CA Insurance Term

If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a

Guaranteed insurability rider

Your clients wants both protection and saving from the insurance, and is willing to pay premiums until retirement at age 66. What would be right policy?

Limited pay whole life

Fixed annuity - account premium to go

insurance company's general account

if the policy owner exercises his/her right to surrender his/her life insurance policy for its current cash value?

insured is no longer covered under the surrendered policy

If an insured surrenders his life insurance policy, regarding the cash value of the policy?

it is only taxable if the cash value exceeds the amount paid for premiums

Medicare insured uses a participating provider, pays the required deductible and receives the necessary treatment. Who is responsible for filing the claim for the rest of the bill?

the health care provider

A permanent life insurance that offers cash value at the lowest premium is?

A Whole Life policy.

Fixed-period settlement option?

Both the principal and interest will be liquidated over a selected period of time

Universal life option, gradually increasing cash value and a level death benefit

Option A

component increases in the increasing term insurance

death benefit

Variable whole life insurance is based on what type of premium?

level fixed

Which of the following settlement options in life insurance is known as straight life? a. life with period certain b. fixed amount c. life income d. single life

life income

When an insured receives a written binder?

the insured's coverage will be effective immediately binders are rarely used

Elimination period for Social Security benefits?

5 months

Method used to determine taxable portion of each annuity payment

Exclusion ratio

An insured pays $1,200 annually for her life insurance premium. The insured applies this year's $300 worth of accumulated dividends to the next year's premium, this reducing it to $900. What option does this describe?

Reduction of premium

True, inpatient hospital care for HMO member? a. care can be provided outside of the service area b. care can only be provided in the service area c. services for treatment of mental disorder is unlimited d. inpatient hospital care is not part of HMO service

a. care can be provided outside of the service area

First Dollar coverage refers to a type of insurance

has no deductible

type of insurance uses Return of premium rider

Increasing Term pay prior to a given age, face amount, paid premiums to beneficiary

If a life insurance policy has an irrevocable beneficiary designation,

The beneficiary can only be changed with written permission of the beneficiary

What are Stock Insurers?

The individual stockholder provides capital for the insurer. In return, they share in any profits and any losses.

During the free-look period, the premium for a variable annuity may be invested in all of the following except, a. value funds b. fixed-income investment c. money-market funds d. mutual funds

c. money-market funds

The policyowner wants to make sure upon this death, the life policy will pay a portion of the proceeds annually to his spouse, but the principal will be paid to their children when they reach a certain age. Which settlement?

interest only option

In common, Modified life and Straight life?

Accumulation of cash value

What is the Eligibility of a Qualified Plan?

ERISA prescribes that all full time employees who have worked for at least 1 year and are age 21 or more must be covered in a Qualified Plan, if offered.

An agent selling variable annuities must be registered with

FINRA

An insured will be allowed to reactivate her lapsed life insurance policy if action is taken within a certain period of time, and proof of insurability is provided. Which policy provision allows this?

Reinstatement provision a lapse policy may be reinstated within 3 years by paying back premiums, with interest, and providing insurability

Equity indexed annuites

Seek high returns

Appropriate for a parent buying a life insurance policy on a child with parent is policy owner

Third-party ownership

What is dividend policy?

distribution of excess funds company's expenses vary, impossible to guarantee dividends

Fixed period settlement option?

Both principal and interest will be liquidated over a selected period of time. period certain. both time & installment

probation period in group health

Join the group after the effective date is waiting period new employees must satisfy

golden years couple, monthly benefit rest of lives. One die, still other receive it

Joint & Survivor may reduced payments

Variable Whole Life insurance is based on what type of premium?

Level fixed Variable Whole life insurance is a level fixed premium investment-base product

Settlement option, guarantees payments for the lifetime of the recipient, but also specifies a period, during which, if the original recipient dies, the payments will continue to a designated beneficiary?

Life income with period certain

Your client is planning to retire. She has accumulated $100,000 in a retirement annuity, and now wants to select the benefit option that will pay the largest monthly amount for as long as she lives.

