XCEL FINAL EXAM

a condition that may increase the likelihood of a loss occurring

A hazard can be best described as

the face amount of the policy is the limit of liability in a life insurance policy

A life insurance policy's limit of liability would be

Pure risk

A situation in which there is ONLY a chance of loss or no loss is a

An insured suffers a financial loss in the state lottery

According to the California Insurance Code, which of the following is NOT an example of insurable event

Denial of a claim based on reckless behavior

According to the California code governing claim settlement practices, which of the following is NOT considered to be an act of unfair discrimination

Reinstatement provision

After a policy has lapsed, which provision allows the insured to continue coverage

Attending Physcian Statement

An applicant has revealed conditions that require more information Which of the following is needed next

Reinsurance

An insurer enters into a contract with a third party to insure itself agisnt losses from insurance policies it issues. what is theis agreement called

solicitor

Anyone employed in California to assist an insurance agent in transacting insurance is called an insurance

60

Cindy buys a 10-year certain annuity with an installment refund. After receiving monthly payments for 5 years. Cindy dies. How many remaining payments will the insurer make to her beneficiary.

100%

Employee participating in a noncontributory group life must be

Tax-deductible by the employer

Employer contribution to qualified plans

50,000

Employer-Provided Group term life insurance is exempt form income taxation up to

Policy Exclusions

How are acts of war and aviation treated under a group life insurance policy

Medical questions must be answered on individual life insurance

How does underwriting differ between group life and individual insurance

5 years

How long must life agents keep their transaction records

Foreign Insurer

In California, an insurer organized under the state laws of Oregon is called an

Policy and attached application

In a Life Insurance policy, the entire contract consits of

10%

In a modified endowment contract, the penalty tax imposed on premature withdrawal is

at all times

Insurance agents and brokers must make their insurance records available to the commissioner

Jim must still disclose the conviction on his insurance license application pursuant to California penal code you are required to report a conviction that was later expunged

Jim is applying to become an insurance agent and has past misdemeanor conviction that was later expunged due to California penal code 1203.4 which of the following statement is correct

Second to die policy cover two lives, but the benefit is paid upon the death of the las surviving insured.

John and Mary have a handicapped child that is dependent upon them. The death of one of the parents would not be financially disastrous, however the death of both likely would be, Which policy would be best suited for them

annually

Life insurance surplus must be distributed to policyowners at what frequency

Renewable term

Lynn owns a life policy that guarntees the right to renew the policy each year, regardless of health but at an increased premium, What kind of policy is this.

Increased chance of a loss because of an insured dishonest tendencies

Moral Hazard is described as the

Marketing

One important function of an insurance company is to identify and sell to potential customors, Which of these BEST describes this function

unnecessary replacement

Pual has an existing annuity and is sold a new one, in which teh new policy holds no greater financial benefit to him than the existing contract

10-30

The California Insurance Code allows an individual how many days to cancel a life policy for a full refund

Life and Health insurance providers

The Medical Information Bureau consists of

30 days

The free-look period for life insurance policyowners age 60 0r older is

Materiality of concealment

The importance of a representation is demonstrated inw hat rule

annuity

The systematic Liquidation of a sum of money is provided by

Medical ailments discovered during the underwriting process

What are members of the medical Information bureau MIB required to report

employer stock ownership plan (ESOP)

What does ESOP stand for

make a premium payment after the due date without any loss of coverage

What does the grace period allow a life insurance policy owner to do

Purchase additional coverage with no evidence of insurability required

What does the guaranteed insurability option allow an insured to do

Presentation of policy feature that includes non guaranteed elements

What does the term Illustration mean when used in the phrase life insurance policy illustration according to the California insurance code

Help an agent or broker sell insurance

What is an insurance solicitor authorized to do

to protect the risk of outliving their financial resources

What is common reason people purchase an annuity

sign a consent form

What must an applicant do in order to authorize the release of an attending physician report

Incontestability Clause insueres are prohibited from denying claims or rescinding a policy based on misstatements in a life, accident or disability policy application after the policy has been in force for two years

What prevents a life insurance policy from being rescinded by the insurer after being in force for two years

Grace period

What time period allows an insured's life insurance policy to remain in force even if the premium was not paid on the due date

mortality

When Calculating life insurance premium rates, which component is affected by an insured's age and gender

Underwriting

When an applicant applies for insurance, the process by which the insurer determines whether to issue a policy is called

Insurer's expenses agents comission is condered part of the insueres expense and is a component of the premium

When calculating life insurance premium rates, which component would an agent comission fall under

Insured becomes totally disabled

When does a life insurance policy waiver of premium take effect

Grace Period

Which Policy Provision protect the policy owner from unintentional lapse of the contract

