Life Insurance
In financial planning, what is the Human Life Value concept based on?
Income
The insurance code definition of an "insurance broker" is:
Someone paid to transact insurance on behalf of another person, but not on behalf of the insurer
In insurance terminology, "indemnify" means
make whole
What form of insurance is usually found in Group Life Insurance?
1 year term
Group insurance law stipulates that an incontestability period be provided to the applicant. The time period is:
2 years
The social security blackout period ends when the surviving spouse reaches the age of:
60
Which of the following is a hazard?
A condition that may increase the likelihood of a loss occurring
Which of following best describes a term insurance policy?
A death benefit is payable, but there is no cash value.
In California, an insurer organized under the state laws of Nevada is considered:
A foreign insurer
The California Insurance Code cites a specific definition for a "life agent." A life agent is:
All of the above are false
All of the following are eligible for dependent coverage under an employer's group life insurance policy EXCEPT:
All unmarried grandchildren under age 21
The California Insurance Code contains very specific regulations regarding the ability of a senior citizen to return a life insurance policy or annuity. The regulation:
Allows a senior citizen a minimum of 30 days to return a life or annuity contract to the insurer. They are entitled to a full refund of the premium.
What occurs during the accumulation period of an annuity?
Allows the annuity to build on a tax-deferred basis
A representation in an insurance contract qualifies as which of the following?
An implied warranty
What is an insurer guilty of if it fails to adopt and implement reasonable standards for prompt investigation and processing of claims?
An unfair claims practice
When must insurance records for insurance agents and insurance brokers be made available to the insurance Commissioner?
At all times
What is the penalty for unlawfully acting as an insurer without a certificate of authority?
Both up to one year imprisonment and a fine not exceeding $100,000
How can partners guarantee a market for their share of the business in the event of death?
Buy-sell agreements.
The premiums for a variable universal life insurance contract:
Can vary in payment schedule and amount.
As defined by the California insurance code, "insurance" is a:
Contract
From the following, select the type of life insurance which could be best used to protect your customer's heirs from a mortgage obligation should your customer die:
Decreasing term
When premiums are paid into a universal life insurance policy, insurers must make certain adjustments to the cash value. The company will add the current premium paid, and:
Deduct for expenses and mortality costs, then add current interest.
Underwriters classify insurance risks as any of the following EXCEPT
Didvidend risks
Which of the following is a correct statement about the premium payment modes? The total premium paid by a life policyowner for one policy year is:
Greater if the premium is paid semiannually rather than annually.
Under the 10-day right to return, the policy will pay proceeds:
If the policy is not returned but premium is paid.
After receiving your insurance license, if you change your address, you are to notify the Commissioner:
Immediately
All of the following are examples of policy exclusions frequently found in life insurance to reduce exposure to higher than average risks, EXCEPT:
Incontestability
What is one difference between group life and individual life underwriting?
Individual life insurance requires the applicant to answer medical questions.
What information can be party to a contract of insurance be allowed NOT to communicate according to California law?
Information which the other party already knows
All of the following are examples of the dividend option available on a whole life insurance policy, EXCEPT:
Life income with period certain
An effort to decrease the frequency of losses is known as
Loss reduction.
The state laws that regulate insurer practices regarding underwriting, sales, rate-making and claims handling are called:
Market conduct regulation
What would a person be guilty of who refuses to submit books and records to the Commissioner?
Misdemeanor
Certain principles apply to the business of insurance. One of them is the concept of insurance issued as an "aleatory" Contract. What does aleatory mean here?
Performance depends on an uncertain future event
Which of the following statements about life insurance policy loans is correct?
Policy loans may be repaid at any time while the policy is in force.
All of the following are used in determining life insurance rates, EXCEPT:
Policy reserves
Which risk classification carried the Lowest premium?
Preferred
In a reinsurance agreement the insurer that transfers its loss exposure to another is called then
Primary insurer
The guaranteed insurability option provides the ability to:
Purchase additional insurance regardless of insurability.