Straight Life

Type of annuity causes immediate taxation of the interest earned

Surrendering the annuity for cash

Called "second-to-die" policy insurance?

Survivership life

When the breadwinner is insured by a Family Policy dies, what rights are provided to other family members that are covered under the policy?

They can convert their coverage to permanent life insurance without evidence of insurability

examples of third party ownership of a life insurance policy, except a. when an insured purchased a new home, the insured made an absolute assignment of a life insurance policy to the mortgage company b. an insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan c. an insured couple purchases a life insurance policy insuring the life of their grandson d. a company purchases a life insurance policy on their manager, who is an important part of the operation

b. an insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan

Regarding health insurance premiums, all of the following statements are true, except a. standard risks pay the regular premium for their classification b. substandard risks are not insurable and are always rejected c. rated policies can be issued by standard insurers d. preferred risks may be given a discounted rate for being a non-smoker or non-drinker

b. substandard risks are not insurable and are always rejected

In terms of social security, spanning between when the youngest child of family turns and before surviving spouse turns age 60 called?

blackout period

Incorrect, Medicare Part B coverage? a Part B will pay 80% of covered expenses, subjected to Medicare's standards for reasonable charge b. It is a voluntary program designed to provide supplementary medical insurance to cover physician services, medical services and supplies not covered under Part A c. Part B coverage is provided free of charge when an individual turns age 65 d. participants under B are responsible for an annual deductible

c. Part B coverage is provided free of charge when an individual turns age 65

All of the following are personal use of life insurance EXCEPT a. estate creation b. cash accumulation c. buy-sell agreement d. survivor protection

c. buy-sell agreement

Which of the following life insurance policies does not build cash value? a. variable life b. whole life c. guaranteed universal life d. universal life

c. guaranteed universal life As long as the policyowner pays the premiums, the policy

Which of the following is true regarding an application for a large amount of insurance? a. the applicant must submit a statement of good health b. the agent, and not the applicant, will complete all of the medical information c. the insurer might require a medical examination by a professional d. the insurer will accept a non-medical application

c. the insurer might require a medical examination by a professional

Deferred annuity surrender charge, prematurely, percentage of _______

cash value and decrease over time

the life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the

incontestability clause

Why is an equity indexed annuity considered to be a fixed annuity?

it has a guaranteed minimum interest rate seek higher return not securities invest on a relatively aggressive basis tied Standard & Poor's 500

single life settlement option

it provides income the beneficiary cannot outlive

What is "Whole Life" insurance?

sometimes called "Cash Value" life insurance, permanent, covers until you die or the policy reaches maturity (normally age 100) cannot be changed without consent, never renewed, premium be paid annually or frequently. a relatively low net cost develop a cash value after the third year that belongs to the policyholder while living. However, upon death of the insured, the policy will pay the "face amount" (policy limit), but the company will keep the accumulated cash value.

Penalty of surrendering a market value adjusted annuity prematurely

the current interest rate at the time of surrender

In life insurance, the temporary term is

the period of time during which a binding receipt covers a poliyholder

Under an extended term nonforfeiture option, the policy cash value is converted to

the same face amount as in the whole life policy

Purpose of annuity riders

to allow investors to obtain additional benefit not offered with the original annuity product

California law requires an insurance company's dividends be credited

to participating policies on the anniversary date of the policy provided all premiums are current except; extended term, paid-up

An insured pays a $100 premium every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered loss. What characteristic of an insurance contract does this describe?

Aleatory

What is credit coverage?

Former Health coverage that gives an individual rights when applying for new coverage

Which of the following annuity riders ensures investors will receive a set amount of income annually?

