Missed Questions

An intentional or unintentional concealment entitles the affected party to which of the following?

Rescission of a contract.

All of the following are the responsibilities of every long-term care insurer in California EXCEPT

Provide enough business to solicit long-term care insurance.

According to California Insurance Code, which of the following can be classified as an insurable event?

Pure risks

Which of the following determines the cash value of a variable life policy?

The performance of the policy portfolio

All of the following are true of key person insurance EXCEPT

The plan is funded by permanent insurance only.

The two types of assignments are

Absolute and collateral.

Which of the following is TRUE about a class designation?

Beneficiaries are not identified by name.

Which of the following entities or individuals evaluates requests for payment by insureds after a loss has occurred?

Claims department

What is the clause that describes the method of paying the death benefit in the event that the insured and beneficiary are both killed in the same accident?

Common Disaster Clause

The automatic premium loan provision is activated at the end of the

Grace period.

The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called

Joint and survivor.

When an insured receives a written binder,

The insured's coverage will be effective immediately.

Which of the following is NOT the consideration in a policy?

the application given to a prospective insured

Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner?

Reduced paid-up

All of the following are examples of third-party ownership of a life insurance policy EXCEPT

An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan.

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

Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled?

Payor Benefit

An insured will be allowed to reactivate her lapsed life insurance policy if action is taken within a certain period of time, and proof of insurability is provided. Which policy provision allows this?

Reinstatement provision

The premiums paid by the employer in a business life insurance policy are

Tax deductible by the employer.

Which of the following is an example of a producer being involved in an unfair trade practice of rebating?

Telling a client that his first premium will be waived if he purchased the insurance policy today

An agent may satisfy the continuing education requirement by attending any course approved by the Commissioner, as long as

The course satisfies the minimum time requirements for continuing education credit.

Which of the following is INCORRECT concerning a noncontributory group plan?

The employees receive individual policies.

What method is used to determine the taxable portion of each annuity payment?

The exclusion ratio

All of the following are general requirements of a qualified plan EXCEPT

The plan must provide an offset for social security benefits.

Agents who persuade insureds to cancel a policy in favor of another one when it might not be in the insured's best interest are guilty of

Twisting

An employee will be taxed on the cost of group life insurance paid by the employer if the amount of coverage exceeds

$50,000

If a policyholder contacts an insurance company about a claim and expects a response to the inquiry, within what span of time must the agent respond?

15 days

If the Department of Insurance requests information from an agent regarding a claim, this must be provided within how many days?

21

The DOI contacts Agent Bob about a claim that was settled two months ago. Within what timeframe must Bob issue a complete response?

21 days

An insured misstates her age at the time the life insurance application is taken. This misstatement may result in

Adjustment in the amount of death benefit.

Which nonforfeiture option has the highest amount of insurance protection?

Decreasing Term

A policy which pays monthly income upon the death of the breadwinner for a predetermined number of years after death, plus a lump sum at death, and combines level term and whole life is known as which policy?

Family maintenance

The Medical Information Bureau (MIB) was created to protect

Insurance companies from adverse selection by high risk persons.

Which settlement option allows the insurer to retain the face amount but pay some income based on gain on the proceeds to the beneficiary at regular intervals?

Interest only

Y was killed in an automobile accident on August 22, before the policy was issued. In this case, the insurance company will

Issue the policy anyway and pay the face value to the beneficiary.

What is the main purpose of the Seven-pay Test?

It determines if the insurance policy is an MEC.

Under the Fair Credit Reporting Act, if the consumer challenges the correctness of the information contained in his/her report, the reporting agency must

Respond to the consumer's complaint.

All of the following are true regarding the guaranteed insurability rider EXCEPT

This rider is available to all insureds with no additional premium.

A man has HIV and was hospitalized for several weeks. His insurance company has delayed paying his claim for 120 days, saying that he is not covered due to a pre-existing condition exclusion in his policy. The insurance company is guilty of which of the following?

Unfair claims settlement practice

In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe?

Unilateral

If the annuitant dies during the accumulation period, who will receive the annuity benefits?

beneficiary

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

An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy?

