California life insurance focus exam
Something of value exchanged between the insurer and the insured is considered an
Consideration
Which of the following can surrender a deferred annuity contract?
Only the annuity Owner
Which of the following determines the cash value of a variable life policy?
The performance of the policy portfolio
A set of legal or regulatory conditions that affect an insurer's ability to collect premiums commensurate with the level of risk incurred would be considered an
Legal hazard
The growing tendency of individuals to file lawsuits and to claim tremendous amount for alleged damages is known as
Legal hazard
Which of the following statements is incorrect concerning an IRA?
Married individuals must contribute into one account for both spouses, up to a specified amount for each person
Which of the following would qualify as an implied warranty an insurance contract?
Oral representation by the applicant
An insured has had a life insurance policy that he purchased three years ago when he was 40 years old. He was killed in an automobile accident and is discover that he is actually 45 years old, and not 43, as stated on the application. What will the company do?
Pay reduced death benefit
The causes of loss insured against an insurance policy are known as
Perils
All of the following are a true regarding insurance policy loans EXCEPT
Policy loans can be made on policies that do not accumulate cash value
Which of the following is correct concerning the taxation of premiums in a key person life insurance policy?
Premiums are not tax-deductible as a business expense
During the process of re-insurance an insurance company that has its property risks reinsured by another provider is called
Primary insurer
What is the penalty for IRA distributions that are below the required minimum for the year?
50%
And IRA uses immediate annuities to pay out benefits; the IRA owner is nearly 75 years old when he decides to collect distributions. What kind of penalty with the IRA owner pay?
50% tax on the amount not distributed as required
To sell variable life insurance policy's, an agent must receive all of the following EXCEPT
A SEC registration
A tornado that destroys property would be an example of which of the following
A peril
Which of the following is not an allowable 1035 exchange?
A whole life insurance policy is exchanged for a term insurance policy
Which of the following is the closest term to an authorized insurer?
Admitted
According to the law of agency, a principal is represented by a
Agent
An insured pays a $100 premium every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered loss. What characteristics of an insurance contract does this describe?
Aleatory
Which of the following would be considered a non-medical insurance application?
An application on which the medical information is completed by the applicant and the agent only
Which concept is associated with exclusion ratio?
Annuity payments
Employer contributions made to a qualified plan
Are subject to vesting requirements
The full premium was submitted with the application of life insurance, in the policy was issued two weeks later as requested. When does the policy coverage become effective?
As of the application date
Which of the following is TRUE about a class designation?
Beneficiaries are not identified by name
All of the following statements are correct regarding credit life insurance except
Benefits are paid to the borrowers beneficiary
When the partners of a business develop an arrangement where to buy should one of them die or become permanently disabled, the other partners would purchase the interest of the deceased or disable partner at a predetermined price, this is called a
Business continuation plan
Which of the following best describes the aleatory nature of an insurance contract?
Exchange of unequal values
When employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy, this is called an
Executive bonus
In the executive bonus plan who is the owner of the policy and who pays the premium?
Executive is the owner and the executive pays the premium
An agent selling variable annuities must be registered with
FINRA
Application is denied insurance because the information found on a consumer report. Which of the following requires the day insurance companies supply the applicant with the name and address of the consumer reporting company?
Fair credit reporting act
What is the benefit of choosing extended term as a nonforfeiture option?
It has the highest amount of insurance protection
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
Variable life insurance is based on what kind of premium?
Level fixed
Which of the following is NOT true regarding policy loans?
Money borrowed from the cash value is taxable
Based on human life value approach which of the following is NOT used to calculate an individual's life value?
Predicted needs of the family after the insured's death
According to California insurance code, which of the following can be classified as an insurable event?
Pure risks
A policy owner 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 policy owner should have her husband named as the
Revocable beneficiary
All of the following topics may be included in the continuing education requirement for long-term care insurance except
Sales techniques and overcoming client objectives in the purchase of long-term care insurance
A gymnastic and sure Asian variable contracts must establish one or more
Separate accounts
The interest earned on a policy dividends is
Taxable
Written binders provide insurance before the policy is actually Issued. The time period between the issuance of the binder in the policies effective date is called
Temporary term
Which of the following is true regarding variable annuities?
The annuitant assumes the risk on investment
Which of the following is not the consideration in a policy?
The application given to a prospective insured
In insurance, an offer is usually made when
The completed application is submitted
An individual applied for an insurance policy and paid the initial premium. The insurer issues a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policies effective date?
The date of medical exam
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 applicationto be completed. After the policy was issued, the agent talk to the insureds 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 avoided if they can be proven that the applicant was not capable of making a buying decision at the time of application
Informing an insurance contract when does acceptance usually occur?
When insurers underwriter approves coverage
And insurance policy specifies that it will pay $600 for a specific loss. The policy owner suffers a loss of $535. How much will the policy pay?
$535
What percentage of a company's employees must take part in a non-contributory group life plan?
