Insurance Exam

Which of the following is false? a) An agent represents a principal b) A broker is licensed to sell life, property and casualty insurance c) An agent can be independent or exclusive d) A broker represents an insured

Brokers are not licensed to sell or market life insurance. (B)

The period of time following the youngest child's 18th/19th birthday until the surviving parent is eligible for benefits is called the: a) Benefit Period b) Coverage Period c) Exclusion Period d) Blackout Period

A survivor does not receive benefits during the Blackout Period. (D)

What occurs during the accumulation period of an annuity? a) Payout of the benefits of the annuity b) Provides for a guarantee of mutual fund growth c) Allows the annuity to build on a tax deferred basis d) Allows the annuity to build on a tax free basis

Annuities build on a tax deferred basis not a tax free basis. (C)

A policy names an irrevocable beneficiary. This beneficiary type: a) Is able to disapprove contingent beneficiaries b) Has the same role as a policy co-owner c) Has a "vested" interest in the life contract d) Automatically becomes an owner if they pay the premiums

Choice c) is correct because of the word "vested." This word means that they have a valuable interest in the contract, and must approve everything that is done to the contract, but they do not have the same role as a policy co-owner. (C)

Policy conditions are: a) The exchange of value in the contract b) The duties and rights of the insurer only c) The duties and rights of the policyholder only d) The duties and rights of all parties to the contract

Conditions apply to all parties to the contract. (D)

An ESOP invests in: a) Employer stock b) Mutual funds c) Corporate bonds d) Employer's investments

ESOP = Employee Stock Ownership Plan. (A)

Which of the following is not a legal activity in this state? a) Participating in a plan to offer free insurance if a person buys some form of service b) Disregarding age in the determination of insurance rates c) Refusing to apply the practice of twisting in sales d) All the above are legal in the state of California

For test purposes there is no such thing as free insurance. (A)

The purchase of an insurance policy by a consumer is the process of risk: a) Reduction b) Avoidance c) Retention d) Transfer

Getting someone else to handle the risk (an insurance company) because the risk is too large for the consumer to handle on their own. (D)

The life analyst is allowed to charge a fee for services provided, as long as it is stated in writing, in advance of performing the service. Each of the following must be included in this written agreement, except: a) The exact fee to be charged b) The commission received for the sale of products, if applicable c) The services which will be performed and provided, but for which no fee will be charged d) The information being analyzed can be obtained directly from the insurer at no charge

It is impractical to list all the services that could be provided that would not be charged for. (C)

Which acronym relates to the calculation of life premiums? e) M.I.B. f) M.I.X. g) M.I.6. h) None of the above

M.I.X. = Mortality, Interest and Expenses. (B)

Which of the following would be considered a morale risk? a) Misstatement by an applicant b) The insured is blind c) The insured drives too fast d) The insured is color blind

Morale risk involves carelessness or irresponsibility. (C)

Which of the following is true regarding mortality tables? a) The risk of death decreases with age b) Mortality tables predict the number of people per 10,000 in a particular age group who will die in a given year c) Mortality tables predict the number of people per 1,000 in a particular age group who will die in a given year d) The upper age limit on the 2001 CSO Mortality Table is age 100

Mortality tables indicate the likely number of deaths per 1000. (C)

The following statements are all incorrect, EXCEPT: a) Family Maintenance policies combine Whole Life and Decreasing Term b) The Family Protection policy will cover newborns without an increase in premium c) The Family Protection policy combines Whole Life and Decreasing Term d) Family Income policies combine Whole Life and Level Term

Newborns are automatically covered at no additional cost. (B)

Which of the listed premium payment schedules would reflect the lowest overall premium? a) Annual b) Every six months c) Quarterly d) Monthly

No interest is being charged. (A)

The California Insurance Code contains very specific regulations regarding the ability of a senior citizen to return a life insurance policy or annuity. The regulation: a) Applies to group plans and individually issued policies equally b) Allows a senior citizen a minimum of 30 days to return a life or annuity contract to the insurer. They are entitled to a full refund of premium c) Specifies a senior citizen as an individual who is at least 65 year of age as of the purchase date d) Answers a), b) and c) are true

Older people have longer to review their policies. (B)

