XCEL Life Insurance State Exam
Employer-provided group term life insurance is exempt from income taxation up to
$50,000
Under the 10-year vesting schedule, what percentage of employer contributions must be vested after 10 years fo service?
100%.
Any changes in background information that occur after a producer application has been submitted or a license has been issued MUST be reported to the Insurance Commissioner within
30 days
The free-look period for life insurance policy-owners age 60 or older is
30 days
How long must life agents keep their transaction records?
5 years
Cindy buys a 10-year certain annuity with an installment refund. After receiving monthly payments for 5 years, Cindy dies. How many remaining payments will the insurer make to her beneficiary?
60 payments ( 5 years left x 12 months= 60 payments)
What is an "insurance broker" according to California Insurance Code?
A person compensated for transacting insurance on behalf of another person with an insurer
Insurance agents and brokers must make their insurance records available to the Commissioner
AT ALL TIMES
What is the insurance term the State of California uses for an insurer that is eligible to transact business in this state?
Admitted
When an insurer has met the qualification necessary to transact business in California, it is said to be
Admitted
Life insurance surplus must be distributed to policyowners at what frequency?
Annually
The systematic liquidation of a sum of money is provided by a
Annuity
The systematic liquidation of a sum of money is provided by an
Annuity
The California Insurance Code allows an individual how many days to cancel 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 receipt.
Bob and Tom are partners in a business. If one of them were to die, which of the following would guarantee a market for each of their share of the business?
Buy-Sell Agreement
Which of the following is an insurer established by a parent company for the purpose of insuring the parent company's loss exposures?
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
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 this process called?
Conversion
A savings vehicle designed to first accumulate funds and then systematically liquidates the funds is called an
Deferred Annuity
What area of group health insurance is regulated under the Employee Retirement Security Act of 1974 (ERISA)
Disclosure and reporting
What does ESOP stand for?
Employee Stock Ownership Plan
Which of the following is NOT a characteristic of the conversion privilege?
Employer pays the premium for the converted policy.
An annuitant would like to determine the amount of an annuity distribution that is exempt from taxation. What is used to calculate this?
Exclusion ratio
Which of the following is NOT a life insurance settlement option?
Extended term option
When handling premiums for an insured, an agent is acting in which capacity?
Fiduciary
Failure to report background changes within 30 days as required under section 1729.2 of the California Insurance code could subject a license or applicant to
Fine, Suspension, Denial, ALL OF THESE
Victoria owns a life annuity and elects to receive annuity payments monthly for the remainder of her life with "ten years certain". Her annuity will make payments
For a minimum of 120 months and a maximum of the remainder of her life
Victoria own a life annuity and elects to receive annuity payments monthly for the remainder of her life with "ten years certain". Her annuity will make payments.
For a minimum of 120 months and a maximum of the remainder of her life.
In California, an Insurer organized under the state laws of Oregon is called a
Foreign insurer
All of these are common personal uses of life insurance EXCEPT
Fund a Buy-Sell agreement
What is an insurance solicitor authorized to do?
Help an agent or broker sell insurance
ESOP's are typically invested in
IRA's
The Human Life Value concept is based on
Income. It calculates the amount of money a person is expected to earn over his lifetime to determine the face amount of life insurance needed.
What prevents a life insurance policy from being rescinded by the insurer after being in force for two years?
Incontestability clause
Which of the following is NOT a characteristic of reinsurance
Increase the unearned premium reserve
Who does a life settlement broker represent?
Individual wanting to sell their life policy to a third party
According to the California Insurance Code, who is responsible for submitting a life agent's appointment?
Insurer
Who are the parties to the master contract in a group life insurance policy?
Insurer and employer
Which of the following does the California Insurance Code NOT require an insurance policy to specify?
Insurer's financial rating
Which of the following statements regarding a life insurance policy dividend is TRUE?
It is the distribution of excess of funds accumulated by the insurer on participating policies.
The California Insurance Code requires that an insurer must have enough assets 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
What kind of annuity pays income to two annuitants until their deaths?
Joint and Survivor annuity
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
Buy-Sell agreements are typically funded by which two insurance products?
Life insurance and disability insurance
What does the insurance term "indemnity" refer to?
Make whole
Which word implies permissiveness according to the California Insurance Code?
May
What are the members of the Medical Bureau (MIB) required to report?
Medical ailments discovered during the underwriting process
How does underwriting differ between group life and individual life insurance?
