Life License 1

The maximum penalty for failure to print an individual agent's license number on printed documents is

$1,000

The legal definition of "person" would NOT include which of the following?

A family

All of the following are features and requirements of the Living Needs Rider EXCEPT

Diagnosis must indicate that death is expected within 3 years.

Which if the following is conserved to be a morale hazard?

Driving recklessly

Selection of coverage in employee benefits plans refers to

Employee choosing benefits

For the retirement plan to be qualified, it must be designed for the benefit of

Employees

Which of the following is NOT a license in the state of California

Life broker

The written instrument, in which a contract of insurance is set forth, is known as the

Policy

An insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured, and matures at the insured's age 100 is called

Single premium whole life

Which of the following best describes taxation during the accumulation period of an annuity?

Taxes are deferred

In regards to life insurance contracts, the temporary term is

The period of time during which a binding receipt covers a policy holder

When an individual purchases insurance, what risk management technique is he or she practicing

Transfer

Which of the following products provides income for a specified period of years or for life, and protects a person against outliving their money?

an annuity

All of the following are beneficiary designations EXCEPT

specified

Which of the following types of insurance policies would provide the greatest amount of protection for a temporary period during which an insured person will have limited financial resources?

term

An absolute assignment is a

transfer of all ownership rights in a policy

Every individual life insurance policy must provide for a free-look provision that lasts for at least

10 days

All insurance policies and annuity contracts delivered to senior citizens in the State of California are subject to a cancellation period of at least

30 days

A person caught violating provisions regarding misrepresentation could be subject to

A fine up to $25,000

An individual has been diagnosed with Alzheimer's disease. He is insured under a life insurance policy with the accelerated benefits rider. Which of the following is true regarding taxation of the accelerated benefits?

A portion of the benefit up to a limit is tax free; the rest is taxable income.

Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. What contract characteristic does this describe?

Adhesion

The process of "post-selection" refers to which of the following?

An insurer is investigating the client's risk profile.

Records required to be maintained or to be made available by an insurer include all of the following EXCEPT

Any printed materials generally used by the insurer, either directly or indirectly by its agents.

When must insurable interest exist in a life insurance policy?

At the time of application

Which of the following is NOT a type of Temporary Insuring Agreement?

Bridge Coverage Receipt

A small hardware store owner is involved in a car accident that renders him totally disabled for half a year. Which type of insurance would help him pay for expenses of the company during the time of his disability?

Business overhead expense policy

A producer who fails to separate premium moneys from his own personal funds is guilty of

Commingling

According to the entire contract provision, what document must be made part of the insurance policy?

Copy of the original application

The term "fixed" in a fixed annuity refers to all of the following EXCEPT

Death benefit

What does "level" refer to in level term insurance?

Face amount

When the policyowner specifies a dollar amount in which installments are to be paid, which settlement option is that?

Fixed amount

Which of the following annuity riders ensures that the owner will receive from an annuity at least the amount paid for the annuity?

Guaranteed Lifetime Withdrawal

A Universal Life insurance policy has two types of interest rates that are called

Guaranteed and current

An individual purchased a life insurance policy on his life naming his wife as primary beneficiary c and their daughter as contingent beneficiary. Under what circumstances could the daughter collect the death benefit?

If the primary beneficiary predeceases the insured

The type of term insurance that provides increasing death benefits as the insured ages is called

Increasing Term

The insured provides a proof of claim to the

Insurer

Which of the following is NOT true regarding the Life with Guarenteed Minimum annuity settlement option

It does not guarantee that the entire principal amount will be paid out

If the deferred annuity is surrender prematurely, a surrender charge is imposed. How is the surrender charge determined?

It is a percentage of the cash value and decreases over time

If an insured surrenders his life insurance policy, which statement is true regarding the cash value of the policy?

It is only taxable if the cash value exceeds the amount paid for premiums.

Which of the following settlement options in life insurance is known as straight life?

Life Income

Untrue statements on the application unintentionally made by insureds that, if discovered, would alter the underwriting decision of the insurance company, are called

Material misrepresentations

Which of the following is NOT true regarding the needs approach method of determining the value of an individual's life?

Need is predicted using the number of years until the insured's retirement

Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured?

Option B

A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will

Pay the policy proceeds only if it would have issued the policy

Which of the following individuals must have insurance interest in the insured?

Policyowner

To achieve the profitable distribution of exposures,

Preferred risks and poor risks are balanced, with average risks in the middle.

Which of the following best describes a pure life annuity settlement option?

Pure life provides payments for as long as the annuitant is alive.

The risk of loss may be classified as

Pure risk and speculative risk

An insured pays $1,200 annually for her life insurance premium. The insured applies this year's $300 worth of accumulated dividends to the next year's premium, thus reducing it to $900. What option does this describe?

Reduction of premium

What is an injured party entitled to receive if an intentional concealment is discovered?

Rescission of the policy

A policyowner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. The policyowner should have her husband named as the

Revocable beneficiary

Which two terms are associated directly with the way an annuity is funded?

Single payment or periodic payments

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?

The cash value will be paid to the annuitant's estate.

After an employee was laid off, he was informed of the right to convert the group coverage to an individual policy within 31 days. Twenty days into the conversion period, the employee suffered a heart attach before he could obtain individual coverage. What is the group policy insurer required to do?

The insurer must pay the death benefit under the former group coverage

An insured stops making payments on a loan taken from his cash value policy. What will most likely happen?

The policy will terminate when the loan amount with interest equals or exceeds the cash value.

How must a replacing producer respond to an applicant wishing to replace existing life insurance?

The producer must provide the applicant with a Notice Regarding Replacement

An applicant has submitted an application for a Life agent license in the state of California. Five years ago, the applicant was charged with, but not convicted of, a felony in another state. The California Commissioner could deny the license on the grounds that the applicant

There are no grounds for which license could be denied based on the information provided.

Which of the following does NOT apply to Errors and Omissions liability contracts?

They are written for the clients of the producer covered by the policy.

An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have?

Universal Life

Which type of life insurance policy allows the policyowner to pay more or less than the planned premium

Universal Life

In a survivorship life policy, when does the insurer pay the death benefit?

Upon the last death

Which if the following is a key distinction between variable whole life and variable universal life products?

Variable whole life has a guaranteed death benefit

The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called

Waiver of Premium

All of the following are personal uses of life insurance EXCEPT

buy-sell agreement

The act of revoking or terminating an insurance policy is called

cancellation

Which of the following components must a life insurance policy have to allow policy loans?

cash value

A legally acceptable attempt by an existing insurer to dissuade a current policyowner from the replacement of existing life insurance is called

conservation

When twin brothers applied for life insurance from Company A, the company found that while neither of them smoked and both had a very similar lifestyle, one of the twins was in a much stronger financial position than the other. Because of this, the company charged him a higher rate for his insurance. This practice is considered

discrimination

All of the following information about the applicant is identified in the General Information section of a life insurance application EXCEPT

education

Which of the following provisions requires an insurer to document all correspondence with an insured?

errors and omissions

If an insurer requires a medical examination of an applicant in connection with the application for life insurance, who is responsible for paying the cost of the examination?

insurer

What is the term used when a person sells his assets as a way to gain money?

liquidation

Which of the following riders added to a life insurance policy can pay part of the death benefit to the insured to cover expenses incurred in a nursing or convalescent home?

long term care

A person who does not lock the doors or does not repair leaks shows an indifferent attitude. This person presents what type of hazard?

morale

Which of the following insurance options would be considered a risk-sharing arrangement?

reciprocal