100%
And internal revenue code provision that specifically provides for an individual retirement plan for public school teachers is a
403B plan TSA
As part of the continuing education requirement, what is the minimum number of hours of continuing education specific to long-term care insurance to be completed prior to each license renewal?
Eight
And insurance agent who commits a repeated violation of the insurance card with respect to insurance replacement will be liable for
And administrative penalty of no less than $5000 and no more than 50,000 per violation
An insurance agent who engages in the insurance business and violates the code with respect to insurance replacement shall on the first violation
Be fined a sum of $1000
Which of the following is incorrect concerning a non-contributory group plan?
The employees receive individual policies
An insured wants to transfer his personal insurance policy to a friend. Under what conditions would this be possible?
The insured will need a written consent of the insurer
All of the following are true statements regarding the accumulation at interest option except
The interest is not taxable since it remains inside the insurance policy
The importance of a misrepresentation is determined by
The materiality of a given concealment
Which of the following would provide an underwriter with information concerning an applicants health history?
The medical information bureau
All of the following statements are true regarding installments for a fixed amount EXCEPT
The payments Will stop when the annuitant dies
Which of the following best describes what the annuity period Is?
The period of time during which accumulated money is converted into income payments
All of the following are true regarding a qualified annuity EXCEPT
At distribution, all amounts received by the employee are tax-free
A policy owner 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 found material for underwriting, a misrepresentation
Can void a contract
The active of revoking or terminating an insurance policy is called
Cancellation
And insured receives an annual life insurance dividend check. What term best describes this arrangement?
Cash option
What does liquidity refer to in a life insurance policy?
Cash values can be borrowed at any time
A tax sheltered annuity is a special tax favored retirement plan available to
Certain groups of employees only
When an insured makes truthful statements on the application for insurance and pays the required premium it is known as which of the following?
Consideration
Contracts that are prepared by one party and submitted to the other on a take it or leave it basis are classified as
Contracts of adhesion
Which of the following is NOT a legitimate use of annuities by businesses
Creating a tax shelter
Selection of coverage in employee benefits plans refers to
Employee choosing benefits
And annuity owner is funding an annuity that Will supplement her retirement. Because she does not know what effect inflation may have on her retirement dollars, she would like a return that will equal the performance of the standard and poor's 500 index. She would likely purchase an
Equity indexed annuity
All insurers doing business in California must maintain a department to investigate possible:
Fraudulent claims by insureds
What provision in an insurance policy stands cover to be on the premium due date?
Grace period
What kind of policy issue certificates of insurance to insured's?
Group insurance
An individual is purchasing a permanent life insurance policy for the face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy?
Guaranteed insurability option
Events or conditions that increase the chances of an insurance loss occuring are referred to as
Hazards
Harry just received his life insurance policy. In reviewing the title page, Harry was able to ascertain the following information except
His spouse had been assigned the primary beneficiary
Units with the same or similar exposure to loss are referred to as
Homogeneous
A man purchased a $90,000 annuity with a single premium, and begin receiving payments two months after that what type of annuity is it?
Immediate
What type of insurance would be used for a return of premium rider?
Increasing term
The medical information bureau was created to protect
Insurance companies from adverse selection by high-risk's person
Which of the following insured's has a right to cancel an individual life policy within 30 days?
Insureds 60 years of age or older
The policy owner wants to make sure that upon his death the life policy will pay a portion of the proceeds annually to a spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement options for the policy owner and choose?
Interest only option
Which of the following is true about the 10 day free look period in a life insurance policy?
It begins when the policy is delivered
Which of the following best describes the MIB?
It is a nonprofit organization that maintains underwriting information applicants for life and health insurance
What is the purpose of a conditional receipt?
It is intended to provide coverage on a date earlier than the date of issuance of the policy
And insured by is a five year level premium term policy with the face amount of $10,000. The policy also contains renewability and convertibility options. When the insured renews the policy in five years, what will happen to the premium?
It will increase because the insured will be five years older than when the policy was originally purchased
Using a class designation for beneficiaries means
Naming beneficiaries as a group
A prospective deferred annuity owner is concerned about what would happen if you surrender the annuity before the Annuitization period. The agent most likely explain which of the following?
Nonforfeiture option guarantees that the owner will receive a surrender value of the contract
What describes a situation when poor risks are balanced with preferred risks and average risks are in the middle?
Profitable distribution of exposures
Profitable distribution of exposure serves the purpose of
Protecting the insurer against adverse selection
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
Upon delivery, the producer may be required to obtain any of the following except
Signed waiver of premium
All the following are true about variable products except
The premiums are invested in the insurers general account
If I deferred annuity is surrendered prematurely, a surrender charge is imposed. How is the surrender charge determined?
The surrender charge is a percentage of the cash value and decreases over time
Which of the following is not true regarding equity indexed annuities?
They earn lower interest rates than fixed annuities
Which of the following is not a goal of risk retention?
To minimize the insurance level of liability in the event of loss