Dividends

Which of teh following is Not a component of determining policy premiums

Medicare

Which of the followind does the California Department of Insurance CDI have no juridiction over

Part of the premium is paid by the employee

Which of the following describes a contributory insurance plan

Statements that all values and benefits are guaranteed

Which of the following does NOT have to be included on life insurance policy illustrations

Dividend schedule

Which of the following does a policy owner NOT have a right to change

Insurer's financial rating

Which of the following does the California Insurance Code NOT require an insurance policy to specify

Increases the unearened premiums reserve

Which of the following is NOT a characteristic of reinsurance

Offers a maximum interest rate that increases annually

Which of the following is NOT a feature of equity-index annuities

Premiums

Which of the following is NOT an insurer policy expense

Advising a claimant to hire an attorney

Which of the following is NOT considered to be an unfair claims settlement practice.

Reinsurance

Which of the following is a type of insurance where an insurer transfers loss exposure from policies written for its insureds

captive insurer

Which of the following is an insurer established by a parent company for the purpose of the insuring the parent company's loss exposure

Loss Exposure are situations which have the potential for loss

Which of the following is considered to be any situation that has the potential for loss

an individuals civic organization memeberships

Which of the following pieces of information is NOT gathered during personal financial planing process

Speculative Risk

Which type of risk is gambling

May

Which word implies permissiveness according to the California insurance code

Insurer and employer

Who are the parties to the master contract in a group life insurance policy

Individual wanting to sell their life policy to a third party

Who does a life settlement broker represent

Participant

Who is issued a certificate of insurance with a group insurance policy

the Free look period begins on the policy delivery date

Why is a life insurance policy's delivery date important

Intrest Option

a Beneficiary receives only the death benefit earning in which settlement option

only one party (the insurers) makes any kind of legally enforceable promise

a Unilateral contract is one in which

an offer, acceptance of the contract terms

a contract require

Non Forfeiture Options

a life insurance policy can be surrendered for its cash value under which policy provison

Endowment policy

a life insurance policy that pays the face amount if the insured survives to a specified period of time is called

Mutual Insurer

a participating company is also referred to as which type of insurer

Consumer's Report

a report which is based on creditworthiness and personal characteristics that influences an insurance applicant's eligibility for life and health insurance is called

Only before the insurance is in effect

a represention may be altered or withdrawn

Materiality is relevant inoramtion that would probably influence an insurer's assessment of a proposed contract

according to the califronia insuarnce Code what term is used to describe a fact so important it could affect the policy premium

Individual policies

all of the following are considered characteristic of group life insurance EXCEPT

unfair method of competition

an agent has advertised that the insurer to which the agent is appointed with is a member of the insurance Guarantee Association, This agent has committed an

conservation

an agent's attempt to stop the replacement of an existing life insurance policy is known as

Exclusion ration

an annuitant would like to determine the amount of an anuity distribution that is exempt from taxation. What is used to calculate this?

an annuity which is backed by a life insurer's seperate account is called a variable annuity

an annuity which is backed by a life insurer's separate account is called

Unfair Discrimination

an insurer that has been found using higher rates based on race, religion or ethnicity is said to be engaging in

Non-deductible contributions and tax free distributions

how are Roth IRA's treated for Tax Purposes

Exempt from federal income taxes

how are death benefits that are recieved by a beneficiary normally treated for tax purposes

Interest option

pam is the primary beneficiary of a life insurance policy and wants to let the death benefit accumulate and receive only the monthly investment proceeds. Which settlement option should she choose.

self funded

the California Life and Health insurance Guarntee Association cover all of these types of Policies, EXCEPT

Modified premiums, ordinary life, single premiums

what is the proper order of initial life insurance premiums from lowest to highest

Fudiciary

when handling premiums for an insured, an agent is actin gin which capacity

Fudiciary

when handling premiums for an insured, an agent is acting in which capacity

Rescission of contract , whether intentional or unintentional entitles the injured party to rescind insurance

when intentional concealment is involved what course of action is the injured party entitled to

Rescinding a contract

which course of action is the insurer entitled to when deliberate concealment is committed by the insured

Extended Term

which of the following is NOT a life insurance settlement option

The loss must be catastrophic.

which of the following is NOT an element of insurable risk

Insurers

which of the following is NOT protected under the California Life and Health Guarantee Association

extended term

which of the following is not a common life insurance policy rider

Only children born prior to policy's issue date may be included

which of the following statements do NOT apply to child coverage in family policy

a dividend option is selected by the insured at the time of policy purchase

which statement is true regarding policy dividends