Life License
Can a Waiver of Cost of insurance rider be included in a whole life policy? a) Yes b) No
B
Among people in the same class and life expectancy, which of the following factors can be used to influence premium rates? a) Marital Status b) Race c) Occupation d) Ancestry
C
A person has a history of DUIs. To his insurer, this presents what type of hazard? a) Moral b) Morale c) Legal d) Physical
B
Which is NOT a type of hazard? a) Moral b) Moral c) Exposure d) Physical
C
Which of the following is NOT a characteristic of pure risk? a) The loss must be catastrophic b) The loss must be due to chance c) The loss must be measurable in dollars d) The loss exposure must be large
A
All of the following statements are true regarding an Ordinary (Straight) Life policy EXCEPT a) it is funded by a level premium b) it builds cash value c) if the insured lives to age 100, the policy matures, and the face amount is paid to the insured d) it does not have a guaranteed death benefit
D
A lender who conditions approval of a loan on the condition that the borrower insurance from that lender may be guilty of a) Misrepresentation b) Unfair discrimination c) Illegal inducement d) Coercion
D
Which risk classification is representative of the majority of people in a certain age group and with similar lifestyles? a) Substandard b) Declined c) Preferred d) Standard
D
All of the following are advantages of a qualified retirement plan EXCEPT a) The funds grow tax deferred b) The income at retirement is tax free c) The contribution is deductible to the employer d) The contribution is not taxable to the employee when made
B
All of the following are consideration in an insurance policy EXCEPT a) The promise to pay covered losses b) The cash value in the policy c) The statements on the application d) The premium paid at the time of application
B
An agent offers life insurance for no cost to people buying property in a local development. When the Commissioner investigates the agent's actions, which of the following is NOT a likely consequence? a) A hearing will be called b) The agent will be charged with a felony and/or up to 10 years in jail c) A civil penalty of up to $5,000 if the actions were not willful and $10,000 if they were willful d) A cease and desist order will be issued
B
Which statement is an accurate description of life insurance policy dividends? a) They are paid as return of premium to policyowners by stock insurers b) They are guaranteed to be paid and they are taxable as income c) They are likely to be larger in nonparticipating policies d) They are not taxable and are not guaranteed
D
In contrasting stock insurers with mutual insurers, which statement is true? a) Nonparticipating policies can pay out dividends to the policyholders b) Mutual insurers are owned by the shareholders and issue participating policies c) Stock insurers are owned by the shareholders and issue nonparticipating policies d) Stock dividends are tax free while policy dividends are taxable
C
Errors and omissions (E&O) liability insurance coverage a) is unlimited b) protects an agent in the case of unintentional negligence c) has very low deductibles d) does not protect the agent if the case against the agent is frivolous
B
Which is considered a peril? a) playing golf in a thunderstorm b) fire c) smoking d) driving too fast for conditions
B
Which of the following best describes a rebate? a) A producer selling insurance primarily to himself, his family and his friends b) A producer returning part of her commission to her client, as an inducement to buy c) A producer misrepresenting policy provisions or coverages at issue d) A producer requiring an insured to buy insurance from her as a condition to a loan
B
Which of the following is NOT a personal use of life insurance? a) An individual buys insurance to provide future income to a surviving spouse b) An individual buys cash value insurance to fund his children's college education c) An individual buys insurance to help the family pay off the mortgage in case of premature death d) An individual buys insurance to fund a buy-sell agreement
D
If an application submits the initial premium with an application, which action constitutes acceptance? a) The producer delivers the policy b) The insurance company receives the application and initial premium c) The underwriters approve the application d) The applicant submits a statement of good health
C
Which of the following best describes the unfair practices of rebating? a) Charging premium amounts in excess of the amount stated in the policy b) Making false statements that are maliciously critical and intended to injure another person in the business of insurance c) Offering an inducement of something of value not specified in the policy d) Making statements that misrepresent an insurance policy in order to induce an insured to replace the policy
C
