coverage can be extended to the dependents of the insured employee. The coverage, however, cannot exceed 100% of the insurance on the life of the insured employee.
Within how many days of termination of employment must an employer give notice of the employee's right to convert the group policy to an individual policy? A 15 days B 25 days C 5 days D 31 days
A 15 days correct! The employer or the insurer must give the employee notice of his/her right to convert to individual coverage within 15 days of termination of employment (or at least 15 days prior to the expiration date of the conversion period).
The notice to senior consumers regarding their right to cancel a policy must be printed on the cover or policy jacket in at least what type of print? A 12-point standard print B 12-point bold print C 14-point standard print D 14-point bold print
B 12-point bold print correct! Each individual life policy annuity contract delivered to a senior consumer must have the regarding their right to cancel either printed on the cover page or policy jacket in 12-point bold print with one inch of space on all sides, or printed on a sticker attached to the cover page or policy jacket.
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. Correct! According to CIC 380, the written instrument in which a contract of insurance is set forth is the policy.
An insurer has been found guilty of a Code violation regarding replacement. The insurer then repeats the violation. What will be the minimum penalty? A $10,000 B $25,000 C $30,000 D $100,000
C $30,000
Chapter: Life Insurance Which of the following best describes the insurer's liability for losses arising from military service? A The insurer is liable for all losses. B The insurer's liability is always excluded. C The insurer's liability is always reduced. D The insurer's liability may be reduced or excluded.
D The insurer's liability may be reduced or excluded. correct! The provision on war, military and aviation risk allows the insurer to reduce or exclude liability for losses resulting from war, military or naval service, and aviation.
What is the limiting age for dependent children of the insured employee in a group life plan (other than disabled children)? A 24 B 26 C 30 D 19
B 26 Correct! The term "dependents" includes the insured's spouse and all children from birth until 26 years of age.
Every individual life insurance policy must provide for a free-look provision that lasts for at least A 60 days. B 90 days. C 10 days. D 30 days.
C 10 days. Correct! Insurers must allow individual life insurance customers the ability to return their new policy within 10-30 days (this time period is up to the insurer) for a full refund.
An applicant knowingly fails to communicate information that would help an underwriter make a sound decision regarding coverage. This is an example of A Fraud. B Breach of warranty. C Concealment. D Waiver.
C Concealment.
The Commissioner may inspect an agent's records A Once a year. B With 30 days written notice. C At any time. D Once every 5 years.
Correct! Agents must maintain their records and make them available for inspection by the Commissioner at any time.
Within how many days of termination of employment must an employer give notice of the employee's right to convert the group policy to an individual policy? A 25 days B 5 days C 31 days D 15 days
D 15 days Correct! The employer or the insurer must give the employee notice of his/her right to convert to individual coverage within 15 days of termination of employment (or at least 15 days prior to the expiration date of the conversion period).
Replacement of life insurance and annuities policies requires for the replacing and existing insurers to retain evidence of all signed applications and disclosures for no less than A 1 year. B 2 years. C 5 years. D 3 years.
D 3 years. correct! The replacing and existing insurers must retain evidence of all signed applications and disclosures, as well as other materials used in replacement or conservation, for no less than 3 years.
All life and disability policies issued to individuals who are age 65 or older must offer a right-to-return period of at least how long? A 30 days B 90 days C 10 days D 20 days
A 30 days correct! Seniors must be given at least 30 days to examine the policy and, if not satisfied, return it for a full refund.
In compliance with the California Insurance Code, individual life insurance policies that are delivered in this state must include a disclosure notice on the cover page. This notice should provide all of the following information EXCEPT A Policy limitations. B How to return the policy. C Notice of penalty for late return. D Agent's commissions.
D Agent's commissions. Correct! A disclosure for individual life insurance policies and annuity contracts must notify the recipient of the policy limitations, ways to return the policy, and late cancellation consequences. Review ContentNext Question
According to the Insurance Code, what is the minimum age that a person must be to qualify as a "senior citizen?" A 55 B 60 C 65 D 70
B 60 correct! Senior citizens are at least 60 years of age.
