Life Insurance Test

According to the California Insurance Code, what is the maximum penalty per violation for anyone who unwillfully commits an unfair method of competition?

$5,000

How long is a person expected to be disabled in order to receive social security disability benefits?

12 months

How long must life agents keep their transaction records?

5 years

In order to be considered "currently insured" under social security, an individual must be credited with

6 quarters of coverage during the last 13-quarters period

At what age is a surviving spouse without dependents eligible for social security survivor benefits?

60

Who is NOT elegible for social security surivor benefits

A deceased worker's dependent parent of any age

An insurance policy written after 1988 that fails to pass the seven-pay test is known as

A modified endowment contact

Which provision will pay a portion of the death benefits prior to the insured's death due to a serious illness?

Accelerated death benefit

When an insurer has met the qualifications necessary to transact business in California, it is said to be

Admitted

Which of the following is NOT considered to be an unfair claims settlement practice?

Advising a claimant to hire an attorney

Which of the following pieces of information is NOT gathered during the personal financial planning process?

An individual's civic organization memberships

The systematic liquidation of a sum of money is provided by a(n)

Annuity

Which of the following is NOT a true description of non-medical life insurance?

Applicants are not required to answer medical questions on the application

When selling a long term care insurance rider to an applicant, a life agent must take into consideration all of these factor EXCEPT

Attending physician's statement

What are collateral assignments normally associated with?

Bank Loans

The California insurance code allows an individual how many days to canal a life policy for a full-refund?

Between 10 and 30 days

How does a conditional receipt differ from a binding receipt?

Binding receipts always provide insurance which starts from the date of receipts

Which of the following is an insurer established by a parent company for the purpose of insuring the parent company's loss exposure?

Captive insurer

A person who asserts a right of recovery under an insurance policy is called

Claimant

Before an insurer is allowed to test an individual for HIV, what must be completed?

Consent form

An agent's attempt to stop the replacement of an existing life insurance policy is known as

Conservation

Which statement is CORRECT when describing a contract of adhesion?

Contract may be accepted or rejected by the insured

What is a participating life insurance policy

Contract that allows the policyowner to receive a share of surplus in the form of policy dividends

Tim was recently terminated from his employment and opted to change his existing group term life insurance to individual permanent life insurance. What is the process called?

Conversion

When an insurance company requests an attending physician's report, the request must be accompanied by a

Copy of the signed authorization

According to social security, an individual with 6 credits of coverage during the previous 13-quarter period is considered to be

Currently insured

Which of the following is NOT a component of determining policy premiums?

Dividends

Which of the following is NOT a characteristic of the conversion privilege?

Employer pays the premium for the converted policy

ESOPs are typically invested in

Employer stock

Which of the following is NOT a requirement of a contract?

Equal consideration is required between the involved parties

Which of the following types of information is NOT required for a life insurance application?

Ethnicity

Which of the following is NOT a common life insurance policy ride?

Extended term

In California, an insurer organized under state laws of Oregon is called a(n)

Foreign insurer

An individual that has 40 quarters of coverage, for social security purposes, is considered to be

Fully insured

What time period allows an insured's life insurance policy to remain in force even if the premium was not paid on the due date?

Grace period

Which principle is accurately described with the statement "insureds are entitled to recover an amount NOT greater than the amount of their loss"?

Indemnity

Which of the following contracts is defined as "one that restores an injured party to the condition that was present before the loss?

Indemnity contract

All of the following are considered characteristic of group life insurance EXCEPT

Individual policies

When does a life insurance policy's waiver of premium take effect?

Insured becomes totally disabled

When calculating life insurance premium rates, which components would an agent's commission fall under?

Insurer's expense

Which of the following does the California Insurance Code NOT require an insurance policy to specify?

Insurer's financial rating

Which of the following is NOT protected under the California Life and Health Guarantee Association?

Insurers

Which of the following is NOT a primary objective of insurance regulation?

Interpret policy provisions

The California Insurance Code requires that an insurer must have enough asserts to cover its liabilities and for reinsurance of all outstanding risks. To remain solvent, it must also possess additional assets equal to what amount?

It's paid-in capital

Jim is applying to become an insurance agent and has a past misdemeanor conviction that was late expunged due to California Penal Code 1203.4. Which of the rolling statements is correct?

Jim is not required to disclose the conviction on his insurance license application

Which of the following describes the statement "The more times an event is repeated, the more predictable the outcome becomes"?

Law of large numbers

What type of license is required for an individual who charges a fee to review an insured's existing life insurance policy?

Life and disability analyst

The Medical information Bureau consists of

Life and health insurance companies

Which of the following is considered to be a situation that has the potential for loss?