Which of the following has the right to change a settlement option in a life insurance policy? a) The insured b) A beneficiary at any time c) The policyowner at any time during the life of the insured d) A beneficiary after the policyowner's death
C
If the annuitant dies before the annuity start date begins a) the interest is never tax deferred b) the interest is taxed if the beneficiary is a spouse c) the interest is nontaxable d) the interest is taxable
D
The renewable provision allows the policyowner to renew the coverage at the expiration date a) With evidence of insurability if the insurer requires it b) With evidence of insurability if the insured risk has increased c) Without evidence of insurability d) Only with evidence of insurability
C
Any person who knowingly and willfully obtains information about an individual from an insurance company, agent, or organization supporting insurance under false pretenses shall be fined a) Not more than $20k, imprisonment not to exceed one year or both b) Not more than $10k, imprisonment not to exceed two years or both c) Not more than $20k, imprisonment not to exceed two years or both d) Not more than $10k, imprisonment not to exceed one year or both
D
Which dividend option will increase the death benefit? a) Paid-up additions b) Accumulation c) Extended Term d) Reduced Paid Up
A
Which dividend option will increase the death benefit? a) Reduced paid up b) Paid-up additions c) Accumulation d) Extended term
B
An illustration used in the sale of a life insurance policy must include a label stating a) "Subject to change" b) "Representation of insurance" c) "Life insurance illustration" d) "Guaranteed items"
C
Which of the following terms is defined by the California Insurance Code as unassigned funds that must be reported on a stock insure'd annual statement? a) Earned income b) Premiums c) Earned surplus d) Dividends
C
Which would NOT be eligible for coverage under key person? a) Pharmacist in a drug store b) Manager of a small store c) Owner of a shop d) Executive officer of a company
C
A person who advises people about their life insurance policies but does not get paid by a company only by the clients? a) Life and disability broker b) Life and disability analyst c) Life and disability counselor d) Life and disability agent
B
Which of the following types of insurance is investment based, has a level fixed premium, and a nonguaranteed cash value? a) Credit life b) Variable whole life c) Interest-based life d) Universal life
B
For a contract o be enforceable by law, the purpose of the contract must be a) for financial gain b) for the benefit of the general public c) of pure intent d) legal and not against public policy
D
Based on Human Life Value Approach, which of the following is NOT used to calculate an individual's life value? a) Predicted needs of the family after the insured's death b) Insured's current and future income c) Insured's annual expenses d) Effect of inflation on income over time
A
Cash value guarantees in a whole life policy are called a) Nonforfeiture values b) Living Benefits
A
If an agent follows the rules and terms of his agent contract, he is exercising his a) Express authority b) Apparent authority c) Contractual authority d) Implied authority
A
All of the following are true of the Survivorship Life policy EXCEPT a) the premium would be lower than a joint life policy b) it can insure more than 2 lives c) The premium is based on the age of each insured d) The death benefit is not paid until the last death
C
An employee dies having 6 quarters of coverage during the 13-quarter period. What status of coverage does the employee have under Social Security? a) Uninsured b) Conditionally insured c) Currently insured d) Fully insured
C
Annuities Certain limit the amount paid by the annuity to a certain fixed a) Amount only b) Period with a certain fixed amount c) Period or fixed amount d) Period only
C
A representation in an insurance contract qualifies as a(n) a) Express warranty b) Policy provision c) Opinion d) Implied warranty
D
During a pre-selection interview, an agent is allowed to do all of the following EXCEPT a) Ask questions that are not on the application but that are important for underwriting b) Provide the applicant with negative information regarding their risk c) Inquire about specific details of the applicant's health history d) Terminate the interview and reject the applicant
A
Every individual's life insurance policy must provide for a free-look provision that lasts for at least a) 90 days b) 10 days c) 30 days d) 60 days
B
What limits the amount that a policyholder may borrow from a whole life insurance policy? a) Amount state in the policy b) Face Amount c) Cash Value d) Premiums Paid
C
Which of the following best describes the difference between joint life and joint and survivor annuity payment options? a) Joint & survivor is a life contingency option b) Joint & survivor pays out a smaller benefit c) In joint life option, the benefits stop after the first death d) Joint life covers 2 or more annuitants
