life insurance

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

Aleatory

Any insurance agent who commits a repeated violation of the Insurance Code with respect to insurance replacement will be liable for

An administrative penalty of no less than $5,000 and no more than $50,000 per violation.

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

Not more than $10,000, imprisonment not to exceed one year or both.

The annuitant dies while the annuity is still in the accumulation stage. Which of the following is TRUE?

The beneficiary will receive the greater of the money paid into the annuity or the cash value.

In terms of Social Security, what is the interval spanning between the day when the youngest child of a family turns 16 and before the surviving spouse turns age 60 called?

Blackout Period

The Department of Insurance contacts an agent about a claim that was settled two months ago. Within what timeframe must the agent issue a complete response?

21 days

What are the continuing education requirements for life-only agents in California?

24 hours every 2 years

An Internal Revenue Code provision that specifically provides for an individual retirement plan for public school teachers is a(n)

403(b) Plan (TSA).

As part of the continuing education requirement, what is the minimum number of hours of continuing education specific to long-term care insurance to be completed prior to each license renewal?

8

All of the following statements are true regarding policy dividends EXCEPT

?

What is an advantage of the Temporary Insuring Agreement to the applicant?

?

In order to become an admitted, authorized insurer, what is the primary body of law about which an applicant company must be concerned?

California Insurance Code

An insurance contract requires that both the insured and the insurer meet certain conditions in order for the contract to be enforceable. What contract characteristic does this describe?

Conditional

Which of the following is NOT an example of a valid insurable interest?

Debtor in the life of the creditor

A producer agent must do all of the following when delivering a new policy to the insured EXCEPT

Disclose commissions earned from the sale of the policy

If an agent unwittingly gives a client incorrect information, what professional insurance would pay for losses or defend the agent against any resulting lawsuits?

Errors and Omissions

Items stipulated in the contract that the insurer will not provide coverage for are found in the

Exclusions clause.

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)

Executive bonus.

What type of premium do both Universal Life and Variable Universal Life policies have?

Flexible

An insured has the right to return the new insurance policy for a full refund during the

Free-look period.

The automatic premium loan provision is activated at the end of the

Grace period.

At the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability. This rider is called

Guaranteed insurability.

What type of insurance would be used for a Return of Premium rider?

Increasing Term

Which statement regarding insurable risks is NOT correct?

Insureds cannot be randomly selected.

If a retirement plan or annuity is "qualified," this means

It is approved by the IRS.

Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy?

Premiums are not tax deductible as a business expense.

Profitable distribution of exposures serves the purpose of

Protecting the insurer against adverse selection

Every long-term care insurer in California must submit to the Commissioner a list of all agents or other insurer representatives authorized to solicit individual consumers for the sale of long-term care insurance. These submitted agent lists must be updated at least

Semiannually

All of the following employees may use a 403(b) plan for their retirement EXCEPT

The CEO of a private corporation.

An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date?

The date of medical exam

All of the following must be specified in an insurance policy EXCEPT

The financial rating of the insurer

Which of the following products requires a securities license?

Variable annuity

All of the following benefits are available under Social Security EXCEPT

Welfare benefits.

Joint and survivor.

settlement option which pays throughout the lifetimes of two or more beneficiaries

Who is eligible to purchase an IRA?

Anyone who has an established 401(k)?

An individual was involved in a head-on collision while driving home one day. His injuries were not serious, and he recovered. However, he decided that in order to never be involved in another accident, he would not drive or ride in a car ever again. Which method of risk management does this describe?

Avoidance

Any insurance agent who engages in the insurance business and violates the Code with respect to insurance replacement shall on the first violation

Be fined a sum of $1,000.

What is the main purpose of the Seven-pay Test?

It determines if the insurance policy is a MEC.

Which of the following is correct regarding credit life insurance?

It insures the life of a debtor.

Which of the following is NOT true regarding the needs approach method of determining the value of an individual's life?

Need is predicted using the number of years until the insured's retirement.

Which of the following is NOT true about a joint and survivor annuity benefit option?

Payments stop after the first death among the annuitants.

All of the following are true about variable products EXCEPT

Policyowners bear the investment risk.

Based on Human Life Value Approach, which of the following is NOT used to calculate an individual's life value?

Predicted needs of the family after the insured's death.

All of the following are examples of risk retention EXCEPT

Premiums

Cancellation

The act of revoking or terminating an insurance policy is called

All of the following are reasons an insurer or an insured would have the right to rescind a policy EXCEPT

The amount of paid claims exceeds the premiums paid.

In a fixed annuity, which of the following is true regarding the guaranteed interest rate on the investment?

The annuitant will receive the higher of either the guaranteed minimum rate or current rate.

Level term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will be

Adjusted to the insured's age at the time of renewal.

Any insurer who engages in the insurance business and violates the Code with respect to insurance replacement shall on the first violation

Be fined a sum of $10,000.

If a policy has an automatic premium loan provision, what happens if the insured dies before the loan is paid back?

The balance of the loan will be taken out of the death benefit

An insured stops making payments on a loan taken from his cash value policy. What will most likely happen?

The policy will terminate when the loan amount with interest equals or exceeds the cash value.

Rate

The price of insurance for each exposure unit is known as

Which of the following statements regarding deferred compensation funds is INCORRECT?

They are usually qualified plans.

An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will coverage begin?

When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health

An investor buys a life policy on an elderly person in order to sell it for a life settlement. This is an example of

A STOLI policy.

An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy?

$50,000

A couple receives a set amount of income from their annuity. When the wife dies, the husband no longer receives annuity payments. What type of annuity did the couple buy?

Joint life

For the reported losses of an insured group to become more likely to equal the statistical probability of loss for that particular class, the insured group must become

Larger

Stranger-originated life insurance policies are in direct opposition to the principle of

Law of large numbers.

A person who does not lock the doors or does not repair leaks shows an indifferent attitude. This person presents what type of hazard?

Morale

An insured and his spouse own a home. When the insured dies, the insurer pays the remaining balance on his home loan. Which type of life insurance provision/rider does this describe?

Mortgage Redemption