Every policy of individual life insurance must include a notice of right to cancel the policy, stating the specific time frame for the free-look period. Once the insured has cancelled the policy, within how many days must the insurer refund all premiums and policy fees? A 2 weeks. B 90 days. C 30 days. D 10-30 days.
C 30 days. correct! All premiums and policy fees paid for the policy must be refunded by the insurer to the owner within 30 days from the date that the insurer is notified that the insured has cancelled the policy.
Which of the following insureds has a right to cancel an individual life policy within 30 days? A Insureds age 55 1/2 or older B Insureds 60 years of age of older C All insureds D Insureds who have dependents only
B Insureds 60 years of age of older Correct! If the insured on the individual life policy is 60 years of age or older, the right of rescission for a full refund must last for at least 30 days.
According to the California Insurance Code, all of the following are general powers and duties of the Commissioner of insurance EXCEPT A To prepare a written report detailing consumer complaints regarding insurers. B To delegate the power to approve a settlement. C To establish a program to investigate consumer complaints against insurers. D To make public service announcements to inform consumers of toll free access to make inquiries.
B To delegate the power to approve a settlement. C To establish a program to investigate consumer complaints against insurers. correct! The Commissioner cannot delegate his/her authority to approve settlements. CIC 12921
Life agents must tell applicants when their coverage will start or the conditions required for their coverage to start either at the time of application or A When an underwriting decision is rendered. B When the first premium is received. C When the Buyer's Guide is issued. D When the Policy Summary is issued.
B When the first premium is received. correct! Either at the time of application or upon receiving the initial premium, life agents must explain to the applicant when coverage will begin or the conditions that will need to be met in order for coverage to start.
Advertisements for term life insurance must adhere to strict criteria of extensive disclosures if directed to persons A 65 years old. B Under the age of 21. C 55 years of age or older. D Of any age.
C 55 years of age or older. correct! Advertisements for term life insurance for individuals age 55 and older must adhere to strict criteria of prominent disclosures (see CIC 10127.8).
Any insurance agent who engages in the insurance business and violates the Code with respect to insurance replacement shall on the first violation A Be administratively suspended from licensing for a period of 180 days. B Be fined a sum of $5,000. C Be fined a sum of $1,000. D Be fined a sum of $10,000.
C Be fined a sum of $1,000. correct! An agent who violates the replacement provision of the Code will be fined a $1,000 for the first offense.
Any insurer who engages in the insurance business and violates the Code with respect to insurance replacement shall on the first violation A Have his/her license suspended. B Be fined a sum of $1,000. C Be fined a sum of $10,000. D Be fined a sum no less than $30,000 and no more than $300,000.
C Be fined a sum of $10,000. Correct! An insurance company that violates the replacement provision of the Code will be fined $10,000 for the first offense.
Which type of life insurance is usually written for small amounts and requires frequent premiums that are collected by the agent? A Industrial life insurance B Credit life insurance C Group life insurance D Key executive life insurance
A Industrial life insurance correct! Industrial or home service life insurance is written for small amounts (under $1,000) and premiums are collected each week or month. Industrial life insurance is written as whole life, limited pay life, or endowment. Family members covered by this type of insurance are covered from birth to age 65 or 70. Review ContentNext Question
During the cancellation period, an insurer must refund any premiums and policy fees within how many days of written cancellation notice by the insured? A 60 B 10 C 20 D 30
D 30 Correct! Once the insurer receives notification of rescission, the company has 30 days to issue the refund of premiums and policy fees.
When replacement of existing coverage is involved, extra requirements apply. The agent must A Present to the applicant a "Notice Regarding Replacement of Life Insurance" as described by the Code. B Have the applicant sign a copy of the "Notice Regarding Replacement of Life Insurance" as described by the Code. C Sign a copy of the "Notice Regarding Replacement of Life Insurance" as described by the Code and leave the copy with the applicant. D Do all of these.
D Do all of these. Correct! As directed by the CIC 10509.4 regarding replacement, a notice regarding replacement must be presented to clients at time of application; the applicant must also sign the notice and a copy of this notice must be left with the applicant.