Medical questions must be answered on individual life insurance
Which of the following does the California Department of Insurance (CDI) have NO jurisdiction over?
Medicare
Which of the following acts is NOT a Federal Offense committed by an insurance agent?
Misrepresentation on an insurance application
A participating company is also referred to as which type of insurer?
Mutual Insurer
How are Roth IRA's treated for tax purposes?
Non-deductible contributions and tax-free distributions
Retirement plans are prevented from favoring highly compensated employees under which government regulation?
Nondiscrimination
Retirement plans cannot favor highly compensated employs. The government regulation that prevents this from happening is called
Nondiscrimination
Which of the following is NOT a feature of equity-indexed annuities?
Offers a maximum interest rate that increases annually
A representation may be altered or withdrawn
Only before the insurance is in effect
Which of the following describes a contributory group insurance plan?
Part of the premium is paid by the employee and the employer
According to the California Insurance Code, how is the word "may" interpreted
Permissive
Which of the following is NOT an insurer policy expense?
Premiums
What does the term "illustration" mean when used in the phrase "life insurance policy illustration", according to the California Insurance Code?
Presentation of policy features that includes non-guaranteed elements.
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 a requirement for a terminated employee that has exercised the conversion privilege?
Provide proof of insurability
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
If a material warranty violation on the part of the insured is found, what recourse does an insurer have?
Rescind the policy.
Non-deductible contributions are typically associated with a
Roth IRA
John and Mary have a handicapped child that is financially dependent upon them. The death of one of the parents would not be financially disastrous, however the death of both likely would be. Which policy would be best suited for them?
Second-to-die policy
The California Life and Health Insurance Guarantee Association covers all of these types of policies EXCEPT
Self-funded plans
Which of the following does NOT have to be included on life insurance policy illustration?
Statement that all values and benefits are guaranteed
Employer contributions to qualified plans are
Tax deductible by the employer
How is the cost of employer-provided group life insurance with coverage amounts above $50,000 treated for tax purposes?
Taxable income to the employee
Premiums are best described as
The amount an insured pays per unit of coverage
Which of the following is NOT an important reason for a life insurance application?
The beneficiary must sign the application before the insurer will issue the policy.
A creditor would be allowed rights to life insurance policy proceeds if which of the following beneficiaries is chosen?
The insured's estate
All of these are reasons the Commissioner may disapprove a licensee's request to use a fictitious name EXCEPT
The name is the licensee's actual name
Pete is a life agent who has misappropriated fiduciary funds to his own use. What is Pete guilty of?
Theft
What is a common reason people purchase an annuity?
To protect against the risk of outliving their financial resources
An insurer that has been found using higher rates based on race, religion, or ethnicity is said to be engaging in
Unfair discrimination
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 fo competition
Paul has an existing annuity and is sold a new one, in which the new policy holds no greater financial benefit to him than the existing contract. This is considered a(n)
Unnecessary replacement
An annuitant would like to determine the current value of her annuity. To do this, she multiplies the number of "accumulation units" she owns times the unit value of the "seperate account". What kind of annuity BEST matches this description?
Variable Annuity
An annuity which is backed by a life insurer's separate account is called a
Variable Annuity
An annuitant would like to determine the current value of her annuity. To do this, she multiplies the number of "accumulation units" she owns times the unit value of the "separate account". What kind of annuity BEST matches this description?
Variable annuity
The California Insurance Code defines "policy" as a
Written contract
A savings vehicle designed to first accumulate funds and then systematically liquidate the funds is called
a deferred annuity
An insurance company entitled to transact business in California is called an
admitted carrier
The systematic liquidation of a sum of money is provided by an
annuity
When an insurance company requests an attending physician's report, the request must be accompanied by a
copy of the signed authorization
A savings vehicle designed to first accumulate funds and then systematically liquidates the funds is called a
deferred annuity
Which of the following is NOT a characteristic of reinsurance?
increase the unearned premium reserve
All of the following are considered characteristics of group life insurance EXCEPT
individual policies
What distinguishes a deferred annuity from an immediate annuity?
it is when the annuity benefit payments begin
An individual who transacts life, disability, or life and accident and health insurance on behalf of an insurer is called a(n):
life agent
When a life insurance policy is surrendered, how does the cost recovery rule apply?
the policy's cost basis is exempt from taxation
Under a Traditional IRA, interest earned is taxed
upon distribution
Life insurance creates an immediate estate. This phrase means:
when the insured dies, a death benefit is paid