L&H Exam

Which of the following is a risk classification used by underwriters for life insurance? A. Excellent B. Standard C. Poor D. Normal

B. Standard

What is the minimum fine for acting as an agent for a non admitted insurer in the transaction of insurance business? A. $100 B. $500 C. $1,000 D. $5,000

$500

The commissioner has the authority to issue a cease and desist order against any person acting as an insurance agent or broker without being licensed. The commissioner may also impose a penalty for each ay the order is violated in what amount? A. $5,000 B. $2,000 C. $2,000 and 6-month jail term D. $5,000 and 6-month jail term

A. $5,000

If an annuitant dies before annuitization occurs, what will the beneficiary receive? A. Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount B. Either the amount paid into the plan or the cash value of the plan, whichever is the lesser amount C. Amount paid into the plan D. Cash value of the plan

A. . Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount

What is the minimum free-look period for newly issued life insurance policies in this state? A. 10 days B. 20 days C. 30 days D. 90 days

A. 10 days

In a group life insurance policy, the employer may select all of the following EXCEPT... A. The premium payor B. The beneficiary C. The type of insurance D. The amount of insurance

B. The beneficiary

Graded Premium Whole Life policy premiums are typically lower initially, but gradually increase for a period of 5 to 10 years. After the period of increase the premiums will... A. Be level thereafter B. Continue to increase C. Return to the initial premium amount D. Decrease again

A. Be level thereafter

In this state, what is the primary body of laws established by the state legislature to regular the business of insurance... A. California Insurance Code B. California Administrative Code C. Code of Ethics D. General Provisions

A. California Insurance Code

Which authority is NOT stated in an agent's contract but is required for the agent to conduct business? A. Implied B. Apparent C. Assumed D. Express

A. Implied

If an insured surrenders his life insurance policy, which statement is true regarding the cash value of the policy? A. It is only taxable if the cash value exceeds the amount paid for premiums B. It is not considered to be taxable C. It is taxable only if it exceeds the amounts paid for premiums by 50% D. It is automatically taxable

A. It is only taxable if the cash value exceeds the amount paid for premiums

Using a class designation for beneficiaries means A. Naming beneficiaries as a group B. Not naming beneficiaries C. Naming an estate as the beneficiary D. Naming each beneficiary by his or her name

A. Naming beneficiaries as a group

Which type of life insurance policy generates immediate cash value? A. Single Premium B. Level Term C. Decreasing Term D. Continuous Term

A. Single Premium

If a life insurance policy has an irrevocable beneficiary designation, A. The beneficiary can only be changed with written permission of the beneficiary B. The beneficiary cannot be changed for at least 2 years C. The owner can always change the beneficiary at will D. The beneficiary cannot be changed

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

Signing and dating a delivery receipt for a life insurance policy helps to establish all of the following timeframes EXCEPT A. The grace period B. The incontestability period C. The free-look period D. The right of rescission

A. The grace period

An insured purchased a 10-year level term life policy that is guaranteed renewable and convertible. What happens at the end of the 10-year term? A. The insured may renew the policy for another 10 years, but at a higher premium rate B. The insured must provide evidence of insurability to renew the policy C. The insured may only convert the policy to another term policy D. the insured may renew the policy for another 10 years at the same premium rate

A. The insured may renew the policy for another 10 years, but at a higher premium rate

An insured wants to transfer his personal insurance policy to a friend. Under what conditions would this be possible? A. The insured will need a written consent of the insurer B. It is impossible to transfer a policy C. The insured would have to surrender his policy to the insurer, and his friend could then ask to buy it. D. The insured can transfer the policy to his friend and then notify the insurer of the change

A. The insured will need a written consent of the insurer

If an insured continually uses the automatic premium loan option to pay the policy premium, A. The policy will terminate when the cash v value is reduced to nothing B. The face amount of the policy will be reduced by the automatic premium loan amount C. The cash value will continue to increase D. The insurer will increase the premium amount