People commonly purchase an annuity to protect against the risk of: a) Dying before their home mortgage is paid off b) Becoming uninsurable c) Outliving their financial resources d) Dying too soon

One of the benefits of purchasing an annuity contract is that, once it annuitizes, the contract holder can receive payments for the rest of their life. (C)

Which of the following are common insurance policy provisions? a) Reinstatement, suicide, pre-existing conditions b) Entire contract, grace period, reinstatement c) Entire contract, incontestability, pre-existing conditions d) Grace period, suicide, right to return

Policies commonly have these provisions. The "entire contract" provision states that the policy, together with the copy of the attached application, is the entire contract. Pre-existing conditions are not a provision, and the right to

The period during which principal and interest accumulate in an annuity is called the: a) Annuity Period b) Benefit Period c) Actuarial Period d) a), b) and c) are all untrue

Principal and interest accumulate during the Accumulation Period. (D)

One of the principal benefits of insurance is: a) Reduction of certainty b) Relief from certainty c) Increase of uncertainty d) Reduction of uncertainty

Reduction of uncertainty is a principal benefit of insurance. (D)

Which of the following is the most correct regarding reinsurance? a) It is illegal b) It is used when an insurer's annual premium volume exceeds the amounts specified by the Department of Insurance c) It is used to allow an insurance company to write insurance in excess of its retention limits d) It is used only with a reciprocal insurer

Reinsurance is required for the insurer to write beyond its retention limit. (C)

The SEC is involved in the regulation of: a) Universal life policies b) Interest-sensitive life policies c) Variable life policies d) All annuities

Since Variable Life policies provides a return on investment linked to an underlying portfolio of securities, the SEC (Securities Exchange Commission) is involved in the regulation. (C)

How is the Insurance Commissioner selected? a) An annual meeting of insurance professionals in the state b) Appointed by the governor c) A group of qualified applicants voted on by the legislature d) An election by the people

The Insurance Commissioner is elected by the people. (D)

After receiving your insurance life agent license, if you change your address, you are to notify the Insurance Commissioner, in writing: a) Within 10 days b) Immediately c) Within 60 days d) Within 90 days

The Insurance Commissioner wants the ability to find an agent in case of possible violations. (B)

An insured bought a $150,000 non-participating Whole Life policy many years ago. He is 100 years old today. He has never borrowed from the policy's cash value and has faithfully made all payments when due. The policy's current cash value is: a) $150,000 b) $100,000 c) $0 d) $50,000

The cash value in a Whole Life insurance policy is calculated and structured actuarially so that it will equal the death benefit and is paid to the insured when the policy matures or "endows" at age 100. (A)

Which of the following is not an acceptable risk for the insurer? a) Preferred b) Declined c) Substandard d) Both b) and c

The only unacceptable risk is one that the insurer declines. (B)

A policy is issued to a 32 year old that has a face amount of $100,000. When the insured reaches the age of 55, the policy has built up $100,000 of cash value. Choose from the selections below the type of policy this most likely describes: a) A 20-pay life insurance policy b) A life paid-up at age 55 policy c) A term to age 55 policy d) An endowment at age 55 policy

When the policy cash value equals the death benefit the policy endows and the cash value is paid to the insured. (D)

Which provision will pay a portion of the death benefit prior to the insured's death due to a serious illness? a) Waiver of premium b) Accelerated death benefit c) Cost of living d) Disability income

a.k.a. "Living Needs Rider." (B)

Which of the following is not one of the policy parts? a) Policy Face b) Insuring Clause c) Consideration d) All are policy parts

"Conditions" not "consideration." (C)

"Consideration," as it applies to a life insurance contract, is defined as: a) $50.00 minimum b) The "face value" on any contract anniversary date c) What the insurance company gives your application during the underwriting process d) The premium payment

"Consideration" includes premium, information, and the promises made by the insurer. (D)

Which of the following is untrue about life insurance free looks? a) The usual free look lasts 10 days b) The free look is at least 30 days for persons aged 65 or older c) The free look is at least 20 days for a replacing policy d) A person who returns the policy during the free look is not covered from the beginning of the contract

30 days if the person is 60 or older. (B)

