CH QUIZS

A and B, a married couple, received monthly benefits from their annuity, and upon A's death, B receives a reduced amount. What annuity payment option did they choose? A Life Income Joint and Survivor B Life with Cash Refund C Life Income D Joint Life

A

All of the following regarding employer group life insurance are true, except: A Employee-paid premiums are tax-deductible to the employee B Employer-paid premiums do not constitute taxable income to the employee unless the death benefit exceeds $50,000 C Death benefit proceeds paid to an employee's named beneficiary are received income tax-free D Premiums paid by an employer are tax-deductible to the business as an ordinary and necessary business expense

A

ERISA sets minimum standards for pension plans primarily in the ______ industry. A Private B Public and Private C Quasi-government D Public

A

Forcing insureds to sue the insurer to collect on a claim by offering substantially less than the amount eventually recovered is a violation of the: A Unfair Claims Settlement Practices Act B Deceptive Trade Practices Act C Insurance Claims Act D PPACA

A

Generally, the ________ is the amount of premiums paid into the policy less any dividends or withdrawals previously taken. A Cost basis B Net premium C Cash value D Loan amount

A

Regarding Social Security survivor benefits, when the youngest child reaches age 16, the widow's/widower's _________ period begins and continues until the surviving (non-remarried) spouse reaches age 60. A Blackout B Elimination C Probationary D Waiting

A

The ________ has all of the contractual rights in an annuity contract. A Owner B Annuitant C Beneficiary D Insurer

A

If money is paid when a change of ownership in a life insurance policy takes place, this is generally known as a ____________. A Transfer for value B 1035 Exchange C Viatical settlement D Life settlement

A A transfer for value takes place when money is paid for a change in ownership.

If an insured uses a life insurance policy's accelerated benefits, what does the beneficiary receive at time of claim? A Face amount less accelerated benefits less insurer's interest charges B Face amount less cash values C Face amount D Face amount less accelerated benefits

A After the accelerated benefits are paid and any lost interest to the insurer is deducted, the insurer must pay the balance of the face amount to the beneficiary.

An agreement by an employer to continue a key employee's salary upon retirement, death or disability as long as the employee continues employment during the term of the agreement is called a: A Salary continuation plan B Key-employee plan C Supplemental executive retirement plan D Split-dollar plan

A An agreement by an employer to continue a key employee's salary upon retirement, death or disability as long as the employee continues employment during the term of the agreement is called a salary continuation plan.

Which of the following statements about policy dividends is true? A There are several dividend options to choose from B Dividends are guaranteed and taxable as income when received C Non-participating policies are eligible for dividends D Dividends can only be withdrawn at certain specified intervals

A Dividends are declared under participating policies. They are not guaranteed, and if received, the dividend itself is generally not taxable. They can be withdrawn any time there is an accumulation.

If dividends are left on deposit with an insurer to earn interest, what happens? A The dividend is tax-free, but the interest is taxable B The dividend is taxable as well as the interest C The interest is tax-free as well as the dividend D The dividend is taxable, but the interest is tax-free

A Interest paid by insurers on dividends left on deposit is taxable as income.

Which of the following best describes field underwriting? A Taking the time to probe beyond the stated questions on the application based upon the applicant's responses B Conducting blood pressure readings, taking the applicant's pulse, and drawing blood C Interviewing the applicant's neighbors about the applicant's morals and character D Obtaining the applicant's medical records, conducting a credit history check, and logging in to the MIB

A Probing beyond the stated questions in the application based upon the applicant's responses is field underwriting. Field underwriting is completed by the producer, not the underwriting department. All other activities are the responsibility of the underwriting department, not the producer.

All of the following are true in general about riders, except: A All riders are provided for as long as the policy is in effect B Riders typically are available for an additional premium C Riders are optional D A rider can modify conditions of the policy by expanding or decreasing its benefits

A Riders are provided for a specified period of time as stated in the policy. It is typical for a rider to end at a specified age (such as the insured's age of 65).

Some Traditional Whole life policies offer a(n) __________ feature to keep the policy in force if there are sufficient cash values to do so. A Automatic premium loan B Cash surrender C Bank loan D Collateral

A Some policies offer an automatic premium loan feature to keep the policy in force if there are sufficient cash values to do so.