A. The policy will terminate when the cash value is reduced to nothing

Under an extended term nonforfeiture option, the policy cash value is converted to A. The same face amount as in the whole life policy B. The face amount equal to the cash value C. A lower face amount than the whole life policy D. A higher face amount than the whole life policy

A. The same face amount as in the whole life policy

The insurer must be able to rely on the statements in the application, and the insured must be able to rely on the insurer to pay valid claims. In the forming of an insurance contract, this is referred to as... A. Utmost good faith B. Reasonable expectations C. A warranty D. Implied warranty

A. Utmost good faith

Which of the following is a key distinction between variable whole life & variable universal life products? A. Variable whole life has a guaranteed death benefit B. Variable universal life is regulated solely through FINRA C. Variable whole life allows policy loans from the cash value D. Variable universal life has a fixed premium

A. Variable whole life has a guaranteed death benefit

The validity of coverage under a life insurance policy may not be contested, except for nonpayment of premium, after the policy has been in force for at least how many years? A. 1 Year B. 2 Years C. 5 Years D. 7 Years

B. 2 years

How long must an insurer keep records of electronic transmission to customers? A. 3 years B. 5 years C. 6 years D. 1 Year

B. 5 Years

An insurance company is domiciled in Montana and transacts insurance in Wyoming. Which term best describes the insurer's classification in Wyoming? A. Unauthorized B. Foreign C. Alien D. Domestic

B. Foreign

The insurer may suspect that a moral hazard exists if the policyholder A. Always drives over the speed limit B. Is not honest about his health on an application for insurance C. Is prone to depression D. Is indifferent to activities that may be dangerous

B. Is not honest about his health on an application for insurance

Which of the following is another term for the accumulation period of annuity? A. Annuity period B. Pay-in period C. Premium period D. Liquidation period

B. Pay-in period

The written instrument, in which a contract of insurance is set forth, is known as the... A. Right of agency B. Policy C. Binding clause D. Insuring clause

B. Policy

Pertaining to insurance, what is the definition of a fiduciary responsibility? A. Offering additional coverage to clients B. Promptly forwarding premiums to the insurance company C. Helping insured to file claims D. Performing review of insured's coverage

B. Promptly forwarding premiums to the insurance company

Events in which a person has both the chance of winning or losing are classified as... A. Retained risk B. Speculative risk C. Insurable D. Pure risk

B. Speculative Risk

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 A. The loss produced by the risk must be definite B. The loss may be intentional C. The loss must not be catastrophic D. There must be a sufficient number of homogenous exposure units to make losses reasonably predictable

B. The loss may be intentional

An insured purchased a variable life insurance policy with a face amount of $50,000. Over the life of the policy, stock performance declined & the cash value fell to $10,000. If the insured dies, how much will be paid out? A. $10,000 B. $40,000 C. $50,000 D. $60,000

C. $50,000

An insured had a $10,000 term life policy. The annual premium of $200 was due on February 1; however, the insured failed to pay the premium. He died on February 28. How much would the beneficiary receive from the policy? A. $0 B. $200 C. $9,800 D. $10,000

C. $9,800

For variable products, underlying assets must be kept in A. Money market account B. A general account C. A separate account D. A revenue account

C. A separate account

What is a material misrepresentation? A. Any misstatement by the producer B. Concealment C. A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company D. Any misstatement made by an applicant

C. A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company

The two types of assignments are... A. Complete and partial B. Complete and proportionate C. Absolute and collateral D. Absolute and partial

C. Absolute and collateral

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? A. Adhesion B. Conditional C. Aleatory D. Good Health

C. Aleatory

Which of the following would qualify as an implied warranty in an insurance contract? A. Contract's legal purpose B. Statements in the policy C. An oral representation D. The applicant's signature

C. An oral representation

All of the following are requirements of eligibility for Social Security disability income benefits EXCEPT.. A. Fully insured status B. Waiting period of 5 months C. Being age 65 D. Inability to perform any gainful work