C
Which of the following is NOT a component of an insurance policy premium? a) Insurer Expenses b) Investment Return c) Number of beneficiaries d) Mortality Cost
C
All of the following are true of the credit life EXCEPT a) The creditor is the policyholder b) The insured names the beneficiary c) The death benefit cannot exceed the amount of the loan d) The premium payment is included in the loan payment
B
The purpose of the California Insurance Guarantee Association is to protect the interests of the policyholders and claimants against losses resulting from the inability of insolvent to meet their contractual obligation. All of the following are "covered" under the association EXCEPT a) The states in which the persons reside have associations similar to the association created by the article b) The insurers within the last 10 years held a license in the states in which the persons reside c) Residents of the state
B
Which of the following best defines earned surplus? a) Dividends paid to policyholders b) Insurer's unassigned funds c) Insurer's expenses and liabilities d) None of the above
B
What does the application of contract of adhesion mean? a) The holder of the contract has the ultimate power of promise b) The insurer may go to another for representation c) It makes sure that the insured does not get more than the value of the loss d) Since the insured does not participate in preparing the contract, any ambiguities would be resolved in favor of the insured
D
What type of insurer uses a formal sharing agreement? a) Stock insurers b) Mutual insurers c) Fraternal Benefit Societies d) Reciprocal insurers
D
Which of the following will be eligible for a tax-sheltered annuity? a) Millitary personnel b) The elderly c) Dependents under the age 21 d) Public school teachers
D
An association could buy group insurance for its members if it meets all of the following requirements EXCEPT a) Hold annual meetings b) Is contributory c) Has at least 50 members d) Has a constitution and by-laws
C
To purchase insurance, the policyowner must face the possibility of losing money or something of value in the event of loss. What is the concept called? a) Insurable interest b) Indemnity c) Exposure d) Pure loss
A
In insurance, the insurance company that transfers its loss exposure to another insurer is the a) Reinsurer b) Primary insurer c) Secondary insurer d) Reciprocal insurer
B
In order to reinstate a life insurance policy the insured must do all of the following EXCEPT a) Pay any interest due on back premiums b) Repay any outstanding loans and interests c) Pay next year's premium in advance d) Pay back premiums
C
Variable Insurance and variable annuities are regulated by a) SEC, FINRA, and Departments of Insurance b) Departments of Insurance only c) NAIC d) SEC and FINRA only
A
All of the following are general requirements of a qualified plan EXCEPT a) The plan's benefit cannot discriminate in favor of the "prohibited group" b) The plan must be temporary c) The plan must be approved by IRS d) The plan must have a vesting requirement
B
When assessing needs for life insurance, an individual may use retention, which means a) Maintaining assets at death b) Keeping a life insurance policy until death c) Raising capital d) Purchasing life insurance
A
In order to calculate how much premium an insurance policyowner will pay, the insurer multiplies the rate by which of the following? a) The number of exposure units b) The expense load (or loading factor) c) The number of people covered on the policy d) The premium adjustment factor
A
When comparing a Joint Life policy to two individual policies of the same amount of the same insureds, which condition is true? a) Joint Life has a lower premium than the total of the two individual policies b) Joint Life has a premium that is identical to the sum of the two individual policies c) The Joint Life premium can only be paid monthly d) Joint Life has a higher premium than the total of the two individual policies
A
An individual has a $200k convertible term life insurance policy. If he chooses, he can a) Purchase another term policy and increase his death benefit without proof of insurability b) Convert to a whole life policy for the same face amount without proof of insurability c) Convert to another term policy with a lower face amount without proof of insurability d) Purchase an individual annuity for any face amount using the 1035 exchange privilege
B
Which of the following ultimately determines the interest rates paid to the owner of a fixed annuity? a) Statewide predetermined annual interest rate b) Insurer's guaranteed minimum rate of interest c) Investment performance of the company d) Investment performance of the insured
B
All of the following can be changed by the owner of a Universal Life Policy EXCEPT a) The amount of the premium payment b) The length of time for the benefit to last c) The guaranteed rate of interest d) The amount of the death benefit