During the application process, a mistake is made by the applicant in answering one of the health questions and needs to be corrected. What is the best way to go about this? A Have the applicant initial the change or start over with a completely new application B Submit the application as is and see if the insurance company catches the mistake C The licensed producer has the implied authority to make any necessary changes to the application on the applicant's behalf D The producer should simply make a note in the agent report section of the application describing the error and what the true response was supposed to be

A The easiest and most practical method would be for the applicant to initial any change; however, some insurers might prefer an entirely new application be completed.

N is asking their life insurance producer about any potential taxation issues related to his $100,000 personal Whole life policy. All of the following are true, except: A The interest that he pays on policy loans is tax-deductible B Since N's policy is a personal policy, N cannot deduct the premiums they pay for the policy C Upon surrender of the policy, N will be taxed on any amount by which the cash value exceeds the cost basis (premiums paid) of the contract D Annual increases in the policy's cash value are not taxable at the time they are credited to the policy

A The interest on policy loans is not tax-deductible.

All of the following are situations in which a life insurance company can legally deny paying a death claim after the insured has died, except: A Five years after the policy was issued, the insurer discovered that the insured was actually older than was stated on the application B The insured dies when they crash their plane 2 hours after receiving a pilot's license C The insured died by suicide 9 months after the policy was issued D Within 6 months after the policy issue date, the insurer discovers material misrepresentations made on the application which, had they been known, the policy would not have been issued

A There is no time limit when it comes to misstatement of age or gender. The insurer must pay the claim but can reduce the amount of the payout based on a ratio of what was paid to what should have been paid.

A partnership has 3 partners who each have an equal ownership interest in their $3,000,000 business. How many policies would have to be purchased under a traditional cross purchase buy-sell agreement plan? A 6 B 3 C 1 D 9

A There would need to be 6 policies purchased in a traditional cross purchase buy-sell agreement plan (3x2). Each partner would be acquiring a policy on the other two partners.

Temporary authority can be granted to an unlicensed person to handle the affairs of an agent on active military service, to do all of the following, except: A Transact new business in that agent's name B Mail out any claim payments due to clients C Transmit premiums to the insurer which are sent to the agent's office D Provide administrative assistance to existing clients

A Under the California Insurance Code, temporary authority can be granted to an unlicensed person to handle the affairs of an agent on active military service, but they may not transact new business in that agent's name.

The nonforfeiture option that provides protection equal to the policy's face amount for a specified number of years and days is: A Extended Term B Reduced Paid-Up C Cash Surrender D Paid-up Additions

A With Extended Term, the Present cash value is used to buy a single premium term policy of the same face amount for as long a period as it will buy, expressed a combination of years and days. This option is sometimes referred to as the Automatic (or Default) Option if no other option has been selected. This option and the policy will expire prior to age 100.

Under an annuity with a Joint Life payment option, what will the survivor receive upon the death of the first annuitant? A Nothing B The same amount they were receiving together C The remaining period certain D The undistributed balance

A. The Joint Life payment option ceases all distributions at the first death of any of the annuitants. This would not be the case if a Life Income Joint and Survivor option were chosen.

A license may be renewed without examination within _____ months of its expiration date by payment of a penalty fee equal to 50% of the 2-year license fee. A 30 B 12 C 24 D 18

B

All CA resident insurance licenses renew every _____ years on the last day of the month in which the license was originally issued. A 5 B 2 C 3 D 4

B

All employer-paid premiums for amounts above $_________ of group life insurance are reported as taxable income to the employee. A $75,000 B $50,000 C $25,000 D $100,000

B

Any person who acts, offers to act, or assumes to act in a capacity that requires a license without holding that license is guilty of a ___________, punishable by a fine of up to $50,000 and/or 1 year in jail. A Civil infraction B Misdemeanor C Felony D Code violation

B

In a STOLI transaction, what are the insureds basically doing? A Borrowing the necessary funds from a third party in order to acquire the amount of insurance they need B Selling their mortality to another for up-front cash C Committing a misdemeanor punishable by monetary fine and forfeiture of the policy issued D Overinsuring themselves

B

S has a home with a mortgage. S needs life insurance to protect their family but also wants to leave them without a mortgage payment if they dies. Ideally which of the following riders should S acquire? A Family rider B Decreasing Term rider C Level Term rider D Increasing Term rider

B

Which payment option pays an income for the life of the annuitant or for a specified period, whichever is longest? A Life Income B Life Income with Period Certain C Period Certain D Life Income with Refund

B

Of the following, which can a home office underwriter solely use to determine insurability of an applicant based on age, medical history, and amount of coverage? A An agent's report B A nonmedical application C A consumer investigative report D A MIB report

B A nonmedical application is used for a policy requested when the applicant's age, medical history or amount of coverage does not require a medical examination for underwriting. Health questions on the application are asked by the producer and are the only medical information required.