C. Being age 65

Which of the following statements regarding Business Overhead Expense policies is NOT true? A. Any benefits received are taxable to the business B. Leased equipment expenses are covered by the plan C. Benefits are usually limited to six months D. Premiums paid for BOE are tax-deductible

C. Benefits are usually limited to six months

Which of the following is true regarding written binders? A. Both the applicant and insurer can write a binder B. Binders serve as a receipt that the insurer is processing the application. No coverage applies C. Binders prove that the insured has insurance coverage, even though the policy has not been issued yet D. Binders apply only to life insurance

C. Binders prove that the insured has insurance coverage, even though the policy has not been issued yet

Which of the following is NOT a legitimate use of annuities by businesses? A. Providing deferred compensation for employees B. Providing an investment vehicle C. Creating a tax shelter D. Funding employee retirement plans

C. Creating a tax shelter

All of the following could own group life insurance EXCEPT A. An alumni group B. A debtor group C. Group needing low-cost life insurance D. A group sponsored by an employer

C. Group needing low-cost life insurance

Which of the following annuities riders ensures the owner will receive from an annuity at least the amount paid for the annuity? A. Guaranteed Minimum Accumulation B. Guaranteed Lifetime Earning C. Guaranteed Lifetime Withdrawal D. Guaranteed Minimum Income

C. Guaranteed Lifetime Withdrawal

Which of the following annuity riders ensures investors will receive a set amount of income annually? A. Guaranteed Lifetime Earnings B. Guaranteed Lifetime Withdrawal C. Guaranteed Minimum Income Benefit D. Guaranteed Minimum Accumulation Benefit

C. Guaranteed Minimum Income benefit

Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary? A. Single life B. Fixed amount C. Life income with period certain D. Joint and survivor

C. Life income with period certain

An individual's tendency to be dishonest would be indicative of a... A. Pure hazard B. Physical hazard C. Moral hazard D. Morale hazard

C. Moral hazard

Under a pure life annuity, an income is payable by the company A. For a guaranteed period of time, whether or not the annuitant survives to the end of that period B. For as long as either the annuitant or a named beneficiary is alive C. Only for the life of the annuitant D. Until the principal and interest are exhausted

C. Only for the life of the annuitant

Regarding the taxation of Business Overhead policies, A. Premiums are not deductible, but benefits are deductible B. Premiums are deductible, but expenses paid are deductible C. Premiums are deductible, and benefits are taxed D. Premiums are not deductible, and benefits are not taxed

C. Premiums are deductible, and benefits are taxed

Which nonforfeiture option provides coverage for the longest period of time? A. Paid-up option B. Accumulated at interest C. Reduced paid-up D. Extended term

C. Reduced paid-up

A 403(b) plan, commonly referred to as a TSA, is available to be used by... A. Postal employees B. Self-employed persons C. Teachers and non-profit organizations D. Government workers

C. Teachers and non-profit organizations

Which of the following types of policies allows for a flexible premium and a variable investment components? A. Variable whole life insurance B. Whole life insurance C. Variable universal life insurance D. Guaranteed issue variable life insurance

C. Variable universal life insurance

An insured decides to surrender his $100,000 Whole Life policy. The premiums paid into the policy added up to $15,000. At policy surrender, the cash surrender value was $18,000. What part of the surrender value would be income taxable? A. $50,000 B. $18,000 C. $15,000 D. $3,000

D. $3,000

The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective? A. As of the policy delivery date B. As of the first if the month after the policy issue C. As of the policy issue date D. As of the application date

D. As of the application date

Which of the following is a feature of a variable annuity? A. Payments into the annuity are kept in the company's general account B. Interest rate is guaranteed C. Securities license is not required D. Benefit payment accounts are not guaranteed

D. Benefit payment accounts are not guaranteed

Which of the following elements in an Indexed Universal Life policy is tied to an index? A. Death benefit B. Face amount C. Premiums D. Cash values

D. Cash Values

When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is A. Aleatory B. Personal C. Unilateral D. Conditional