Which of the following is not false? a) In a contributory plan, 75% of all employees must enroll b) In a contributory plan, the group sponsor contributes 75% of the premium c) In a noncontributory plan, all eligible employees must not be covered d) In a contributory plan, 75% of all eligible employees must enroll

75% of eligible employees/members must be covered. (D)

If a person was in violation of Section 770 of the CA Insurance Code, what action would the insurance Commissioner most likely take if the violation dealt with loans on the security of real or personal property? a) Require the violator to complete an approved ethics course before soliciting in the state of California again b) Issue a cease and desist order for a violation of more than one transaction c) Charge the violator with a felony with a six month maximum jail sentence per violation d) Issue a fine of $205,000 per violation

A cease and desist order is the usual minimum for violations. (B)

Which of the below best describes the term "aleatoric" as it relates to insurance? a) The insurer relies upon the truthfulness of the insured b) The contract provides for an act for a promise and is one-sided c) Performance depends on an uncertain future event d) The contract is personal in nature

Aleatoric means the contract depends on an uncertain future event. (C)

Which of the following would be considered an alien insurer? a) An unauthorized company that underwrites undocumented workers b) A company located in England and doing business in California c) A company that is organized in Nevada but maintains branch offices in this state d) All the above are alien insurers

Alien insurers are domiciled outside of the U.S. but are allowed to do business in the state. (B)

Which of the following is not an acceptable risk to the underwriting department of an insurer? a) Sub-standard b) Preferred c) Standard d) All are acceptable risks

All of the risks listed would be accepted by the underwriting department. (D)

If the Commissioner issues a Notice of Seizure for documents and the individual fails to send those documents what is the penalty? a) 1 year in jail b) $1,000 fine c) 1 year in jail and/or $1,000 fine d) Each state handles discipline in its own way

Although answer choice d) is true, it does not directly answer the question. (C)

According to the CA Insurance Code, an insured's policy must specify all of the following, EXCEPT: a) The risks insured against b) The financial rating of the insurer c) The property or life being insured d) The policy period

Although important, the financial rating of the insurer is not found in the policy itself. (B)

The term "consideration" applies to the issuance of an insurance policy. Choose the best description of this term from the choices below. a) The amount of death benefit b) The time the underwriting department gives the application c) The face amount of the policy one year from the date of issue d) None of the above

Consideration is the exchange of value between the insured and the insurer, specifically the exchange of premium for the insurer's promise to pay benefits. None of the examples have anything to do with the concept of consideration. (D)

The premiums for a Variable Universal Life insurance contract: a) Must be paid at certain times, and can vary in their amount b) Can vary in payment schedule and amount c) Must not vary in amount, but can vary when they must be paid d) Cannot vary in payment and amount

The characteristics listed are found in Variable Universal Life policies. (B)

What is the difference between a defined contribution plan and a defined benefit plan? a) The party receiving the distribution b) The party making the contribution c) The contract period requiring specific payments d) The penalties for early distribution

Defined Benefit (DB) plans usually have an agreed early distribution date (often age 55) which allows the employee to take a reduced amount of benefits as an annuity without penalty. Otherwise, early distributions are generally not permitted in DB plans. Defined Contribution plans have a 10% penalty for withdrawals before age 591/2 except for allowed distributions. (D)

Unless the applicant indicates otherwise during the right-to-return period in an individual annuity, the premium for a variable annuity would be invested only in: a) Fixed income investments and money market funds b) The mutual funds underlying the variable annuity contract c) The insurer's general fund d) The insurer's separate account

During this period, the premium needs to be in a safe investment that will not fluctuate in value. (A)

The Federal Act that is designed to protect group plan participants, establish pension equality, and mandates strict reporting and disclosure requirements is: a) COBRA b) DEFRA c) TEFRA d) ERISA

ERISA is the Employee Retirement Income Security Act. (D)

A non-medical application: a) Relieves the applicant from having to submit to a physical b) Applies only to health insurance c) May require an applicant to submit to a physical d) Non-medical Applications are disallowed in California by the code

Even when the application is taken non-medically the insurance company reserves the right to ask the applicant to take a medical exam. (C)