Regarding insurable interest which one of the following is false? A A parent has an insurable interest in their child B An insurable interest exists in cases where a financial or economic loss by the insured results in the event that the policyowner dies C A creditor has an insurable interest in one of their debtors D An individual has an insurable interest in their own self

B An individual has an insurable interest in their own self and in cases where a financial or economic loss by the owner results in the event that the insured dies.

Benefits that may be received monthly under Social Security include all of the following, except: A Retirement benefits for spouses of workers as early as age 62 B Survivor's benefits for widows and widowers no earlier than age 62 C Retirement benefits for workers as early as age 62 D Survivor's benefits for dependent children until age 18 (19 if still in school)

B Benefits that may be received monthly under Social Security include retirement benefits as early as age 62 for workers and their spouses, and survivor's benefits for children up to age 18 (19 if still in school) and for widows and widowers as early as age 60.

K has a $100,000 traditional whole life policy with $30,000 of cash values and a $10,000 loan outstanding. What is the maximum additional amount she could borrow from the policy at this time? A $60,000 B $20,000 C $30,000 D $40,000

B K can borrow up to the policy's cash value. K already has a loan of $10,000, so K could borrow another $20,000 at this time.

If a lump sum from a lawsuit, a lottery winning, or inheritance, is used to purchase a guaranteed lifetime income. It is referred to as a ___________. A Life certain settlement B Structured settlement C Lifetime income D Guaranteed income

B Lump sum structured settlements come from lawsuits, lottery winnings, or an inheritance which can be used to purchase a structured settlement in the form of an annuity. The annuity can then be used to provide guaranteed lifetime income to the annuitant.

In California, all of the following are true statements, except: A An individual licensed as both a fire and casualty agent/broker and life agent can satisfy the continuing education requirements by completing courses approved for either license B To be licensed as a Life and Disability Analyst, the applicant must have worked as a life licensee or employee of a licensee for at least 3 years prior to application C A person who provides an insurance quote to a California Resident over the internet is deemed to be transacting insurance in California D An insurance agent's license becomes inactive if no appointment by an insurer is in effect for the license provided fees for the license have been paid and continuing education requirements have been met

B The applicant must have worked as a life licensee or employee of a licensee for 5 years prior to application.

Which of the following will pay the highest premium for a life insurance policy with all other factors being equal? A Male age 65 B Male age 70 C Female age 70 D Female age 65

B The higher the age group, the higher the mortality rate which translates in to a higher premium, and the Mortality Table shows that males have a higher mortality rate than females.

An agreement that pays on behalf of another party under specified conditions describes which of the following contract terms? A Adhesion B Indemnity C Personal D Aleatory

B The insurance company pays for a claim covered by the indemnity contract on behalf of the insured. An Indemnity Contract is an agreement to pay on behalf of another party under specified circumstances, such as when a loss occurs.

An insured dies within the time limit of an Increasing Term Rider and the beneficiary receives the face amount plus the value of all paid premiums. Which rider is attached to the policy? A Waiver of Premium B Return of Premium C Term to age 100 D Return of Cash Value

B With a Return of Premium Rider, if the insured dies within the period of the term, the beneficiary receives the death benefit of the Whole Life Policy and, through an increasing term rider, the equivalent of the premiums paid on the Whole Life Policy.

When a life insurance policy's ownership is changed from the original owner to a new owner without payment, this is known as a(n) ___________. A Viatical settlement B Absolute assignment C Collateral assignment D Life settlement

B. When a life insurance policy's ownership is changed from the original owner to a new owner, this is known as an absolute assignment when no money is involved.