D. Conditional

Which of the following reports will provide the underwriter with the information about an insurance applicant's credit? A. Inspection report B. Agent's report C. Any federal report D. Consumer report

D. Consumer report

What happens when a policy is surrendered for its cash value? A. Coverage ends but the policy can be reinstated at any time B. The policy can be reinstated by paying back all policy loans and premiums C. The policy can be converted to term coverage D. Coverage ends and the policy cannot be reinstated

D. Coverage ends and the policy cannot be reinstated

If an insured changes his payment plan from monthly to annually, what happens to the total premium? A. Stays the same B. Doubles C. Increases D. Decreases

D. Decreases

When an employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy, this is called a(n) A. Key person policy B. Fraternal Association C. Aleatory contract D. Executive bonus

D. Executive Bonus

Which of the following life insurance policies does NOT build cash value? A. Universal life B. Variable life C. Whole life D. Guaranteed universal life

D. Guaranteed Universal Life

An individual is purchasing a permanent life insurance policy with a face value of $25,00. While this is all he insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy? A. Dividend options B. Guaranteed renewable option C. Nonforfeiture options D. Guaranteed insurability option

D. Guaranteed insurability option

Harry has just received his life insurance policy. In reviewing the title page, Harry was able to ascertain the following information EXCEPT A. His children have been covered by a child rider B. He has purchased a 20 year renewable term insurance policy in the face amount of $150,000 C. His total annual premium amount D. His spouse had been assigned the primary beneficiary

D. His spouse had been assigned the primary beneficiary

Which of the following is true regarding a policy with a face value less than $10,000? A. An insured cannot return the policy B. If it's returned during the free-look period, the contract will be cancelled, but the insurer will retain the premium paid. C. The policy can be cancelled with full refund of premium at any time D. If its returned during the free look period, the agreement will be void

D. If its returned during the free look period, the agreement will be void

The type of term insurance that provides increasing death benefits as the insured ages is called A. Flexible term B. Interest-sensitive term C. Age-sensitive term D. Increasing term

D. Increasing term

Which of the following is NOT a license in the state of California? A. Life-only agent B. Solicitor C. Insurance agent D. Life broker

D. Life broker

According to the California Insurance Code, the term "shall" describes what kind of actions? A. Permissive B. Implied C. Directive D. Mandatory

D. Mandatory

Which of the following individuals must have insurable interest int he insured? A. Beneficiary B. Underwriter C. Producer D. Policyowner

D. Policy owner

Which of the following is the most common way to transfer risk A. Increase control of claims B. Lessen the possibility of loss C. Name a beneficiary D. Purchase insurance

D. Purchase insurance

A situation in which a person can only lose or have no change represents A. Speculative risk B. Adverse selection C. Hazard D. Pure risk

D. Pure risk

An applicant buys a nonqualified annuity, but dies before the starting date. For which of the following beneficiaries would the contract's interest NOT be taxable? A. Charitable organization B. Dependents C. Annuitant D. Spouse

D. Spouse

Which of the following is NOT true regarding the annuitant? A. The annuitant's life expectancy is taken into consideration for the annuity. B. The annuitant receives the annuity benefits C. The annuitant must be a natural person D. The annuitant cannot be the same person as the annuity owner

D. The annuitant cannot be the same person as the annuity owner

Which of the following is NOT required on an illustration used in the sale of a life insurance policy? A. Generic name of policy B. Name of insurer C. Underwriting or rating classification upon which the illustration is based D. The name of the primary and secondary beneficiaries

D. The name of the primary and secondary beneficiaries

The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called... A. Guranteed insurability B. Waiver of cost of insurance C. Payer benefit D. Waiver of premium

D. Waiver of premium

The main difference between immediate and deferred annuities is A. How the annuity is purchased B. the number of insureds C. The amount of each payment D. When the income payments begin

D. When the income payment begin

To which of the following products does the Replacement Regulation apply? A. Group annuities B. Credit life insurance C. Converting an existing policy with the same insurer D. Whole life insurance

D. Whole life insurance