Charles received a large inheritance from his uncle's estate. Because he can use the income, he buys an annuity with the full amount of his inheritance that will begin paying him monthly payments starting the following month. Charles has purchased a/an _____ annuity.
Single Premium Immediate
Which provision in a life insurance contract prohibits a beneficiary from assigning his or her interest in the policy proceeds?
Spendthrift clause
There are four basic classes of life insurance. All of the selections listed below are regarded as ordinary insurance, EXCEPT:
Term life insurance policy
Which of the following often acts as a "field underwriter"?
The agent
From the choices below select the one which is false about Social Security (OASDHI):
The benefits received are closely related to the contributions made, actuarially speaking.
A child born or adopted after a family policy is issued has what effect on the policy?
The child will have term insurance coverage under the same contract.
How does the cost recovery rule apply when a life insurance policy is surrendered for its cash value?
The cost basis of the policy is exempt from taxation.
Who pays the premiums for voluntary group life insurance benefits made available through an employer?
The employee
John applies for a variable annuity and does not request that the premiums be immediately invested in a stock or bond portfolio. After the annuity is issued, John returns the annuity contract to the insurer within the free look period. What will John receive from the insurer?
The entire premium
What is the limit of liability in a term life insurance policy?
The face amount of the policy.
The CIC requires property insurance policies specify all of the following except
The insured's address
Gina, the beneficiary on a life insurance policy, dies before the insured dies. In California, when the insured eventually passes away, the death benefit goes to which of the following if the policy is still in effect?
The insured's estate
In a group life insurance policy who are the parties to the master contract?
The insurer and the employer.
What happens to an agent's license after all notices appointment have been terminated?
The license is considered to be inactive.
Regarding life insurance coverage for a company, the one responsible for obtaining the coverage, maintaining the policy, and paying the premium is:
The master policy holder
In group life insurance, who is issued a certificate of insurance?
The participant
All of the following statements about survivorship life insurance are true, EXCEPT:
The policy face amount is paid out only upon the death of the first insured to die.
What does the statement "Life insurance creates an immediate estate" mean?
The total death benefit is paid whenever the insured dies.
The social security normal retirement age depends upon:
The worker's year of birth
Which of the following is incorrect regarding life insurance benefit settlements?
They must be decided at the time of application.
The purchase of an insurance policy by a consumer is the process of risk:
Transfer
Which of the following best defines risk?
Uncertainty of financial loss
What do we call the process whereby insurers decide which customers to insure, and what coverage to offer?
Underwriting
What is it called when an insurer uses higher rate based solely on religion, race, or ethnic group?
Unfair discrimination
Which type of insurance coverage has both a savings element and a flexible premium option?
Universal life
If one were to receive the principal sum benefit of death in a disability policy, the death must occur:
Within a specified number of days after injury occurs
A participating life insurance policy is defined as a contract that
allows the policy owner to receive a share of surplus in the form of policy dividends.
The additional premium charged by an insurer for adding the accidental death benefit to a whole life policy
does not affect the policy's cash value
Death benefits that are received by a beneficiary are generally:
exempt from federal income tax
Which of the following describes an insurer who has enough financial resources only to provide for all its liabilities and for all reinsurance of all outstanding risks?
insolvent
All of the following are contained in a mortality table EXCEPT
number living at the end of designated year.
When the public purchases annuities, they are attempting to address the risk of:
outliving the money they have saved for retirement
If the insured intentionally submits a fraudulent claim, what could the insured be charged with?
perjury
An insurer's request for an attending physician's report MUST be accompanied by a copy of the:
signed authorization
An insured bought a $150,000 non-participating whole life policy many years ago. She is 100 years old today. She has never borrowed from the policy, and has made all premium payments when due. The policy cash value is:
$150,000
If an insurer pays an insured $25,000 in lost wages, $45,000 for physicians visits and hospital costs, and $15,000 for physical therapy treatments, and later discovers that the claim was fraudulent, the insured may be fined as much as:
$170,000 Calculation: ($25K + $45K + 15K) X 2 = $170K ($170K is GREATER than $150K)
A person has paid $50,000 into a fixed annuity over 20 years. When he decides to begin income payments the insurer calculates that he will receive $4,000 per year for life, which means that he will receive a total of $100,000. In the first 10 years of payments how much is taxable each year?