Guaranteed minimum income benefit

Life insurance policy develop cash value faster than a seven-pay whole life contract, it become

Modified endowment contract it loses the benefit of standard life contract

Using a class designation for beneficiaries means

Naming beneficiaries as a group like all my children

"Any occupation" disability income policy pays when the insured is unable to perform _____

any job in the field related to the insured's education and experience

All of the following long-term care coverage would allow an insured to receive care at home EXCEPT a. home health care b. skilled care c. custodial care in an insured's home d. respite care

b. skilled care

If a life insurance policy develops cash value faster than a seven-pay whole life contract, it become a

modified endowment contract it loses the benefits of a standard life contract

A married couples retirement annuity pays them $250 per month. The husband dies and his wife continues to receive $2125.50 per month for as long as she lives. When the wife dies, payments stop. What settlement option?

Joint and survivor joint settlement - stops first dies

The form of life annuity pays benefit throughout the lifetime of the annuitant and also guarantees payment for a minimum number of year is called

Life income with period certain

All of the following qualify for Medicare Part A, except a. anyone who is over 65, not covered by social security, and is willing to pay premium b. anyone who is willing to pay a premium c. anyone that qualified through social security d. anyone who is at the end stage of renal disease

b. anyone who is willing to pay a premium

All of the following are true regarding representation, except a. they may be made before or at the time of policy issue b. they may be oral or written c. they may be altered or withdrawn after the issuance of the policy d. they are statements believed to be true

c. they may be altered or withdrawn after the issuance of the policy

An individual has been making periodic premium payments on an annuity. The annuity income payments are scheduled to begin after 1 year since the annuity was purchase. What type of annuity is it? a. fixed b. flexible premium c. immediate d. deferred

d. deferred Deferred annuities may be purchased with either a single lump sum or periodic payment, but they do not begin the income payment until sometime after 1 year form the date of purchase

probationary period in disability policy

during which illness-related disabilities are excluded from coverage it limits coverage on new policies for certain ill-related condition

What does Basic Medical Expense insurance cover?

first dollar coverage for scheduled benefits. no deductible, pays up to the limit . "Major Medical" that covers high limits, deductible and co-insurance.

All of the following would fall under the definitions of durable medical equipment EXCEPT A) oxygen equipment B) wheel chairs C) hospital bed D) hospital blankets

hospital blankets

an individual purchased a $100,000 joint life policy on himself and his wife. Eight years later, he died in an automobile accident. How much will his wife receive from the policy?

$100,000

Policyowner specified the installment amount to be paid, until the principle and interest are exhausted, settlement option of beneficiary of a life policy wants the proceeds to be paid out in equal monthly payments, settlement option?

Fixed amount

According to the nonforfeiture law. if the owner decides to surrender a deferred annuity prior to annuitization, the owner is entitled to

Guaranteed surrender value The nonforfeiture law stipulates that a deferred annuity must have a guaranteed surrender value that is available if the owner decides to surrender the annuity prior to annuitization

An insured has Modified endowment Contract.. He wants to withdraw some money in order to pay medical bills.

H will have to pay a penalty if he is younger than 59 1/2 Any cash value life insurance policy that develops cash value faster than a seven-day whole life contract is called MEC. It loses the benefits of standard life contract. All withdrawals are subject to taxation on a LIFO basis, and if withdrawals are made earlier than the age 59 1/2, a 105 penalty

An insured has a social insurance supplement rider in her disability income plan. Following a disability, she begins receiving benefit payments from the insurer. She then begins receiving social security benefits that are smaller than the SIS benefit payment. At that point, her insurer ends the SIS benefit payments. Situation?

Insured should contact insurer to confirm actual SS benefit amount. SIS rider should pay the difference btwn rider amount and actual benefit SIS pays the amount close to SS pays. SS pays begin, SIS reduces, but not stop.

The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose?

Interest only option insurance company retains policy proceeds and pays interest on the proceeds to beneficiary at regular intervals

Paid-up additions - what option?

It is a dividend option, not an insurance rider. purchase a smaller amount of same type at original policy

If an annuitant selects the straight life annuity settlement option, in order to receive all of the money out of the contract, it would be necessary to

Live at least to his life expectancy it pays as long as the annuitant lives. The amount is based on the annuitant's life expectancy

Under a pure life annuity, an income is payable by the company

Only for the life of the annuitant income payments cease at the annuitant's death and there is no refund or payments to survivors. referred to as Life Only or Straight Life

What do living benefit riders do?

