California Practice Life Exam B

Under which life settlement option does the insurer retain the death benefit but pays the beneficiary the earnings on the death benefit?

Interest only option

All of these statements about life insurance settlement options are false, except:

Life income with 10 years certain provides at least 120 months of payments

A client has a history of DUIs. To his insurer, they see him as a ________ hazard.

Morale

Which of the following is considered ordinary insurance?

Mortgage redemption

Which type of insurer requires an attorney-in-fact overseen by an advisory committee of subscribers?

Reciprocal Insurer

What is the minimum number of members required for group life insurance?

10

For a flexible premium deferred annuity, the time during which the owner makes premium payments and the time before benefit payments begin is known as the:

Accumulation period

Which of the following is not a personal use of life insurance?

A client buys insurance to fund a buy-sell agreement

Which of the following is an incorrect statement about a client's privacy rights?

A client does not have access to their MIB report as it belongs to the member's life insurers

An applicant has the right to know that the insurance company will collect certain personal information about their credit, character and reputation. The insurer may gain such information from:

A consumer report

Situations where the risk is increased by slippery floors, a habit of lying, or reckless drunk driving are best described by which of the following?

A hazard

Premiums paid into a variable annuity purchase which of the following?

Accumulation units

At age 72, Mrs. Smith is considering applying for Medi-Cal so she can afford her medical bills. Today Agent Charles is visiting her home and wanting to sell her an annuity product. Which of the following is true?

Agent Charles cannot allow Mrs. Smith to purchase an annuity if after the purchase, Mrs. Smith wouldn't qualify for Medi-Cal

Profit Sharing Plans:

Allow for a contribution of a specified proportion of company profits

Which action by an insurer, or its representatives, is not considered an unfair claims violation?

An agent advises a claimant to obtain the services of an attorney

All of the following statements about agents are true, except:

Exclusive agents work for themselves

In insurance, the agents have authorization to represent the company. The producers may exercise this relationship though:

Express authority, implied authority, and apparent authority

What nonforfeiture option allows a policy owner to use the existing cash value to purchase a policy of the same face amount as the original policy but for a reduced amount of time?

Extended term insurance

A partial payment of proceeds to over final expenses is paid to someone not designated as a beneficiary but acting in a legal or fiduciary capacity. This is provided in which provision?

Facility of Payment

An insurer invests the cash value of a fixed annuity in which of the following assets?

General account

All of the following statements about a policy grace period are false, except:

Grace periods are typically 31 days

Which statement best describes "agreement" as it relates to contracts?

One party accepts the exact terms of the other party's offer

While collecting underwriting information, certain rules must be followed. Which of the following is incorrect?

Post-claims underwriting is a valid and necessary means of determining the insurability of a potential applicant

In a group life policy with a death benefit of more than $50,000:

Premium cost for insurance about $50,000 is taxable as income to the employee

A client has purchased an annuity with an annual bonus she received at the end of last year. She has requested annual benefit payments to start at the end of this year. What type of annuity did she purchase?

Single premium immediate annuity

The provision that protects the proceeds of a life insurance policy from attachment by the beneficiary's creditors after the insured's death is known as:

Spendthrift (Trust) Clause

Who submits a request for life insurance to a company?

The applicant

All of the following are true about key person insurance, except:

The death benefit is taxable to the business

Brian purchased a variable life policy and died 25 months after the issue date. It is then discovered that Brian understated his age on the application. What will the insurer do in regard to the payment of the death benefit to the beneficiary?

The death benefit will be reduced to reflect the age discrepancy

All of the following statements about life insurance policy illustrations and the senior market are correct, except:

The illustration will note that both guaranteed and non-guaranteed elements will remain unchanged for the years illustrated

Which of the following statements is false in regard to a Life Paid-up at 65 whole life policy?

The policy will endow at age 65

Which party has the legal authority to name or change the beneficiary?

The policyowner

Which statement about reinstatement is false?

The reinstated policy is incontestable if the first time it was in force it already passed the 2 year mark

An agent who knowingly misrepresents material information for the purpose of inducing a client to lapse, forfeit, change or surrender a life insurance policy or annuity has committed an illegal practice known as:

Twisting

In which type of policy does the insurer apply flexible premium to pay for the cost of insurance and expenses and then uses the remaining balance plus interest to build the case value account?

Universal life

How many hours of continuing education are required per renewal for a life-only agent?

24 hours, 4 of the hours must be in ethics

According to the CIC, life-only agents must keep records of their transactions for:

5 years

At what age does Social Security Medicare program Part B start providing benefits?