If an annuitant withdraws funds from their annuity prior to age 59 1/2 what is the tax consequence? A Tax on the entire withdrawal plus a 10% tax penalty B Tax on the tax deferred portion of the withdrawal along with a 15% tax penalty C Tax and 10% penalty tax on the withdrawal that represents earnings D Tax on cost basis and 10% tax penalty on the tax deferred portion of the withdrawal

C

In California, whose responsibility is it to inform the insurer of a change of physical or email address? A Agency B Beneficiary C Policyowner D Agent

C

Proceeds from a buy-sell agreement are received ___________. A Only after the deceased's estate is settled and a proper valuation of their share of the business B Taxable as income C Income tax free D Taxed to the extent that the amount exceeds $50,000

C

Risks that may be placed only with a non-admitted insurer include all of the following, except: A International maritime transportation B Property and liability insurance for aircraft or spacecraft C Workers' Compensation D Marine builder's risk

C

The _________ clause states what each party exchanges in the contract. A Incontestability B Insuring C Consideration D Entire Contract

C

The advantage of an insurance funded buy-sell agreement is: A The surviving spouse becomes the new partner in the firm B Assets are forced to be sold to generate cash to pay for the business interest of the deceased partner C It is a legally enforceable agreement, which pre-establishes the value of the business, and provides the funds for an efficient method of transferring the deceased's business interest D The estate transfer may be delayed due to forced business liquidation

C

When the life insurance policy's cash value equals the face amount of the policy and the proceeds are paid to the policyowner, this is known as the policy's _________. A Renewal B Conversion C Endowment D Reinstatement

C

A Long-Term Care Rider provides up to what percentage of the policy's death benefits if the insured qualifies for long-term care benefits based on being chronically ill as defined in the rider? A 75 B 50 C 100 D 80

C A Long-Term Care Rider provides up to 100% of the policy's death benefits if the insured qualifies for long-term care benefits based on being chronically ill as defined in the rider, this will reduce the ultimate death benefit payable to the beneficiary.

If the insured qualifies for long-term care benefits based on being chronically ill as defined in the Long-Term Care rider, how will this impact the ultimate death benefit payable to the beneficiary? A It will be increased B It will have no impact so long as the policyowner pays the required fee and any interest charges C It will be reduced D It will have no impact

C A Long-Term Care Rider provides up to 100% of the policy's death benefits if the insured qualifies for long-term care benefits based on being chronically ill as defined in the rider, this will reduce the ultimate death benefit payable to the beneficiary.

Which of the following is not a natural person? A Q, a retired tailor who still owns QRS Tailors B C, a self-employed tailor doing business as QRS Tailors C QRS Tailors, a business operated by R, a sole proprietor D K, a tailor who is employed by a dry cleaner

C A natural person is a living (or formerly living) human being. A business entity is not a natural person, even when operated as a sole proprietorship.

All of the following are true regarding changes or modifications to insurance policies, except: A They must be signed-off by an executive officer of the insurer B They must be in writing C They can be waived by the producer D They must be approved by the policyowner

C A producer cannot alter, change, modify, or waive any policy provisions without the policyowner's approval. Changes or modifications must be in writing, signed by an executive officer of the insurer, approved by the policyowner, and made part of the entire contract.

The insurance contract is a(n) ___________ contract because only the insurance company makes a promise to pay a future covered claim. A Unilateral B Conditional C Aleatory D Bilateral

C A unilateral contract is one in which one party (the insurer) makes a promise of performance.

California law permits group insurers to offer coverage for up to 100% of the employee's basic coverage amount for a spouse and all children from birth until age: A 25 B 19 C 26 D 21

C California law permits group insurers to offer an employee's 'spouse and all children from birth until age 26' to be covered for up to 100% of the employee's basic coverage amount.

Every individual annuity contract delivered or issued for delivery to a senior citizen in California may be returned by the owner to the insurance company or agent who sold the policy within the free look period after receipt of the policy for: A The amount of premium deposit in excess of any costs of issuance B The amount of cash value in excess of the surrender charge C A full refund D The policy's cash values, if any

C Every individual annuity contract delivered or issued for delivery to a senior citizen in California may be returned by the owner to the insurance company or agent who sold the policy within 30 days after receipt of the policy for a full refund.