C
Which of the following would be TRUE of both the fixed-period and fixed-amount settlement options? a) The size of installments decreases after certain period of time b) Both guarantee payments for the life of the beneficiary c) Both guarantee that the principal and interest will be fully paid out d) The amount of payments is based on the recipient's life expectancy
C
An applicant for an insurance license has had a previous application for a professional license denied for cause within the last 5 years. The insurance Commissioner may a) Accept the application as other licenses have no bearing on this application b) Accept the application for a 2-year provisional license c) Accept or deny the application after an exploratory hearing d) Deny the application without a hearing
D
According to the life insurance replacement regulations, which of the following would be an example of policy replacement? a) A lapsed policy is reinstated within a specific timeframe b) A policy is reissued with a reduction in cash value c) A term policy expires, and the insured buys another term life policy d) Term insurance is changed to a Whole Life policy
B
A policyowner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. The policyowner shoul dhve her husband named as the a) Primary beneficiary b) Irrevocable beneficiary c) Revocable beneficiary d) Secondary beneficiary
C
Which is a correct statement about annuities? a) Variable annuities provide minimum guaranteed rate of interest b) Variable annuities place the funds into the company's general account c) Fixed annuities have the annuitant assume the risks of investment d) Fixed annuities do not provide protection against inflation
D
Which of the following riders would NOT cause the Death Benefit to increase? a) Guaranteed Insurability Rider b) Cost of Living Rider c) Accidental Death Rider d) Payor Benefit Rider
D
Employer contributions made to a qualified plan a) are taxed annually as salary b) are subject to vesting requirements c) may discriminate in favor of highly paid employees d) Are after-tax contribution
B
If the policy summary for a life insurance policy is not given when the application is taken, when must the policy summary be given to the policyowner? a) When the policy is delivered b) Within 15 days of the application date c) Within 30 days of policy issue d) When the policy is issued
A
In a group life policy with a death benefit of more than $50k a) premium cost above $50k is taxable as income to the employee b) premium cost below $50k is taxable as income to the insured c) premium cost is tax deferred d) premium cost is taxable to the employer
A
Which of the following governs the nontaxable exchange of certain life insurance policies and annuities? a) Section 1035 Exchange b) Modified Endowment Contract c) Replacement Rule d) Section 457 Deferred Compensation Plan
A
A life insurance policy that provides coverage to every family member in a single policy, with permanent insurance on the breadwinner and convertible term on other family members is called a) A family income policy b) A family blanket policy c) A family policy d) A family member's endowment
C
A representation in an insurance contract qualifies as a(n) a) Express warranty b) Policy provisions c) Opinion d) Implied warranty
D
An annuitant pays the annuity premium on the 14th of each month. Which of the following best describes this arrangement? a) Flexible b) Lump Sum c) Single d) Level
D
If the policy summary for a life insurance policy is not given when the application is taken, when must the policy summary be given to the policyowner? a) Within 15 days of the application date b) Within 30 days of policy issue c) When the policy is issued d) When the policy is delivered
D
Which of the following is the best definition of "indemnification"? a) A contract whereby one undertakes to indemnify another against loss, damage, or liability arising from a contingent or unknown event b) The act of one person who agrees o restore an injured person to the condition he/she enjoyed prior to the loss c) A legal entity which acts on behalf of itself, accepting legal and civil responsibility for the actions it performs and making contracts in its own name d) A contract whereby the two parties involved agree to what things of value will be exchanged by the parties to the contract
B
Which of the following is true regarding the surrender charge in a market value adjusted annuity? a) If the current rate at the time of surrender is lower than the contract rate, the insurer will asses a penalty b) If the current rate at the time of surrender is the same as the contract rate, there is no adjustment c) Current rate does not affect the surrender charge d) If the current rate at the time of surrender is higher than the contract rate, there is no adjustment
B
When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option? a) Reduced paid up b) Extended term c) Paid up additions d) Cash surrender value