Loss exposure

Which of the following is NOT an element of an insurable risk?

Loss must be catastrophic

Which of the following is NOT a benefit of insurance?

Losses due to fraud are eliminated

According to the California Insurance Code, what term is used to describe a fact so important it cold affect the policy premium?

Materiality

The importance of a representation is demonstrated in what rule?

Materiality of concealment

Most U.S. life insurance companies belong to the

Medical information bureau

What is the proper order of initial life insurance premiums, from lowest to highest?

Modified premium, ordinary life, single premium

Which of the following describes the increase in the probability of a loss due to an insured's dishonest tendencies?

Moral Hazards

When calculating life insurance premium rates, which component is affected an insured's age and gender?

Mortality

The probability of death, listed by year, are demonstrated in

Mortality tables

A participating company is also referred to as which type of insurer?

Mutual Insurer

Which of the following is a life insurance policy that does NOT require a physical exam?

Non-medical

Retirement plans are prevented from favoring highly compensated employees under which government regulation?

Nondiscrimination

A life insurance policy can be surrendered for its cash value under which policy provision?

Nonforfeiture options

What is required after a life agent sells an insurance policy to an applicant without being appointed by the insurer?

Notice of appointment must be submitted to the commissioner

Which of the following statements correctly describes a contract of indemnity?

One party is restored to the same financial position the party was in before the loss occurred

Which of the following describes a contributory group insurance plan?

Part of the premium is paid by the employee

Who is issued a certificate of insurance with a group insurance policy?

Participant

John has an insurance policy that gives him the right tot share in the insurer's surplus. What kind of policy is this?

Participating

In a life insurance policy, the entire contact consists of the

Policy and attached application

How are acts of war considered under a group life insurance policy?

Policy exclusion

When an accidental death benefit is added to a whole life policy, how does this affect the policy's cash value?

Policy's cash value is not affected

Restoring an insured to the same condition as before a loss is known as

Principle of indemnity

which type of jurisdiction requires an insurer to have its rates accepted by the insurance department prior to using them?

Prior approval

Which of the following is NOT required in the content of a policy?

Probability of loss

Which of the following is NOT considered to be an act of insurance solicitation?

Publishing a magazine where one of the advertisers is an insurer

A situation in which there is ONLY a chance of loss or no loss is a

Pure risk

After a policy has lapsed, which provision allows the insured to continue coverage?

Reinstatement provision

In a renewable term life insurance policy, the contact will usually

Require a higher premium payable at each renewal

Which course of action is the insurer entitled to when deliberate concealment is committed by the insured?

Rescinding the contract

When intentional concealment is involved, what course of action is the injured party entitled to?

Rescission of the contract

The California life and health insurance guarantee association covers all of these types of policies EXCEPT

Self-funded plans

Anyone employed in California to assist an insurance agent in transacting insurance is called an insurance

Solicitor

Which of the following is a circumstance in which there is a possibility of both a loss or a gain?

Speculative risk

Which type of risk is gambling?

Speculative risk

Which of the following does not have to be included on life insurance policy illustrations?

Statement that all values and benefits are guaranteed

A terminated employee that has exercised the conversion privilege is able to convert

Term group life coverage into permanent insurance

A creditor would be allowed rights to life insurance policy proceeds if which of the following beneficiaries is chosen?

The insured's estate

When a life insurance policy is surrendered, how does the cost recovery rule apply?

The policy's cost basis is exempt form taxation

A life insurance policy's limit of liability would be

The policy's face amount

What distinguishes a deferred annuity from an immediate annuity?

The time at which benefit payments start

Pete is a life agent who has misappropriated fiduciary funds to his own use. What is Pete guilty of?

Theft

What does the term "indemnity" mean as it pertains to insurance?

To make whole

What is considered to be the definition of disability, according to social security?

Unable to engage in any substantial gainful activity

An agent has advertised that the insurer to which the agent is appointed with is a member of the insurance Guarantee Association. This agent has committed a(n)

Unfair method of competition

Paul has an existing annuity and is sold a new one, in which the new policy holds on greater financial benefit to him than the existing contract. This is considered a(n)

Unnecessary replacement

A worker is entitled to social security disability benefits if all of the following are true EXCEPT for

Worker cannot perform his or her current job, but is actively seeking other employment

Which of these factors affects the social security normal retirement age?

Year in which worker was born

A contract requires

an offer and acceptance of the contract terms

Which social security status does a worker with 6 quarters of coverage during the last 13-quarter period have?

currently insured

Which of the following is NOT a feature of equity-indexed annuities?

offers a maximum interest rate the increases annually

A life insurance policy where the insured can choose where the cash value can be invested is called

variable life