An insured has a $175,000 permanent life insurance policy and is having difficulty keeping up with the premium payments. Which nonforfeiture option would allow them to forego the premiums and retain the same face amount until the cash surrender value is exhausted? A Cash Surrender B Premium Reduction C Extended Term D Reduced Paid-Up

C Extended Term continues the same coverage until the cash value from which the premium is paid is exhausted.

The continuation of coverage under a particular benefit provided under a group policy following discontinuance with respect to an employee or dependent who is totally disabled on the date of discontinuance is called: A Replacement of coverage B Conversion of benefits C Extension of benefits D Continuation of coverage

C Extension of benefits is the continuation of coverage under a particular benefit provided under a group policy following discontinuance with respect to an employee or dependent who is totally disabled on the date of discontinuance.

In which of the following situations will the annuity's value be included in the deceased annuitant's estate? A If the annuitant dies while receiving income from a Life Only settlement option B If the annuitant dies just after cashing in check number 180 from a 15 year period certain payout that was funded with $100,000 C If the annuitant dies during the annuity or payout phase with any remaining value D If the annuitant dies in year 11 when receiving a life and 10 year period certain payout from a Variable annuity

C If the annuitant dies during the payout phase of an annuity with any remaining values, those values will be included in the annuitant's estate. For all of the other answer choices, there would be zero remaining value and therefore nothing would be left to include in the estate.

Which of the following is not an element of an ideally insurable risk? A Risks must include a large number of homogenous units B The loss must be quantifiable C The loss must be catastrophic D The loss must be accidental

C Insurers want to avoid catastrophic perils.

M let their permanent policy lapse. M discovered there was $2,498 in cash remaining in the policy and decided to pay off some of M's credit card debt. M exercised which nonforfeiture option? A Fixed Amount B Extended Term C Cash Surrender D Reduced Paid-Up

C M surrenders the policy for its cash value and then uses that cash value to reduce M's debt load.

Each of the following statements about Whole Life insurance is true, except: A They have nonforfeiture values and options are offered B As an insured ages, the premiums remain the same C The policy can be converted into a Term Life insurance plan at renewal D The death benefit and cash values are guaranteed

C Term Life insurance may have an option to convert to a Whole Life policy, but Whole Life insurance cannot be converted to Term Life.

Which of the following is not a responsibility of the Insurance Commissioner? A Order rates for Workers' Compensation insurance increased B Order rates for Workers' Compensation insurance reduced C Set the rates for Workers' Compensation insurance D Reject a requested rate increase for Workers' Compensation insurance

C The Commissioner has broad authority to reject rate increases for most lines of insurance, or to order rates increased or reduced when necessary, but the Commissioner does not have authority to set specific rates.

With a Guaranteed Universal Life policy, if the owner uses the cash value to cover the premium or misses a premium payment, what happens? A The policy automatically converts to an Annual Renewable Term policy B The policyowner/insured can be charged back premium plus interest as a penalty for breach of contract C The No-Lapse Guarantee is removed from the policy D The policy automatically lapses

C With a Guaranteed Universal Life policy, if the owner uses the cash value to cover the premium, or misses a premium payment, the No-Lapse Guarantee is removed from the policy.

P is the insured and policyowner. P named D and K as co-primary beneficiaries per stirpes of P's $400,000 policy. D and K each have 3 children. D dies, then P dies, so K is entitled to receive $____________. A $300,000 B $400,000 C $200,000 D $100,000

C With per stirpes designations, the children of the deceased primary beneficiary step into the deceased's shoes and claim their share. Here, the $400,000 is first split between D and K. Then D's children split their 1/2 of the total equally amongst themselves.

A Life Settlement Broker is exclusively the representative of the __________ who seeks to sell his interest in the policy. A Insurer B Beneficiary C Provider D Policyowner

D

Before a licensed agent may transact insurance, the agent must first be _________ by an admitted insurer. A Certified B Authorized C Licensed D Appointed

D

Social Security pays an eligible surviving spouse (or minor child) a one-time benefit upon the death of a covered worker. Which of the following is the amount of that benefit? A $355 B $350 C $250 D $255

D

To help protect against ___________, group plans have a probationary period set by the group sponsor. A High employee turnover B Lazy and unmotivated employees C Inventory shrinkage and bad hires D Preexisting conditions and immediate claims

