Practice exam C
an applicant with above average exposures to loss is usually issued a a. preferred policy b. rated policy c. standard policy d. term policy
standard policy
Which type of policy pays the death benefit when the second insured dies? equity index life joint life life paid-up at age 65 survivorship life
survivorship life
the growth of cash values within an annuity are a. tax deferred b. tax free c. taxed each year as ordinary income d. only taxed during the accumulation period
tax deferred
If the Department of Insurance requests information from an agent regarding a claim, the information must be provided within how many days? A. 15 B. 21 C. 31 D. 90
21
Once a life settlement has been executed and by all parties and the owner has received all disclosures, how long does the owner have to rescind the contract a. 15 days b. 30 days c. 60 days d. it cannot be rescinded
30 days
when does the right rescission for a life insurance policy begin? date of application policy issue date date of medical exam date of policy delivery
Date of policy delivery
An applicant who is visually impaired has what type of hazard? A. Physical B. Moral C. Morale D. Legal
Physical
who is the first in line to receive the death benefit from a life insurance policy tertiary beneficiary revocable beneficiary contingent beneficiary primary beneficiary
Primary beneficiary
adverse selection is potential for an insurer to experience a. underwriting profits b. underwriting laws c. investment gain d. a disproportionate losses
a disproportionate losses
the main purpose of underwriting is to protect the insurer against fraud adverse selection temporary insurance exposure
adverse selection
what type of policy renews each year but the premium increased according to the insureds attained age? a. limited-pay b. increasing term c. level term d. annual renewable term
annual renewable term
which life annuity benefit option is often used for short term needs? a. life with 10 year certain b. annuity certain c. cash refund life d. pure life
annuity certain
all of the following are considered to be business uses of life insurance EXCEPT a. accumulation units b. stock shares c. mutual fund shares d. annuity units
annuity units
the provisions that allow an insurer to deduct premiums from the policy's cash value to prevent the policy from lapsing is a(n) A. incontestability clause B. automatic premium loans C. reinstatement provision D. return of premium payments
automatic premium loans
a return of premium insurance policy consists of a. level premium b. increasing term c. decreasing term d. cash value
cash value
what is NOT guaranteed with a variable whole life policy death benefit premium cash value period of protection
cash value
to prevent people from taking advantage of minors or the insane a contract must have which element? A. offer and acceptance B. competent parties C. advice and consent D. legal purpose
competent parties
the term that refers to unequal values given between two parties in a contract is a. aleatory b. conditional c. adhesion d. unilateral
conditional
which of the following is true regarding the blackout period? A. it begins when the youngest child reaches 16 years of age B. it starts when a disability begins C. It is a social security benefit administrated by insurance companies
it begins when the youngest child reaches 16 years of age
When an agent does not hold any active appointments with an insurer, what happens to the agent's license? a. it expires b. it becomes inactive c. it must be returned to the department of insurance d. it must be renewed upon a new appointment
it expires
buy - sell agreements are usually funded by a. joint life insurance b. joint and survivor life annuity c. survivorship life insurance d. decreasing term insurance
joint life insurance
a reduction in the value of an asset is called a(n) A. exposure B. loss C. hazard D. peril
loss
the specific event that causes a loss is a/an a. peril b. hazard c. indemnity d. exposure
peril
the primary purpose of an inspection report is to assess an applicants A. family history B. personal characteristics C. education level D. health profile
personal characteristics
what type of risk allows both gains and losses? pure exposure speculative hazards
speculative
a beneficiary receives monthly payments from the fixed amount installment option, how is the income taxed the interest portion of the payment is taxed, the principle is not the entire payment is received taxed free the principe portion of the payment is taxed, the interest is not
the interest portion of the payment is taxed, the principal is not
An agent is a legal Entity who acts on behalf of himself/herself the policyowner the principle the applicant
the principal
Insurance is the most common and effective method of handling risk by using which type of risk management? a. reduction b. sharing c. retention d. transfer
transfer
the administration penalty for an insurers first violation of the replacement provisions of the california code is A. $2,500 B. $5,000 C. $10,000 D. $30,000
10,000
individual annuities issued to seniors 65 and older must be given how many days to return the contract for a full refund? 10 20 30 45
30 days
an employee usually has how long after termination from a group plan to exercise the conversion option? a. 10 days b. 31 days c. 60 days d. 90 days
31
If changes need to be made to an application, the producer should make the change and submit it to the insurer initial the change and send it to the insurer have the applicant initial the change and send to the insurer erase the incorrect information and make the change
Have the applicant initial the change and send to the insurer
What information is NOT required prior to making a recommendation for the purchase of an annuity? A. Sources of income B. Age C. Health status D. Liquid net worth
Health status
Which annuity settlement option would result in the highest monthly income payment straight life refund life life with 10 year certain life with 20 year certain
Straight life
a condition or situation that increases the chance of an insured loss occurring is called hazard risk loss speculation
hazard
Pure death protection is provided by which type of life insurance policy a. term life b. whole life c. variable life d. universal life
universal life
Which policy offers a level death benefit or an increasing death benefit option? a. adjustable life b. universal life c. graded premium life d. survivorship life
universal life
the waiver of cost of insurance rider is found on which of the following policies? A. whole life B. term life C. variable life D. universal life
universal life
which life insurance policy is characterized by flexible premiums? A. variable life B. equity indexes life C. universal life D. limited pay life
universal life
the policy and copy of the application, along with any riders and amendments are called the a. whole contract b. complete contract c. entire contract d. primary contract