65

Any person to whom the commissioner has issued a seizure order and who refuses to deliver any books, records, or assets of an insurer faces:

A misdemeanor punishable by a fine up to $1,000, a year in prison, or both

Which of the following is not a qualified 1035 exchange?

A variable annuity exchanged for a variable universal life policy

A policy pays the face amount if the insured dies before a specified date, or lives to that specified date. This best describes:

An endowment policy

Which statement is false concerning insurance company regulations?

An insurer suffering from an impairment of their minimum required paid-in capital is labeled solvent

Ashley, the policy owner and insured, named Wendell as primary beneficiary and Barbara as contingent beneficiary. Just six (6) weeks prior to Ashley's death, Wendell and Barbara are killed in a common disaster. The insurance proceeds will be received by whom?

Ashley's estate

All of the following statements about assignments are not false, except

Assignments need not be filed with the insurer if notarized and filed in county records

The Roth and Tradition IRAs have some similarities. Which of the following is not true?

Both are tax deductible to the investor

Which statement below is least correct regarding the type of insurance that fits best with the applicant's needs?

Convertible term can be purchased by applicants who may require a larger death benefit in the future

Which of the following is not excluded from the California Life and Annuity Replacement Law?

Converting a convertible term policy to whole life insurance

In comparing the purchase of individual life insurance to acquiring group life, which statement is not true?

Group insurance has a non-deductible premium while individual insurance has a tax deductible premium to the payor

Which of the following riders would provide for an insured to increase the face amount of their life insurance policy without proof of insurability?

Guaranteed insurability/Future purchase option

A forty five year old investor has been laid off from his job. In order to pay bills he takes a premature distribution from his traditional IRA account. What tax penalties, if any, will he face?

He will be required to pay a 10% tax penalty on the amount withdrawn

The Commissioner can deny an applicant for a license after a hearing:

If the applicant has permitted someone in their employment to violate the California Insurance Code

A policy owner who cannot borrow the equity, change beneficiaries, assign a policy or stop paying premiums without the beneficiary's written consent has designated the beneficiary as a(n):

Irrevocable

All of the following describe differences between binding receipts and conditional receipts, except:

No claim is paid with either receipt until a policy is issued

All of the following statements are true about participating and non-participating policies, except:

Non-participating policies issue dividends to policyowners

Term insurance is best described by which of the following?

Provides temporary protection, builds no cash value, is less expensive, and may be renewed

Variable insurance and variable annuity products are regulated by?

SEC, FINRA and DOI

Which of the following is most likely to have a TSA?

School district employee

To authorize the release of an attending physician's report, the applicant must?

Sign the consent form

Which of the following statements is not included in the Entire Contract clause?

The insurer agrees to provide life insurance protection for the named insured which will be paid to a designated beneficiary when proof of death is received by the insurer

Which of the following cannot be used in a policy illustration if non-guaranteed elements are intended to pay future premiums?

Vanishing premiums

A client has missed her premium payment on her cash value policy, and the grace period has also lapsed. The policy is still in force because her insurer has been deducting the cost of the premium from her cash value. What provision allows this?

Automatic premium loan

The person who will receive the benefit of an annuity and whose life the payout is based upon when the contract is purchased is the

Annuitant

Which of the following are characteristics of renewable term?

Allows the policy owner the opportunity to renew the policy at the end of term, without evidence of insurability. The premium will increase.

According to the CA DOI, an insurer whose articles of incorporation are registered in Oslo, Norway, is considered:

An alien insurer

Which of the following transactions would most likely be declined due to lack of insurable interest?

An employee insures their employer in the fear of losing their job

In life insurance, beneficiary succession is the method used to determine who will receive death proceeds. If the primary beneficiary is not living upon the death of the insured who will receive the payment?

Contingent beneficiary

Which statement is not true about insurance sales?

Brokers represent insurers in negotiating coverage with various insureds

All of the following statements about policy provisions are true, except:

Death during the grace period results in a full death benefit being paid

Which of the following is not an acceptable underwriting classification?

Declined

All of the following needs to be included on an application for life insurance except:

Disability income insurance

When an applicant makes a material statement believed to be true to the best of their knowledge, the statement is considered to be a/an:

Representation

The insured dies 6 months after the policy issue date. Upon death of the insured, it is determined that the applicant made a material misstatement on the application. What is the most likely course of action for the insurer?

Rescind the policy

For an insurance contract, utmost good faith means?

Each party relies upon the truthfulness of the other

Which of the following becomes part of the contract, is guaranteed to be true, and if untrue, may be grounds for rescinding the policy?

Warranty

Which insurance is known for having a level premium with a fixed rate of return resulting in guaranteed cash value?

Whole Life