After being hired to deliver newspapers to his neighbors, a man is provided with $10,000 of life insurance by the newspaper. He would be covered under which kind of life insurance? A Blanket life B Group life C Ordinary life D Universal life
A Blanket life correct! Blanket life insurance is available to newspapers hiring persons as "independent contractors" to deliver newspapers. (CIC 10222)
Which of the following must be disclosed in all advertisements and policies of term life insurance for individuals 55 years of age or older? A Life insurance policy illustrations B Insurance monetary value index C Life insurance surrender cost index D MIB report
B Insurance monetary value index correct! When a term life insurance monetary value index is adopted by the Commissioner, it must be disclosed in all advertisements and policies of term life insurance for individuals age 55 and older.
An insured has the right to return the new insurance policy for a full refund during the A Free-look period. B Settlement period. C Probationary period. D Grace period.
A Free-look period. Correct! The right-to-return period for all individual life insurance contracts must be no less than 10 days and not exceed 30 days from the date the policy is delivered to the insured. During this period, the insured may return the policy to the insurer for a full refund.
A life insurance policy can be delivered by all of the following means, EXCEPT A First class mail with a delivery receipt. B Personal delivery by a trained employee of the insurer, with a delivery receipt. C Certified mail. D Priority mail.
Correct! Acceptable methods of delivery include Registered or Certified Mail, Personal Delivery with a signed, written delivery receipt, 1st Class Mail with a signed, written Del. Receipt, or any reasonable means determined by the Commissioner. Priority mail does not establish an exact date of delivery or to whom it was delivered, and personally delivering the policy needs to be done by a properly licensed representative who can answer questions.
An insured has the right to cancel a policy by written notification to the insurer. This notification may be mailed to the insurer or returned to the original agent who made the sale. Upon receipt of the cancellation request, the insurer will A Have the writing agent review the policy cancellation and attempt to conserve the policy. B Report the cancellation to the insurer's home office and the Department of Insurance Policy Conservation Unit for statistical data accounting purposes. C Cancel the policy and terminate an automatic bank-drafting of premiums. D Refund any premiums and policy fees within 30 days of notice if the policy is within the cancellation period specified by the insurer.
D Refund any premiums and policy fees within 30 days of notice if the policy is within the cancellation period specified by the insurer. correct! An insurer has 30 days from notification of cancellation to refund any premiums and policy fees and return the parties to the place they were prior to the policy being sold.
Chapter: Life Insurance When employees are covered by group insurance, they receive A A certificate of insurance. B The original policy. C A copy of the policy. D The dividends, if any, in cash.
A A certificate of insurance. Correct! The employer receives the original contract, but employees need only be given a certificate of insurance showing their coverage and privileges. (CIC 10209)
According to the CIC, when an insured has functionally identical coverages that overlap or duplicate benefits to the extent that the coverage is not cost-effective, this represents A Overloading. B Overlap. C Excess of coverage. D Twisting.
A Overloading. correct! "Overloading" happens when a person's coverages overlap one another to the extent that the combination of coverage is not cost-effective.
Which of the following best describes the insurer's liability for losses arising from military service? A The insurer's liability may be reduced or excluded. B The insurer is liable for all losses. C The insurer's liability is always excluded. D The insurer's liability is always reduced.
A The insurer's liability may be reduced or excluded. Correct! The provision on war, military and aviation risk allows the insurer to reduce or exclude liability for losses resulting from war, military or naval service, and aviation.
Chapter: Life Insurance Where must agents keep records associated with insurance transactions? A All records must be transferred to the DOI within 90 days. B At their principal place of business C There is no specified location, provided that agents can give the Commissioner easy access to records. D In any of their offices, as long as the office is located in this state.
B At their principal place of business Correct! Agents must keep records associated with insurance transactions for at least 5 years. The Commissioner can audit these records at any time.
Which of the following is true regarding a policy with a face value less than $10,000? A The policy can be cancelled with full refund of premium at any time. B If it's returned during the free look period, the agreement will be void. C An insured cannot return the policy. D If it's returned during the free look period, the contract will be cancelled, but the insurer will retain the premium paid.