Pay part of the policy death benefit to insureds in order to help fund long-term care or nursing home care

When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy as well as refund of all of the premiums paid. Which rider attached to the policy?

Return of premium

A survivorship life insurance policy will pay benefits when the?

The last party dies.

The Waiver of Cost of Insurance rider is found in what type of insurance?

Universal life

Short term annuity to pay fixed period or amount

annuity certain select amount or period

Not true for Equity Index Annuities a. the insurance company keeps a percentage of the returns b. they have guaranteed minimum interest rates c. they are less risky than variable annuities d. they earn lower interest rates than fixed annuities

d. they earn lower interest rates than fixed annuities

One of the advantages of a family life insurance policy that provides coverage for children is that it

may be converted to permanent insurance for the children without requiring evidence of insurability

10 year level life, guaranteed renewable & convertible. What is the end?

may renew for another 10 years, but at the higher premium

Max pays for an individual occupational disability income policy. If he becomes disabled while on vacation,

must notify the insurer within 20 days onset of the disability

Two terms are associated directly with the way an annuity is funded

single payment or periodic payment

Employer contribution made to a qualified plan are

subject to vesting requirement

What is the advantage of reinstating a policy instead of applying for a new one?

the original age is used for premium determination

Max. period of Additional Monthly Benefit rider for disability

1 year when it ends, Social security will begin to pay

If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select?

Fixed period called period certain, years is selected, equal installments are paid

If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without providing insurability, the policy includes

Guaranteed insurability rider

How does an insured typically decide which settlement option to choose for his/her beneficiary?

He/she typically decades by determining if the beneficiary will need one payment or "steady stream" of income

The premium of a survivorship life policy compared with that of a joint life policy would be

lower survivorship pays on last death joint life expectancy in a sense of extended, resulting in a lower premium

The Entire Contract Provision in a health policy states?

policy and a copy of application, with attached endorsements and other papers, constitutes the Entire Contract between the policyholder and the insurance company.

What type of premium do both universal & variable life policies have?

Flexible

When can earned surplus be returned to the policyholder?

Whenever it exists and is not needed for other expenses

According to the nonforfeiture law, if the owner decides to surrender a deferred annuity prior to annuitization, the owner is entitled to which of the following? a. full premium refund without any charges b. guaranteed surrender value c. no payments d. annuity dividends

b. guaranteed surrender value The noforfeiture law stipulates that a deferred annuity must have a guaranteed surrender value that is available if the owner decides to surrender the annuity prior to annuitization

An insured purchase a life policy in 2010 and died in 2017. The insurance company discovers at the time the insured had misstated information during the application process.. What can they do? a. sue for the right to not pay the benefit b. pay the death benefit c. refuse to pay the death benefit because of the misstatement on the application d. pay a decreased death benefit

b. pay the death benefit

1035 exchange

cash value to annuity non taxable

All of the following would be considered insolvent insurers EXCEPT a. a company that paid out all its liabilities but doesn't have additional assets equal to the aggregate paid-in capital b. a company with insufficient policy reserves to meets its financial obligations c. a company with an impairment of minimum paid-in capital d. a company that reinsurers outstanding risks

d. a company that reinsurers outstanding risks

Creditable coverage includes a. workers compensation b. credit-only insurance c. coverage only for accident or disability income insurance d. coverage under a state health benefit risk pool

d. coverage under a state health benefit risk pool Credit coverage also includes, but is not limited to, coverage provided under any individual or group policy: coverage under Medicare Parts A or B, and Medicaid: or health plans under the Federal Employees Health Benefits Program

The life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is know as

incontestability clause

What is Continuous Premium - Straight Life (Whole Life)?

premium payments are based upon client's (original) age at issue and can never be changed. Whole Life policies must accumulate a cash value after the third year in force. A Whole Life policy can never be canceled or changed by the insurance company. Policies reach maturity at age 100.