D

Under the California Insurance Code, the Commissioner has continuing authority to act against a former agent whose license has been surrendered or expired for up to: A 7 years B 10 years C 6 years D 5 years

D

Which of the following is a likely outcome if a buy-sell agreement in a two person partnership is not in place when one of the partners dies? A The value of the business will increase B The agreement will need to go through the probate process C Partnership transfer taxes are due within 9 months D The surviving spouse of the deceased becomes the other partner

D

Which settlement option pays a specified dollar amount until benefits are exhausted? A Life Income B Interest Only C Fixed Period D Fixed Amount

D

ABC Enterprises is worth $300,000. There are 3 shareholders and each shareholder is an equal owner of the company. If they establish an entity buy-sell agreement, the entity would have to buy policies in the amount of $____________ on each of the owners. A $50,000 B $75,000 C $150,000 D $100,000

D If ABC Enterprises is worth $300,000 and each shareholder is an equal owner of the company, then the company would buy three $100,000 life insurance policies, one on the life of each owner. The policy would be owned by the company. The company would be named as the beneficiary. At death of one of the owners, the company would have the funds necessary to buy the deceased's stock in the company.

X, age 65, has a life insurance policy they no longer need and no longer can afford, but X does have a need for cash. XYZ Inc. purchased the policy for less than the face amount but more than the cash value and is now the policyowner and premium payor. This was which of the following transactions? A Buy/Sell Agreement B Living Needs Transaction C Viatical Trust Settlement Agreement D Life Settlement

D A Life Settlement is like a Viatical Settlement except it does not involve a terminally ill insured.

All of the following are characteristics of a mutual insurance company, except: A Profits may be returned as policy dividends B A policyholder votes for the board of directors C They provide insurance to members D Stockholders have ownership

D A mutual insurance company is owned by its policyholders, and does not have stockholders. Some mutual insurance companies require policyowners to be members of an underlying organization.

In a Universal Life policy, the minimum separation between the cash value and the death benefit is called the _______. A The MEC limit B The earned interest C The cash value D Risk corridor

D A universal life policy must include an amount at risk. If the cash value approaches the face amount, the death benefit must increase so as to provide for this amount at risk. This minimum separation between the cash value and the death benefit is called the 'risk corridor.'

In California, which of the following statements regarding annuity suitability requirements is false? A Producers must meet the need for consumer awareness of surrender charges B Producers must receive product-specific training before marketing annuity products to seniors C Producers must make a reasonable effort to obtain suitability information before making a recommendation D Producers must follow suitability requirements for all types of annuity transactions

D Annuity suitability requirements do not apply to all transactions. Some of the exclusions include direct response solicitation, contracts used to fund 401(k) or 403(b) plans, and nonqualified deferred compensation arrangements maintained by employers.

Life insurance will be considered incidental to a Qualified plan if the insurance amount is not more than ________ times the expected monthly benefit amount. A 150 B 200 C 250 D 100

D Generally, life insurance will be considered incidental to a Qualified plan if no more than 50% of the contributions are used to pay insurance premiums, and the insurance amount is not more than 100 times the expected monthly benefit amount.

All of the following are characteristics of group life Insurance, except: A Evidence of insurability is usually not required B Claims are not contestable after an employee has been covered for 2 years C Most states require a minimum number of enrollees at date of issue D Group is typically written utilizing permanent Insurance

D Group insurance is typically written on a Renewable Term basis. However, some insurers do make permanent Insurance available.

Z has deposited $100,000 into a single premium immediate annuity. If Z were to die before receiving $100,000 in payments, the balance of the $100,000 would be paid to Z's sister. Z has selected the: A Life Income Joint and Survivor option B Life Income Period Certain option C Joint Life option D Life Income with Refund option

D If Z dies prior to receiving an amount equal to the total of all payments made into the annuity and the balance of that amount is refunded to a beneficiary either in a lump sum or in installments, Z has chosen Life Income with Refund.

Which of the following is a policy not issued with a rating? A Tabular Rate B Flat Rate C Lien Plan D Preferred Rate

D Individuals who meet certain requirements and qualify for lower premiums, such as ideal health, height, and weight, are issued at preferred rates. Substandard Risks (Higher Risk Exposure) Individuals who are not acceptable at standard or preferred rates because of health, habits, or occupation, and are issued 'rated policies.'

