LIFE INSURANCE PRAC EXAM PT2

Which of the following is authorized to transact insurance on human lives?

Life agent

Which of the following explains the policyowner's right to change beneficiaries, choose options, and receive proceeds ofna policy?

Owner's Rights

What form of the annuity settlement options provides payments to an annuitant for the rest of the annuitant's life and ceases at the annuitant's death?

Pure Life

The risk of loss may be classified as

Pure risk and speculative risk

A situation in which a person can only lose or have no change represents

Pure risk.

Which nonforfeiture option provides coverage for the longest period of time?

Reduced paid-up

If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer may

Require evidence of insurability

The sole beneficiary of a life insurance policy dies before the insured. If the policyowner fails to change the beneficiary before the insured's death, the proceeds of the policy will go to

The insured's estate.

Not all losses are insurable, and there are certain requirements that must be met before a risk is a proper subject for insurance. These requirements include all of the following EXCEPT

The loss may be intentional.

Which of the following is NOT a characteristic of pure risk?

The loss must be catastrophic.

Which of the following best describes a non-medical application?

The medical portion of an application that asks for medical information but does not require a medical exam

Which of the following is NOT required on an illustration used in the sale of a life insurance policy?

The name of the primary and secondary beneficiaries

How must a replacing producer respond to an applicant wishing to replace existing life insurance?

The producer must provide the applicant with a Notice Regarding Replacement.

Which of the following is TRUE about nonforfeiture values?

They are required by state law to be included in the policy.

Which of the following is NOT true regarding Equity Indexed Annuities?

They earn lower interest rates than fixed annuities.

Which of the following is the best reason to purchase life insurance rather than an annuity?

To create an estate

Which type of misrepresentation persuades an insured, to their detriment, to cancel, lapse, or switch policies from one to another?

Twisting

In a survivorship life policy, when does the insurer pay the death benefit?

Upon the last death

During the free-look period, the premium for a variable annuity may be invested in all of the following EXCEPT

Value funds.

An insured receives a monthly summary for his life insurance policy. He notices that the cash value of the policy is significantly lower this month than it was last month. What type of policy does the insured have?

Variable

What is the name of a clause that is included in a policy that limits or eliminates the death benefit if the insured dies as a result of war or while serving in the military?

War or military service

Which of the following types of policies will provide permanent protection?

Whole life

Which of the following terms is defined by the California Insurance Code as unassigned funds that must be reported on a stock insurer's annual statement?

Earned surplus

An insured purchased a 15-year level term life insurance policy with a face amount of $100,000. The policy contained an accidental death rider, offering a double indemnity benefit. The insured was severely injured in an auto accident, and after 10 weeks of hospitalization, died from the injuries. How much will the beneficiary receive from the policy?

$200,000

Within how many days are insurers required to respond to written requests for documents or information from the CDI Fraud Division for all lines except for workers compensation?

30 days

What is the penalty for excessive contributions to an IRA?

6%

A tornado that destroys property would be an example of which of the following?

A peril

Which of the following best describes a misrepresentation?

A statement intended to distract, mislead, or deceive a party to a contract.

Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. What contract characteristic does this describe?

Adhesion

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 of the following products provides income for a specified period of years or for life, and protects a person against outliving their money?

An annuity

Records required to be maintained or to be made available by an insurer include all of the following EXCEPT

Any printed materials generally used by the insurer, either directly or indirectly by its agents.

Representations are written or oral statements made by the applicant which

Are considered true to the best of the applicant's knowledge.

Any 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 $1,000.

Which of the following is NOT a type of Temporary Insuring Agreement?

Bridge Coverage Receipt

A small hardware store owner is involved in a car accident that renders him totally disabled for half a year. Which type of insurance would help him pay for expenses of the company during the time of his disability?

Business overhead expense policy

How is the premium in an insurance policy determined?

By multiplying the rate by the number of units of insurance purchased

In this state, what is the primary body of laws established by the state legislature to regulate the business of insurance?

California Insurance Code

Which of the following features of the Indexed Whole Life policy is NOT fixed?

Cash value growth

What does "liquidity" refer to in a life insurance policy?

Cash values can be borrowed at any time.

A business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of additional assets to secure the loan. The business owner then decided to use her $250,000 life insurance policy to secure the loan. Which provision makes this possible?

Collateral assignment

A long stretch of national economic hardship causes a 7% rate of inflation. A policyowner notices that the face value of her life insurance policy has been raised 7% as a result. Which policy rider caused this change?

Cost of Living Rider

Which of the following is NOT a required element of an insurance contract?

Counteroffer

Which of the following is TRUE about credit life insurance?

Creditor is the policyowner.

Which of the following terms is used to name the nontaxed return of unused premiums?

Dividend

Which of the following is true regarding taxation of dividends in participating policies?

Dividends are not taxable.

Which of the following is NOT an example of a valid insurable interest?

Debtor in the life of the creditor

Which of the following terms best describe the coverage provided by term policies, as compared to any other form of protection?

Greatest

At the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability. This rider is called

Guaranteed insurability.

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

Has at least 50 members.

The Commissioner MAY deny an application for license for any applicant who

Has been convicted of a felony, Does not have a good business reputation & Is not qualified to accomplish the duties to be performed

Fixed annuities provide all of the following EXCEPT

Hedge against inflation.

Which insurance principle states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost?Indemnity

Indemnity

If an insurer's legal reserve funds are found to be less than the minimum required by law, the insurer is

Insolvent.

An underwriter may obtain information on an applicant's hobbies, financial status, and habits by ordering a(n)

Inspection report.

The mode of premium payment

Is defined as the frequency and the amount of the premium payment.

Which of the following is TRUE regarding the accumulation period of an annuity?

It is a period during which the payments into the annuity grow tax deferred.

When a reduced paid-up nonforfeiture option is chosen, what happens to the face amount of the policy?

It is reduced to the amount of what the cash value would buy as a single premium.

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.

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

Joint and survivor.

In a single employer group plan, what is the name of the policy issued to the employer?

Master contract

Any person who transacts insurance without a license

May be guilty of a misdemeanor

Which part of an insurance application would contain information regarding the cause of death of the applicant's deceased relatives?Medical Information

Medical Information

Which of the following is NOT true regarding policy loans?

Money borrowed from the cash value is taxable

Insurance is the transfer of

Risk

An insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured, and matures at the insured's age 100 is called

Single premium whole life.

Which of the following types of insurance policies would provide the greatest amount of protection for a temporary period during which an insured will have limited financial resources?

Term

Who is protected by a Temporary Insuring Agreement?

The applicant and the insurer

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

The application given to a prospective insured

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

The beneficiary

The primary beneficiary of her husband's life policy found that no settlement option was stated in the policy on the date of her husband's death. Who will select the settlement option in this case?

The beneficiary

An employer offers group life insurance to its employees for the amount of $10,000. Which of the following is true?

The cost of coverage is a deductible expense by the employer.

The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change?

The death benefit can be increased by providing evidence of insurability