B If it's returned during the free look period, the agreement will be void. correct! If the owner returns the policy within the free-look period, the agreement will be void from its beginning. All premiums and any policy fees that have already been paid must be refunded to the owner.
For how long must agents keep records of insurance transactions? A 10 years B 15 years C 20 years D 5 years
D 5 years correct! Agents must keep records associated with insurance transactions for at least 5 years. The Commissioner can audit these records at any time.
During the free-look period, the premium for a variable annuity may be invested in all of the following EXCEPT A Value funds. B Fixed-income investments. C Money-market funds. D Mutual funds (only upon the investor's request).
correct! During the 30-day cancellation (free-look) period, the premium for a variable annuity may only be invested in fixed-income investments and money-market funds, unless the investor specifically requests that the premiums be invested in the mutual funds.
Which of the following terms means a result of calculation based on the average number of months the insured is projected to live due to medical history and mortality factors? A Risk exposure B Morbidity C Life expectancy D Mortality rate
C Life expectancy correct! Life Expectancy is an important concept in life settlement contracts. It refers to a calculation based on the average number of months the insured is projected to live due to medical history and mortality factors (an arithmetic mean).
An insured stated on her application for life insurance that she had never had a heart attack, when in fact she had a series of minor heart attacks last year for which she sought medical attention. Which of the following will explain the reason a death benefit claim is denied? A Waiver B Utmost Good Faith C Estoppel D Material misrepresentation
D Material misrepresentation Correct! A material misrepresentation will affect whether or not a policy is issued. If the insured had been truthful, it is very likely that the policy would not be issued. Review ContentNext Question
The right of the applicant to rescind the policy for a full refund of all premiums A Must be exercised within 3 days of the policy issue. B Is not a valid right. C Must be clearly stated in the policy's text. D Is implied during the application process.
C Must be clearly stated in the policy's text. correct! The right of the applicant to rescind the policy for a full refund of all premiums paid, if the policy is returned within the specified timeframe, must be clearly stated in the policy's text (outlined on title page and described in text).
According to the Code, how many separate requirements should an insurance policy have? A 6 B 8 C 10 D 4
Correct! The following must be identified: the parties to the contract; the property or persons being insured; a statement of the insurable interest that exists if the insured is not the owner; the risk(s) being covered; the time period during which the policy will be in force or continue; the stated premium or manner to calculate premium.
All life and disability policies issued to individuals who are age 65 or older must offer a right-to-return period of at least how long? A 90 days B 10 days C 20 days D 30 days
D 30 days Correct! Seniors must be given at least 30 days to examine the policy and, if not satisfied, return it for a full refund.
Jenn purchased an annuity contract on March 1st, but after carefully reviewing its limitations, she returned it to the insurer on March 15th. The insurer didn't have any specific instructions from the policyowner on how to invest the premium. What should Jenn expect from the insurance company? A A refund of premium and the policy's account value at the time of return B Nothing: initial premiums are non-refundable C A refund of premium minus administration fees D A refund of premium and policy fees
D A refund of premium and policy fees correct! According to the CA Insurance Code, if a variable annuity or life insurance contract is purchased and the owner doesn't instruct the insurance company to invest the premium in a stock or bond portfolio immediately, and if the policy is cancelled within 30 days, the policyowner will be entitled to a refund of the premium and policy fees paid.
Any insurance agent who commits a repeated violation of the Insurance Code with respect to insurance replacement will be liable for A An administrative penalty of no less than $30,000 and have his/her license revoked. B A criminal penalty of up to $10,000. C A penalty not to exceed $1,000 per violation. D An administrative penalty of no less than $5,000 and no more than $50,000 per violation.
D An administrative penalty of no less than $5,000 and no more than $50,000 per violation. Correct! The fines for additional violations of the replacement article by an individual agent will result in increased fines ($5,000 to $50,000). The Commissioner may suspend or revoke the license of any person or entity that violates this article.
For an insurance contract to be valid in the State of California, when must insurable interest exist? A At any time prior to the issue of a policy on the beneficiary B At the time at which a claim for indemnification is made C At the time at which the first premium is paid D At the time of application for a policy on the insured
D At the time of application for a policy on the insured Correct! Insurable interest must be established at the time of application and remains valid for the duration of the policy as long as premiums remain current.