B
All of the following are true about variable products EXCEPT a) The cash value is not guaranteed b) Policyowners bear the investment risk c) The premiums are invested in the insured's general account d) The minimum death benefit is guaranteed
C
Any person to whom the Commissioner has issued a seizure order and who refuses to deliver any books, records, or assets of an insurer faces the following penalties: a) Administrative fines only b) A felony punishable by a fine up to $1,000, a year in prison, or both c) A misdemeanor punishable by a fine up to $1,000, a year in jail, or both d) A misdemeanor punishable by a $5,000 fine, if unintentional, or $10,000, if intentional
C
When life insurance proceeds are used to pay inheritance taxes and federal estate taxes, it is known as what? a) Liquidity b) Life Settlement c) Estate Conservation d) Estate Creation
C
Which is NOT true of the agent's implied authority? a) It is incidental to express authority b) It is given to an agent by the insurance company that is not specifically communicated c) It is specifically stated in the contract d) It is assumed by the agent in order to transact the business of insurance
C
Which of the following best describes life annuity with period certain option? a) The maximum guarantee period is 10 years b) The benefit payments cease with the death of the annuitant c) It guarantees benefit payments for life of the annuitant and for a specified period of the beneficiary d) It provides the highest monthly benefit for an individual annuitant
C
Which of the following must an agent receive in order to sell variable life insurance policies? a) Certificate of Authority b) SEC Registration c) FINRA Registration d) Variable products license
C
At age 72, an individual is considering applying for MediCal so she can afford her medical bills. Today an agent is visiting the applicant's home in order to sell her an annuity produce. Which of the following is true? a) The agent should recommend an annuity instead of MediCal b) The agent should recommend the annuity purchase to generate a commission c) It is permissible for the agent to visit the applicant for the first time without providing a 24-hour advanced notice in writing d) The agent cannot allow the applicant to purchase an annuity if after the purchase, she wouldn't qualify for MediCal
D
If an insured purchases an insurable policy with a large deductible, what risk management technique is the insured exercising? a) Sharing b) Retention c) Transfer only d) Avoidance
B
A whole life policy is surrendered for a reduced paid-up policy. The cash value in the new policy will a) Decrease over time b) Reduce to the pre-surrender value c) Continue to increase d) Remain the same
C
The purpose of the Fair Credit Reporting Act is to a) Protect the insurer from adverse selection b) Ensure the consumers receive a copy of investigative consumer reports c) Ensure coverage for all applicants d) Protect consumers against the circulation of inaccurate or obsolete personal or financial information
D
An annuity owner is funding an annuity that will supplement her retirement. Because she does not know what effect inflation may have on her retirement dollars, she would like a return that will equal the performance of the Standard and Poor's 500 index. She would likely purchase a(n) a) Flexible Annuity b) Immediate Annuity c) Equity Indexed Annuity d) Variable Annuity
C
If a change needs to be made to application for insurance, the agent may do all of the following EXCEPT a) Note on the application the reason for the change b) Destroy the application and complete a new one c) Erase the incorrect answer and record the correct answer d) Draw a line through the first answer, record the correct answer and have the applicant initial the change
C
What does an annuity protect the contract owner against? a) Leaving beneficiaries without income b) Estate taxes c) The financial impact caused by premature death d) Living longer than expected
D
Which of the following is NOT true regarding the Needs Approach method of determining the value of an individuals life? a) Coverage is based on the predicted needs of that family b) The death of an insured must be premature c) It must be assumed that the death of the insured will occur immediately d) Need is predicted using the number of years until the insured's retirement
D
In which of the following instances would the premium be tax deductible? a) Premiums paid by an employer on a $30k group term life insurance plan for employees b) Premiums paid by an individual on his/her own life insurance c) Premiums paid by a mother on her son's policy
A
What is the benefit of choosing extended term a a nonforfeiture option? a) It allows for coverage to continue beyond maturity date. b) It can be converted to a fixed annuity. c) It has the highest amount of insurance protection. d) It matures at age 100.