$50,000

Which of the following is a TRUE statement concerning an insurer's Earned Surplus?

Earned Surplus are unassigned funds that are required to be reported on the insurer's annual statement.

Selection of coverage in employee benefits plans refers to

Employee choosing benefits.

Which of the following CANNOT be included along with illustrations used to sell life insurance?

Vanishing premium information

Within how many days of requesting an Investigative Consumer Report must an insurer notify the consumer in writing that the report will be obtained?

3 days

In life insurance policies, cash value increases

Grow tax deferred

Which of the following can an insured submit to the insurer that would provide evidence of a claim and illustrate how severe the loss is?

Proof of claim

An insured wants to change from an annual premium mode to a monthly premium mode. Which of the following is true?

This change can only be made on the policy's anniversary.

If a consumer requests additional information concerning an Investigative Consumer Report, how long does the insurer or reporting agency have to comply?

5 days

Any insurance agent who commits a repeated violation of the Insurance Code with respect to insurance replacement will be liable for

An administrative penalty of no less than $5,000 and no more than $50,000 per violation.

All of the following are TRUE of the federal tax advantages of a qualified plan EXCEPT

At distribution, all amounts received by the employee are tax free.

Factual statements about the insured or the risk in an insurance policy are considered

Express warranty

An association could buy group insurance for its members if it meets all of the following requirements EXCEPT

Has at least 50 members.

All of the following are beneficiary designations EXCEPT

Specified.

In forming an insurance contract, when does acceptance usually occur?

When an insurer approves a prepaid application

Which nonforfeiture option has the highest amount of insurance protection?

Extended Term

What is the purpose of a conditional receipt?

It is intended to provide coverage on a date earlier than the date of the issuance of the policy.

Which of the following is true regarding a single life settlement option?

It provides income the beneficiary cannot outlive.

Which of the following statements best describes the effect the Accelerated Benefit provision would have on the benefits paid to the beneficiary?

It will decrease the benefits paid to the beneficiary.

Which of the following riders would NOT cause the Death Benefit to increase?

Payor Benefit Rider

When can earned surplus be returned to the policyholder?

Whenever it exists and is not needed for other expenses

Your client wants to buy a par policy to supplement his retirement savings program. Which of the following does your client need to understand about insurance policy dividends?

Dividends are considered a refund of unused premiums.

A policyowner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision?

Automatic premium loan

If during a sales presentation a producer intentionally makes a statement which may mislead the insurance applicant, the producer has committed

Misrepresentation.

On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. The company is guilty of

Misrepresentation.

The dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as the

One-year term option.

An applicant buys a nonqualified annuity, but dies before the starting date. For which of the following beneficiaries would the contract's interest NOT be taxable?

Spouse

In insurance, an offer is usually made when

The application is submitted.

If a life insurance policy has an irrevocable beneficiary designation,

The beneficiary can only be changed with written permission of the beneficiary.

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

The insured's beneficiaries.

An agent has been hired by a local businessowner to determine what type of personal and professional coverage he needs. The agent has determined the businessowner's needs and recommended policies from 3 possible companies. The agent does NOT have an agency contract with any of these companies. The agent is acting as

An insurance broker.

What describes a situation when poor risks are balanced with preferred risks, and average risks are in the middle?

Profitable distribution of exposures

During a pre-selection interview, an agent is allowed to do all of the following EXCEPT

Ask questions that are not on the application but that are important for underwriting.

An insurance contract requires that both the insured and the insurer meet certain conditions in order for the contract to be enforceable. What contract characteristic does this describe?

Conditional

Which of the following is true regarding a policy with a face value less than $10,000?

If it's returned during the free look period, the agreement will be void.

An agent tries to sell insurance over the phone to an applicant who appears to be confused, but is eventually able to give enough information for the application to be completed. After the policy was issued, the agent talked to the insured's family, and they explained that the insured was recovering from a surgery and might have been under the influence of medication at the time of application. Which of the following is true?

The policy may be voided if it can be proven that the applicant was not capable of making a buying decision at the time of application.