Which of the following is true about nonforfeiture provisions? a) Extended Term provides a reduced level of insurance that is paid-up until the end of the policy term b) Cash Surrender is the default option c) Reduced Paid-up is only available after a Cash Surrender d) Extended Term is the default option

Extended Term is the default. (D)

Which of the following is true regarding the annuity free-look? a) In a variable annuity, the insurer will invest the premium in fixed income or money market funds. If the policy is returned during the cancellation period the full premium paid will not be refunded. b) If the owner has directed that the premium is immediately invested in the stock or bond portfolio, cancellation during the free-look period entitles the owner to a full refund of the premium. c) Both a) and b) are true d) Neither a) or b) are true

If the investment is in fixed or money market accounts initially, there is a possible full refund of premium during the free-look. If the investment is in securities initially, there is a possible refund of the account value only. (D)

In the state of California: a) Twisting is an approved practice b) Providing free insurance coverage in connection with the sale of services as an inducement for completing the transaction is not legal c) Life and health ratings may not be related to the age of the insured d) A life solicitor's license has the same licensing requirements as a life agent's license

Insurers, agents or brokers are prohibited from participating in any plan to offer free insurance or annuities as an inducement to the purchase, or rental, by the public of any real or personal property or services. (B)

Which of the following is NOT a contributing factor to an agent acting unethically? a) Paying no attention to a recent tax law change affecting their clients b) Selling so little insurance that the office sales manager threatens to fire the agent c) Keeping the client's best interest foremost in mind d) Fraternizing with a group of agents that blatantly and consistently break code regulation

Keeping the client's interest in mind is the ethical thing to do. (C)

Which of the following is a false statement? a) Annuities can be non-qualified plans b) A Roth IRA is a non-deductible IRA c) A Roth IRA is a non-deductible IRA d) ESOP stands for Employee Stock Ownership Plan

Keogh Plans are designed for unincorporated businesses. (C)

In which type of permanent insurance does the insurance protection decrease over the lifetime of the policy? a) Increasing Term b) Decreasing Term c) Whole Life d) Level Term

The death benefit is made up of increasing cash value and decreasing insurance protection. (C)

The concept of "adhesion" refers to: a) An insured being unable to recover more than what was actually lost b) A court making a decision in favor of an insured because there was unclear wording in the policy document c) The insurance company making a one-sided promise that can be enforced in a court of law d) The insured relying upon the information given by the agent

Laws require the insured and insurer to adhere to (stick to) the contract as written. Since the insurance company draws up the terms of the life insurance contract, the court will side with the insured if the contract language is unclear. (B)

Which of the following is/are false regarding settlement options? a) Life Income Only payments will end on the death of the insured b) Settlement options can be chosen by the policyholder before the death of the insured c) The beneficiary can choose a settlement option if the policyholder has previously chosen one for them and c) are false

Life Income Only ends on the death of the beneficiary and the beneficiary can only choose a settlement option if it has not already been chosen for them. (D)

Identification of clients is performed by the: a) Actuarial Department b) Marketing Department c) Underwriting Department d) Claims Department

Marketing identifies clients. (B)

The factors that affect the amount of cash value in a Universal Life Policy are: a) Premium, current interest rates, mortality cost and expenses b) Premium, guaranteed interest rates, mortality cost and expenses c) Premium, current interest rates and mortality cost d) Premium, fixed interest rates, mortality cost and expenses

Premium and current interest is credited; mortality and expenses are charged. (A)

Which of the following is false concerning risk? a) Risk is uncertainty of loss b) Speculative risks involve the possibility of gain and loss c) Pure risks are uninsurable d) Speculative risks are uninsurable

Pure risks are potentially insurable. (C)

Subject to the restrictions of the CA Insurance Code, any person capable of making a contract may be considered: a) An insurer b) A broker c) An agent d) A solicitor

Question wording is from the insurance code section describing insurers. (A)

The purpose of laws regarding the replacement of life and annuity contracts includes all of the following, EXCEPT: a) To protect the interests of life insurers and their agents b) To establish penalties for failure to comply with replacement requirements c) To assure the purchaser receives information to make an informed decision d) To reduce the opportunity for misrepresentation and incomplete disclosures

Replacement laws are designed to protect the consumer. (A)