C
Which statement describes one of the reasons individuals purchase life insurance? a) It always accumulates cash value b) It provides income an insured cannot outlive c) It creates an immediate estate d) It helps liquidate an estate through death proceeds
C
Which of the following is true regarding a joint life annuity? a) The payments go to the surviving annuitant after the first death b) The payments stop at the first death c) The payments stop at the last death d) The payments go to a beneficiary upon the last death
B
Which of the following would describe the difference between a blanket life insurance policy and a franchise policy? a) Franchise insurance is used for large groups of people b) Blanket policy does not name individuals insureds c) Franchise policy doesnt require individual underwriting d) Blanket insurance covers a group of people
B
Which of the following has the right to change a settlement option in a life insurance policy? a) A beneficiary at any time b) The policyowners at any time during the life of the insured c) A beneficiary after the policyowner's death d) The insured
B
What type of insurance would be used for Return of Premium rider? a) Annually Renewable Term b) Increasing Term c) Level Term d) Decreasing Term
B
Which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information? a) Consumer Privacy Act b) The Fair Credit Reporting Act c) Unfair Trade Practice Law d) The Guaranty Association
B
When a life insurance policy stipulates that the beneficiary will receive payments in specified installments or for a specified number of years, what provision prevents the beneficiary from changing or borrowing from the planned installments? a) Accelerated benefits provision b) Loan provision c) Spendthrift provision d) Settlement option
C
A graded premium life insurance policy is a modified form of a) Level Term b) Deferred Annuity c) Universal Life d) Whole Life
D
The provision that sets forth the basic agreement between the insurer and the insured and states the insurer's promise to pay the death benefit upon the insured's death is called the a) Insuring Clause b) Payment of claims c) Declarations d) Consideration
A
When determining life insurance premium rates an insurer may NOT legally use which of the following information about the applicant? a) Gender b) Nationality c) Geographic Location d) Age
B
Some deferred annuities an adjustment that subjects the owner of the annuity to share in all loss or gain due to a premature liquidation of bonds. This feature is found in a) A Market Value Adjusted Annuity b) A Fixed Annuity c) A Variable Annuity d) An Equity Indexed Annuity
A
What is the minimum number of members required for group life insurance in this state? a) 10 b) 15 c) 25 d) 100
A
All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT a) The employer pays a bonus to a selected employee to fund the policy b) It is considered a nonqualified employee benefit c) The policy is owned by the company d) Any type of insurance policy may be used
C
An adjustable life policy can assume the form of a) only term insurance b) only permanent insurance c) either term or permanent insurance d) neither term or permanent insurance
C
Which of the following individuals would be a likely candidate to purchase a deferred annuity? a) Someone who wants to grow retirement funds tax deferred b) Someone who needs to start receiving benefit payments within 6 months of the annuity purchase c) Someone who wants to leave the death benefit to the beneficiaries d) Someone who cannot afford life insurance
A
The term "limit of liability" refers to a) Outstanding policy loans b) Exclusion riders c) Loan interest due to insurer d) Death benefit payable to the beneficiary
D
California's Insurance Code requires all insurers to have a department the sole purpose of which is to investigate possible a) Claims arising from arson b) Fraudulent claims from insureds c) Violations of the Code by agents d) Fraud by insurers
A
Dividend received on participating life insurance policies are a) Not taxable because they are a return on your investment b) Taxable because they are a return of unused premiums c) Not taxable because they are a return of unused premiums d) Taxable because they are a return on your investment
C
Which of the following is true regarding a joint life annuity? a) The payments go to a beneficiary upon the last death b) The payments go to the surviving annuitant after the first death c) The payments stop at the first death d) The payments stop at the last death
C
Underwriters use all of these methods to protect the insurer against adverse selection EXCEPT a) Accepting certain risks only at a higher rate b) Restricting coverage c) Refusing to accept a risk d) Only accepting a small percentage of applicants
D
A long stretch of national economic hardship causes a 7% rate of inflation. A policowner notices that the face value of her life insurance policy has been raised 7% as a result. Which policy rider caused this change? a) Value Adjustment Rider b) Return of Premium Rider c) Inflation Rider d) Cost of Living Rider
D
An annuity has accumulated the cash value of $70k of which $30k is from premium payments. The annuitant dies during the accumulation phase. The beneficiary will receive a) $30k b) $70k c) $100K (combination of cash value and premiums) d) A survivor benefit determined by the insurance company
B
The Code defines the term "transact" as all of the following EXCEPT a) Executing a contract of insurance b) Analyzing a contact of insurance c) Solicitation of insurance d) Negotiations prior to a contract of insurance
B
Which of the following is an example of apparent authority of an agent appointed by an insurer? a) The agent puts up a sign with the insurer's logo without express permission b) The agent accepts a premium payment after the end of the grace period c) The agent accepts a premium payment during the grace period d) The agent has business cards and stationery printed