entire contract
which of the following would NOT constitute replacement when new life insurance is purchased a. causing a lapse of an existing policy b. changing a policy to a reduced paid-up insurance c. changing a policy to extended term insurance d. converting term insurance within the same company
converting term insurance within the same company
which is NOT a required element of a contract agreement legal purpose consideration counter offer
counter offer
a deferred annuity can be purchased with all of the following premium payment options EXCEPT a. single b. level c. flexible d. deferred
deferred
all of the following are methods of managing risk exposure EXCEPT a. avoidance b. retention c. reduction d. elimination
elimination
the beneficiary of a key person policy is the key person employer key persons spouse employee
employer
which transaction would NOT be appropriate for a 1035 exchange? whole life policy to a fixed annuity whole life policy to a universal life policy variable annuity to a whole life policy fixed annuity to a variable annuity
Variable annuity to a whole life policy
a life insurance policy with premiums that gradually increase for a specific period of years then remain level is a. ordinary life b. limited-pay life c. modified whole life d. graded premium whole life
graded premium whole life
which characteristics below would NOT prevent an insurer from accepting an insurance risk? a. catastrophic loss exposure b. group of homogeneous exposure units c. the market value is difficult to determine d. predictable loss
group of homogeneous exposure units
when assessing a consumers need for life insurance by focusing on an individual's future stream of income, the producer is using the A. needs approach B. estate creation C. lump-sum needs D. human life value approach
human life value approach
The clause that protects the proceeds of a life insurance policy from creditors after the death of the insured is known as the a. spendthrift clause b. common disaster clause c. incontestability clause d. beneficiary clause
spendthrift clause
each of the following is a typical characteristic of group life insurance EXCEPT a. evidence of insurability is usually required b. the master policy is issued to the sponsor of the group c. the plan has a grace period d. there is a conversion privilege for terminated employees
evidence of insurability is usually required
which type of agent authority is stated in the agents contract? a. implied b. assumed c. express d. apparent
express
which settlement option offers a level benefit until all proceeds are paid? a. fixed amount b. fixed period c. life income d. interest only
fixed amount
which provision keeps the policy enforce when premiums are less than 30 days past due? grace period free look period reinstatement insurability clause
grace period
according to the california insurance code, every applicant must notify the commissioner of any change in email or mailing address A. immediately B. within 10 days c. within 30 days d. within 90 days
immediately
representations in insurance contracts qualify for a. expressed warranties b. implied warranties c. agreements d. guarantees
implied warranties
a payer benefit rider is used to keep what type of policy in force? a. juvenile insurance policy b. term life policy c. whole life policy d. permanent policy
juvenile insurance policy
insurance that pays a death benefit to a corporation due to a financial loss because of the death of an employee who has specialized knowledge is called A. key person insurance B. buy-sell agreement C. split dollar plan D. deferred compensation plan
key person insurance
When money is withdrawn from an annuity during the accumulation phase the amounts are taxed on what basis? a. first in, last out b. last in, first out c. capital gains d. exclusion ratio calculations
last in, first out
the principal that states that larger the number of exposure units, the more predictable the number of future losses will be is known as law of large numbers adverse selection predicable loss factor future loss equation
law of large numbers
which element of contract law requires that contracts must be enforceable in court and show insurable interest? a. acceptance b. consideration c. legal purpose d. indemnity
legal purpose
the settlement option that may provide payments that exceed the proceeds of the policy and the interest earned is a. life income b. fixed period c. fixed amount d. interest only
life income
which life insurance rider will reduce the death benefit payable to the beneficiary? a. accidental death b. long-term care c. disability income d. waiver of premium
long-term care
all of the following are characteristics of whole life EXCEPT a. builds cash value b. premiums are level c. endows at age 100 d. lower premiums than term
lower premiums than term
the concept that states that all parties to a contract are entitled to all information needed to make an informed decision a. legal purpose b. materiality c. indemnity
materiality
What enables insurers to estimate the average frequency of future losses and set rates for life insurance? a. medical information bureau reporting b. morbidity tables c. mortality tables d. risk classifications
medical information bureau reporting
transaction insurance without a license is considered a(n) a. felony b. misdemeanor c. class A violation d. act of negligence
misdemeanor
a life settlement broker a. places property & casualty insurance with non-admitted carriers b. negotiates life settlement contracts between an owner and provider c. sells single premium immediate annuities to seniors d. assists beneficiaries in filing a claim on a life insurance policy
negotiates life settlement contracts between an owner and provider
when there is insufficient cash surrender value in the policy, this rider prevents the policy from terminating a. waiver of cost insurance b. guaranteed insurability c. cost of living d. no-lapse guarantee
no-lapse guarantee
an accelerated (living) benefit provision allows a terminally ill insured to a. pay extra premiums b. receive the face amount of the policy c. receive a portion of the death prior to death d. reduce the policy premiums
receive a portion of the death prior to death
an example of a former risk-sharing arrangement would be a reciprocal insurance exchange mutual insurer stock exchange plan split dollar plans
reciprocal insurance exchange
when an insurance contract is cancelled in favor of another insurer it is called a. solicitation b. twisting c. controlled business d. replacement
replacement
if an individual commits suicide within 6 months after purchasing an insurance policy, the insurer will a. pay nothing b. return the premiums paid c. pay the face value less the suicides deduction d. pay the face value
return the premiums paid
The premiums for a variable annuity are invested in the general account separate account investment account qualified account
separate account