What recourse does an insurer have if a violation of a material warranty on the part of the insured is discovered? a) A hearing by the Insurance Commissioner to determine the severity of the misrepresentation, and to determine an appropriate course of action b) None, if the policy has been in force for over 12 months c) Rescission of the policy d) A hearing in a court of law to determine an appropriate course of action an insurer may take

Rescission is possible during the contestability period. (C)

In order to be considered an ideally insurable risk the situation must NOT: a) Involve uncertainty of loss b) Potentially cause catastrophic economic harm c) Potentially cause significant economic harm d) Be reasonably predictable

Risk must not cause catastrophic harm. (B)

The Waiver of Premium Rider will usually waive payments after: a) 12 weeks of disability b) 3 months of disability c) 6 months of disability d) 6 weeks of disability

Six months is the usual waiting period. (C)

How long must a life agent maintain records regarding policies sold in this state? a) 1 year b) 2 years c) 3 years d) 5 years

Statement of fact. (D)

Not all of the following are false, EXCEPT: a) Mutual insurers are owned by policyholders b) Stock insurers may declare dividends c) Mutual insurers may declare policy dividends d) Stock insurers are not owned by stockholders

Stock insurers are owned by stockholders. (D)

Which is correct concerning Survivorship Life? a) It pays the death benefit upon the first death rather than the second b) This type of policy is frequently used in cases where there will be a large estate tax liability upon the death of the first spouse c) The death benefit is usually $1 million or less d) None of the above

Survivorship Life pays on the death of the second insured and has a usual death benefit of $1 million or more. (D)

An individual with a low income and high insurance needs should buy: a) Whole life insurance b) Universal life insurance c) Endowment insurance d) Term insurance

Term insurance is best when the purchase of pure insurance is needed. It has the lowest cost to benefit ratio. (D)

An example of a moral (NOT morale) hazard is relation to a life insurance application would be: a) An individual has an indifferent attitude about participating in activities that may be damaging to his health b) Misstating your health history to an insurance company c) A person suffering bouts of severe depression d) Someone who often drives at excessively high rates of speed

The insurance company must have correct information to assign the correct risk classification that will generate enough premium to cover the risk. (B)

Of the following, which best describes an annuity? a) It is generally paid out to the annuitant in a lump sum cash payment b) The insurance company has an obligation that is different for both the accumulation period and the liquidation period c) Since it can provide monthly income to a beneficiary, it is said to create an immediate estate d) Since it can provide monthly income to an annuitant, it is said to create an immediate estate

The insurer's obligation during the accumulation period is to invest the money entrusted to it. Its obligation during the liquidation period is to pay out the money accumulated. (B)

The doctrine of "utmost good faith" applies to the business of transacting insurance. Which of the following is an example of its application? a) Each party is entitled to rely upon the representations of the other party b) Answers to application questions are provided to the best of one's knowledge c) Each party to a contract must give valuable consideration d) Any unclear or ambiguous statement in a contract of insurance is decided in favor of the insured

The key phrase is "rely upon the other" and this is part of the definition of utmost good faith. (A)

A beneficiary wants to receive $2,000 per month until the principal and interest are exhausted. Which settlement option should be chosen? a) Fixed amount option b) Cash option c) Fixed period option d) Interest option

The key word is "exhausted." This option emphasizes the dollar amount per installment as opposed to length of time installments are to be paid. (A)

Which of the following is the definition of the Law of Large Numbers? a) The larger the number of similar risks combined into a group, the easier it is to predict losses for individuals in the group over time b) The smaller the number of individual, but similar, risks that are combined into a group, the easier it is to predict losses for that group over time c) The larger the number of individual, but dissimilar, risks that are combined into a group, the easier it is to predict losses for that group over time d) The larger the number of individual, but similar, risks that are combined into a group, the easier it is to predict losses for that group over time

The larger the number of individual but similar risks that are combined into a group, the easier it is to predict losses for that group over time. (D)

The usual elimination (waiting) period for a Disability Income rider is a) One month b) One week c) One day d) Three to six months

The long period of time is imposed to allow the insured to get back to work or prove they really are disabled. A longer period is also chosen so that the premium is more affordable. (D)