B
Cash value guarantees in a whole life policy are called a) Dividends b) Nonforfeiture values c) Living Benefits d) Cash Loans
B
Restoring an insured financially after a claim is known as a) Reasonable Expectations b) Indemnity c) Adhesion d) Restoration
B
All of the following are true of credit life EXCEPT a) The death benefit cannot exceed the amount of the loan b) The premium payment is included in the loan payment c) The creditor is the policyowner d) The insured names the beneficiary
D
A prospective deferred annuity is concerned about what would happen if he surrendered the annuity before the annuitization period. The agent most likely explained which of the following? a) It is not possible to surrender an annuity before the annuitization period b) Nonforfeiture option guarantees that the owner will receive a surrender value of the interest c) The owner will receive some of the money back, which will depend on the surrender value established by the insurer at the time that the contract is terminated d) The insurance company will apply the money to another annuity or a life insurance policy, but the money cannot be returned
B
All of the following are true about key-person insurance EXCEPT a) the business is the beneficiary b) the death benefit is taxable to the business c) the business is the applicant and owner
B
The insurance Commissioner may deny an applicant an insurance license for any of the following reasons EXCEPT a) the applicant lied about an insurance policy b) the applicant does not have a good business reputation c) the applicant lacks integrity d) the applicant does not have a California business address
D
Which of the following allows the insurer to relieve a minor insured from premium payment if the minor's parents have died or become disabled? a) Jumping Juvenile b) Juvenile Premium Provision c) Waiver of Premium) d) Payor Benefit
D
An Equity Indexed Annuity will grow based upon a) A diversified portfolio of individuals stocks and bonds b) A moderate rate of interest c) A rate of interest determined by the banking system d) Performance of a recognized index
D
An individual has been diagnosed with Alzheimer's disease. He is insured under a life insurance policy with the accelerated benefits rider. Which of the following is true regarding taxation of the accelerated benefits? a) Principal is tax free, but interest is taxed b) The entire benefit will be received tax free c) The entire living benefit is considered taxable income d) A portion of the benefit up to a limit is tax free, the rest is taxable income
D
If a life insurance company uses HIV testing as a part of its underwriting, when must an applicant be notified of the procedure? a) Prior to ordering a physical examination b) Prior to solicitation of the policy c) Prior notice is not required d) Prior to performance of the test
D
If an applicant submits the initial premium with an application, which action constitutes acceptance? a) The applicant submits a statement of good faith b) The producer delivers the policy c) The insurance company receives the application and initial premium d) The underwriters approve the application
D
In the Executive Bonus Plan, who is the owner of the policy and who pays the premium? a) Company is the owner, but the executive pays the premium b) Board of directors is the owner and pays the premium c) Company is the owner and pays the premium d) Executive is the owner and pays the premium
D
An agent offers life insurance for no cost to people buying property in a local development. When the Commissioner investigates the agent's actions, which of the following is NOT a likely consequence? a) A cease and desist order will be issued b) A hearing will be called c) The agent will be charged with a felony and/or up to 10 years in jail d) A civil penalty of up to $5k if the actions were not willful and $10k fine if they were willful
C
An annuity's contract holder dies before the annuitization date. Taxes on the contract's interest will continue to be deferred if the beneficiary is a) A charity b) The contract holder's dependents c) A named beneficiary d) A spouse
D
In insurance, an offer is usually made when a) The insurer approves the application and receives the initial premium b) The agent hands the policy to the policyholder c) An agent explains a policy to a potential applicant d) The completed application is submitted
D
Which of the following is NOT a type of Temporary Insuring Agreement? a) Conditional Receipt b) Acceptance Form of Receipt c) 30-day Interim Term Receipt d) Bridge Coverage Receipt
D
Slippery floors, reckless driving, or providing false info are examples of a) Hazards b) Pure risks c) Cause of loss d) Perils
A
Which statement below is INCORRECT regarding the type of term insurance that fits best with the applicant's needs? a) Employers looking to provide cost effective group life insurance for their employees may choose annual renewable term b) Applicants who may require a larger death benefit in the future should buy convertible term insurance c) Applicants concerned with the increasing cost of living should purchase increasing term d) Applicants wishing to pay off a mortgage should they suffer a premature death might buy a decreasing term plan
B
Which of the following is true regarding a joint life annuity? a) The payments stop at the last death b) The payments go to a beneficiary upon the last death c) The payments go to a surviving annuitant after the first death d) The payments stop at the first death
D
Which rider provides for the payment of part of the policy death benefit if the insured is diagnosed with a terminal illness that will result in death within 2 years? a) Long-Term Care Rider b) Cost of Living Rider c) Accidental Death Rider d) Living Needs Rider
D