Which of the following is NOT a true statement regarding the disclosure included for variable annuity or variable life insurance contracts? A It must be included in all policies, with no exceptions. B It must provide investment specifications. C It must adhere to strict formatting specifications. D Surrender charge notice may be omitted.
A It must be included in all policies, with no exceptions. correct! The disclosure that follows strict formatting and content specifications must be included in all individual variable annuity and life insurance contracts. This law does not apply to life insurance policies issued in connection with a credit transaction or under a contractual policy-change or conversion privilege provision in a policy. It also does not apply to contributory and noncontributory employer group life insurance and annuity contracts.
Tom purchased a variable life insurance contract and instructed the insurance company to invest the premium into stocks right away. Twenty five days later he decided to return the policy. What will Tom receive as a refund from the insurance company? A Nothing: the insurance company will retain the premium for cancellation fees B The paid premium C The policy's account value at the time the policy is returned D The policy's account value at the time the policy was purchased
C The policy's account value at the time the policy is returned correct! According to the CA Insurance Code, if a variable annuity or life insurance contract is purchased and the owner instructs the insurance company to invest the premium in a stock or bond portfolio immediately, and if the policy is cancelled within 30 days, the policyowner will be entitled to a refund of the policy's account value on the day the policy is received by the insurance company.
Chapter: Life Insurance Where replacement of existing coverage is involved, in addition to providing the proper notices to the applicant, the agent must A Send a copy of the policy illustration used in making the sale to the current insurer for review. B Notify the Department of Insurance that a replacement of existing coverage is being made and that all replacement guidelines have been met. C List any existing life insurance or annuities to be replaced on the application. D Contact the current insurer and give notice that replacement of coverage is being made.
C List any existing life insurance or annuities to be replaced on the application. Correct! The agent must list any existing life insurance or annuities to be replaced on the application so that the INSURER can properly notify the Department of Insurance and current insurer regarding the replacement that is being made. Review ContentNext Question
Chapter: Life Insurance A life agent's records must include which of the following? A All correspondence between the agent and the policy holder B A copy of the outline of coverage C All policies sold by the agent D All of these
D All of these Correct! Agents must keep all correspondence between the agent and policy holder, a copy of the outline of coverage, and all policies sold by the agent.
The attempt to "save" an original policy from replacement or lapse is called A A misdemeanor. B Misrepresentation. C Fraud. D Conservation.
D Conservation. Correct! Conservation is an attempt to "save" the original policy when the insured is considering replacement. This allows the insured to make an informed decision instead of blindly assuming that replacing the policy would be the best decision.
Chapter: Life Insurance All insurance policies and annuity contracts delivered to senior citizens in the State of California are subject to a cancellation period of at least A 20 days. B 30 days. C 45 days. D 60 days.
B 30 days. Correct! All insurance policies and annuity contracts, other than variable contracts and modified guaranteed contracts, marketed to senior citizens in the State of California are subject to a cancellation period of no fewer than 30 days.
According to California law, all of the following may be covered as dependents under group life insurance EXCEPT A The insured's unmarried child, age 25. B Disabled children of the insured over age 26. C The insured's elderly parents living with the insured. D The insured's spouse.
C The insured's elderly parents living with the insured. Correct! In group insurance, there is no provision for dependent parents to be eligible for coverage. Dependent children, however, are eligible as described. (CIC 10203.4)
Concerning AIDS and HIV risks, all of the following acts may subject an insurer to liability claims or fines EXCEPT A Not providing counseling contacts and educational information about HIV and AIDS. B Disclosing test results to third party without applicant's consent. C Requiring applicant to pay for HIV test in order to be underwritten. D Declining applicant for a positive HIV test result.
D Declining applicant for a positive HIV test result. Correct! Companies pay for their medical testing and underwriting. At the time of application, information on HIV and AIDS and counseling options must be given to the clients. Applicants can be declined for HIV/AIDS (a true health risk). Disclosing health results to an unauthorized party is a violation. Review ContentNext Question