Which of the following is true regarding an irrevocable beneficiary? a) If the irrevocable beneficiary permits, the policy owner may borrow from the cash values b) An irrevocable beneficiary may borrow from the cash value without the permission of the policy owner c) A policy owner may remove an irrevocable beneficiary whenever she wishes d) None of the above

The owner and the irrevocable beneficiary must both agree when a change is made to the policy. (A)

The Common Disaster provision is designed to protect the interests of which of the following? a) The primary beneficiary b) The insurer and insured c) The contingent or secondary beneficiary d) None of the above

The primary beneficiary is assumed to have died before the insured in a common disaster in order to ensure that the proceeds go to the contingent beneficiary if one exists. (C)

What does the "grace period" in a life insurance policy permit the insured to do after the premium due date? a) Still reinstate a lapsed policy without having to prove insurability b) Pay the premium without losing coverage c) Pay the premium with evidence of insurability d) Still reinstate a lapsed policy since premium payment within the grace period triggers new coverage

The purpose of the grace period is to keep the policy on the books without a lapse in coverage. (B)

An agent who replaces an existing life insurance contract must do all of the following, EXCEPT: a) Submit a copy of the replacement notice to the applicant b) Submit a copy of the replacement notice to the existing insurer c) Submit a copy of the replacement notice to the replacing insurer d) Obtain a signed statement from the applicant as to whether insurance is to be replaced

The replacing insurer notifies the existing insurer. (B)

Which of the following is correct regarding the transfer of risk? a) The transfer is from a large group (insureds) to an individual (insurer) b) Transfer of risk is not the basic principle of all insurance c) The transfer is from an individual to a group d) None of the above

The transfer is from an individual to a group of other insureds. (C)

If an insured works at two different jobs, they will be rated according to the: a) Job that has the highest income b) Job that has the longest work hours c) Job that has the worst safety record d) Job that has the highest prestige

The worst safety record presents the highest risk for the insurer. (C)

Term insurance is typically characterized by: a) Low premiums and high cash value b) High premiums and no cash value c) High premiums and high cash value d) Low premiums and no cash value

There is no cash value in traditional forms of Term insurance. Cash value is found in Whole Life and other ordinary policies. (D)

In determining the rates to charge payers for life insurance premiums, a company will use: a) Policy reserves, interest, expenses b) Mortality, policy reserves, expenses c) Mortality, interest, policy reserves d) Mortality, interest, expenses

These are the three components of a premium. (D)

The clause that protects the proceeds of a life insurance policy from attachment by creditors after the death of the insured is: a) Common disaster clause b) Spendthrift trust clause c) Incontestability clause d) Beneficiary clause

This clause will guard the proceeds from creditors until after the time the beneficiary receives them. (B)

The policy provision which comes into effect when the insured and primary beneficiary die in a simultaneous (common) accident with no evidence as to who died first is: a) Common disaster provision b) Simultaneous death provision c) Joint life provision d) Joint and second to die provision

This clause/provision in a life insurance policy is designed to determine the order of deaths when the insured and the beneficiary die in the same accident. Otherwise, the proceeds are payable to the insured's estate. (A)

All of the following statements are correct regarding a warranty,EXCEPT: a) It is a statement merely made to the best of one's knowledge, and can only be express b) Should either party violate a warranty it entitles the other party to cancel the contract c) Warranties can be made about events in the past, present or future d) Warranties made at or during the execution of a policy must be contained in the policy, signed by the insured and attached to the contract

This concept is misrepresentation. (A)

In order to deal with the financial consequences of the death of a senior sales manager, a corporation could purchase: a) Group life insurance b) Key person insurance c) Business overhead expense insurance d) Ordinary life insurance

This insurance is on essential employees with benefits payable to the business. Amongst the many advantages of key person insurance is that it enhances the ability of the business to continue operations. (B)

Which of the following is a hazard? a) A large number of similar exposure units b) A peril c) A condition that might increase the likelihood of a loss occurring d) A speculative risk

This is a true statement, and includes physical, moral, morale, and legal hazards. (C)

Which of the following comprise a Family Income insurance policy? a) Term insurance b) Permanent insurance c) Permanent combined with increasing term insurance d) Permanent combined with decreasing term insurance

This is another memorization question. (D)