All of the following are true of a substandard risk, except: A The insured may have a flat additional premium added to their base premium B The insured may be rated as older than their actual age C The coverage could be reduced for a period of time D The premium would be discounted

D Individuals whose risk factors do not measure up to underwriting standards are usually issued rated policies.

Licensees must make all records available to the Commissioner including all files for how many years prior to the request? A 1 B 8 C 5 D 4

D Insurers specifically are required to maintain claim data so that it is accessible, legible, and retrievable for examination, and must be able to provide the claim number, line of coverage, date of loss, date of acceptance, date of payment, date of denial or closing without payment. This data must be available for all open and closed files for the current year, and the 4 preceding years.

Individual life policies typically pay out a death benefit if death is a result of suicide after being in force for _____ years. A 6 B 4 C 5 D 2

D Life insurance policies issued in California must pay death benefits for death by suicide after the policy has been in force for 2 years.

___________ insurance is used to provide coverage when insurance is not available from an admitted carrier. A Domestic B Facultative C Alien D Surplus

D Nonadmitted business, such as surplus insurance, must be transacted through a surplus lines broker.

H has an annuity funded with after-tax contributions. So far, H has placed $10,000 into the policy and it is now worth $25,000. If H cashes out the annuity, what is H's cost basis? A $25,000 B Zero C $15,000 D $10,000

D The amount contributed is after tax dollars and is considered the cost basis.

Which of the following Traditional Whole Life policies has the lowest first-year annual premium? A 30-Pay Life B 20-Pay Life C 10-Pay Life D 40-Pay Life

D The longer the premium paying period, the lower the premium. A Limited Pay Life policy of 40 years would have a lower premium than a 30-Pay, 20-pay, or 10-Pay Life policy.

Which one of the following applicants is most likely to have an insurable interest in the insured? A An applicant who is applying for coverage on a person they are expecting an inheritance from B An employee applying for a policy on a coworker C An individual applying for insurance on a neighbor D A spouse applying for coverage on an applicant

D The policyowner must have a potential for financial hardship in the event of a loss, such as a spouse.

What is it called if an agent or insurer recommends the replacement or conservation of an existing policy by use of a materially inaccurate presentation or comparison of an existing contract's premiums, benefits, dividends, and values? A Competition B Comparing C Marketing D Twisting

D Twisting is an unfair trade practice that involves an agent or insurer recommending the replacement or conservation of an existing policy by using materially inaccurate presentation or comparison of an existing contract's premiums, benefits, dividends, and values. Twisting is a misdemeanor.

Under the California Insurance Code, any notice required to be given to an insured may be provided to the policyowner, insured, claimant, or beneficiary by electronic transmission if each party: A Has access to sending and receiving electronic transmissions on an encrypted basis B Has no other way to communicate in a timely fashion C Understands the risks involved D Has agreed

D Under the California Insurance Code, any notice required to be given to an insured may be provided to the policyowner, insured, claimant, or beneficiary to be notified by electronic transmission if each party has agreed.

P has a Whole Life insurance policy with a face amount of $100,000, an annual premium of $1,000, and a cash value of $10,000. If P wants to borrow money from the insurer, what is the maximum they can obtain? A $90,000 B $100,000 C The sum of the premiums paid up to that point in time D $10,000

D When using a Whole Life policy for collateral for a loan from the insurer, the maximum amount of that loan is the amount of cash value in the policy.

Which of the following is not a taxable event for a Modified Endowment Contract (MEC)? A Withdrawal of cash value to pay for a wedding B Taking out a policy loan C Cash surrender of the policy D Lump Sum death benefit paid to the beneficiary

D Withdrawal of any cash value to pay for a daughter's wedding, policy loans, and cash surrender of the policy are all taxable distributions. Lump Sum death benefits are considered to be tax-free life insurance proceeds.

All of the following regarding policy loans are true, except: A Policy loans cannot exceed the amount in the cash value B The interest on a policy loan is not deductible C Policy loans are not taxable so long as the policy remains in force D Policy loans are taxable if the policy remains in effect and the amount borrowed exceeds the premiums paid

D. If the policy lapses with a loan outstanding, the excess borrowed over the premium paid becomes taxable as ordinary income.