Which of these statements with regard to the tax treatment of life insurance is true? a) Death benefits are generally exempt from taxation b) Individual policy premiums are tax deductible c) Policy premiums that provide benefits to employees are not tax deductible d) These are all true

This is how death benefits are treated under current tax law. (A)

According to the terms of the suicide clause found in a life insurance policy, if an insured commits suicide six months after the policy is issued, what will the insurer do? a) Pay the full claim b) Pay nothing c) Pay a pro-rated amount of the premiums received d) Refund all the premiums paid

This is how the suicide provision works. (D)

The class beneficiary designation which means that the beneficiaries will receive equal shares of the death benefit divided among the surviving members of the class is: a) Class beneficiaries, equal shares b) Per capita c) Per stirpes d) Per diem

This is one definition of per capita. Per stirpes refers to sharing the beneficiary's share of an estate among that beneficiary's children. (B)

Which of the following is a description of a Life and Disability Analyst? a) A broker paid fees for service b) A person licensed to assist an agent in soliciting life insurance c) A person licensed to advise clients about life and disability insurance for a fee d) Any agent

This is the definition of a Life and Disability Analyst. Choices a) and c) refer to property and casualty insurance, not life insurance. (C)

In regards to representations, which of the following is correct? a) Representations can only be in writing b) Representations are guaranteed to be true c) Representations are statements made to the best of one's knowledge b) All are true

This is the definition of a representation. (C)

The type of life insurance policy which will pay the face amount to a beneficiary if the insured dies during the policy's term, or will pay the face amount to the insured who is living at the end of this period of time is a/an: a) Mortgage redemption policy b) Term insurance policy c) Illegal contract d) Endowment policy

This is the definition of an endowment policy. (D)

The price of insurance for each exposure unit is called the: a) Premium b) Rate c) Adjustment factor d) Package price

This is the definition. (B)

If a policy is cancelled and the insurance company legally keeps the earned premium along with a penalty charged the premium payer it is called a: a) Penalty cancellation b) Pro-rata cancellation c) Short rate cancellation d) None of the above

This is the definition. (C)

An agent makes a misleading comparison of a policy he is selling in order to convince a prospect to lapse an old insurance policy. What is this called? a) Intimidation b) Rebating c) Boycotting d) Twisting

This is the definition. (D)

Choose the best beneficiary designation for the following case: the children are to receive equal shares of the benefit. If any of the children die before the insured does, the insured wishes that the remaining children receive the deceased child's share equally divided among them. a) Per stirpes b) Per capita c) Each named as primary beneficiary, equal shares d) None of the above

This is the per capita definition. (B)

Any attempt by an existing insurer or their agent to dissuade a policy owner from replacing an existing life insurance or annuity contract is known as: a) Replacement b) Reinstatement c) Assignment d) Conservation

This normally occurs when a policy is in danger of, or in the process of, lapsing. (D)

Choose the correct statement from the selection below: a) Dividend income is considered a taxable event b) If a company overestimates what is needed to issue policies a dividend can result c) Dividends cannot be paid in cash by an insurer d) Law restricts the use of dividends to pay down premium payments

This scenario describes how dividends can work. (B)

Joe receives a large bonus at work and decides to purchase an annuity with it. His monthly income payments from the annuity will begin the following month. Which of the following has Joe purchased? a) A single premium deferred annuity b) An individual retirement annuity c) A tax sheltered annuity d) A single premium immediate annuity

This type of annuity begins payments after a single premium is paid. Payments begin the month after purchase. (D)

Regarding life insurance coverage for a company, the one responsible for obtaining the coverage, maintaining the policy, and paying the premium is: a) The master policy holder b) The individuals who make up the group c) The insurer that provided the group coverage d) The agent who obtained the group coverage

This what the master policyholder (employer) does. (A)

The Payor Rider on a juvenile life policy provides that if the payor dies or becomes disabled before the insured juvenile reaches the age specified on the policy: a) The insurer will make the payments until the insured juvenile reaches the specified age b) The insurer will lend money to keep the policy in force c) The insured's estate will make the premium payments d) The insurer will make all of the policy payments

Typically, the insurer pays until the juvenile reaches age 21 or 25. (A)