$2,000
How much employer-provided group term life insurance is exempt from income taxation?
$50,000
If an employee has a term life insurance policy of $50,000, what is the maximum that can be written for his spouse?
$50,000
Violating the Federal law that prohibits certain acts in the business of insurance is punishable by a fine up to:
$50,000
What maximum amount of employer-provided group-term life insurance is tax-free (excluded from an employee's income)?
$50,000
A person has a $100,000 life insurance contract. He passed away after having paid $500 in premium. How much tax will the beneficiary need to pay?
0%
If an insurer is found guilty of unfair trade practices while inadvertently issuing, renewing and servicing a policy, the insurer could be prosecuted for how many violations?
1
The maple insurance company has only the Mile high manufacturing account for disability income insurance for all of Mile high's employees. A high concentration of these insured is in one location. Oak grove insurance company previously had the Account along with many other large manufacturing companies around the country. Choose from below the correct statement regarding the " law of large numbers" as it relates to these two insurers: 1) Oak grove can use the law of large numbers better than maple, 2) catastrophic loss exposure was the same for both insurers, 3) The more employees insured, the battery company can predict the injury of anyone employee
1 only
If the Commissioner issues a Notice of Seizure for documents and the individual fails to send those documents what is the penalty?
1 year in jail and/or $1,000 fine
*Violating the Federal law that prohibits certain acts in the business of insurance is punishable by imprisonment for up to:
10 or 15 years
The laws of most states require that a cash surrender benefit be provided in all of the following types of life insurance policies EXCEPT:
10 year convertible term policy
If the owner of an annuity makes a withdrawal from here before age 59 1/2, what will the penalty be?
10%
What is the penalty tax imposed on amounts received from a modified endowment contract?
10%
The free look period for life insurance is:
10-30 days
Social Security disability benefits are paid to persons expected to die or be disabled at least:
12 months
How many days is allowed by law for an insurance firm to supply claim forms to the person submitting a claim?
15
The MINIMUM number of employees for group life insurance in California is:
2
How long is the life insurance policy grace period?
2 months
At what age does a "jumping juvenile" policy increase the benefit from $1,000 to$5,000?
21
An agent gets his license in 2018. He will need to complete ______ hours of continuing education for each 2-year license term.
24 hours
How much continuing education is an agent who holds the life-only and/or accident & health license AND property and/or casualty broker-agent license required to complete?
24 hours per license term for either license
Dependent children are eligible for coverage under the employee's group life insurance policy through age:
26
According to section 1729.2 of the California Insurance Code, which of these does NOT qualify as "background information"?
30
How long is the free cancellation period for life insurance policies offered to individuals who are 60 or older?
30 days
Life insurers are required to maintain records on policies they have sold. How long from the date of delivery must these records be kept?
5 years
To reach currently insured status under the Social Security system, an individual must be credited with a minimum of
6 quarters of coverage during the last 13-quarter period
What is a senior's age as it pertains to life and annuities?
60
A 10-year certain annuity with an installment refund is purchased. The annuitant dies after receiving monthly payments for 5 years. How many remaining payments will the insurer make?
60 payments.
Which of the following statements concerning a contributory group life program is true?
75% of eligible employees must participate
Which of the following would be considered an alien insurer?
A company located in England and doing business in California.
All of the following apply to variable life insurance, EXCEPT:
A guarantee is provided by the insurer for the performance of the fund.
Renewable term insurance can be best described as:
A level death benefit with an increase in premium
Which contract promises to pay the owner a guaranteed minimum income for as long as the individual lives?
A life annuity
All of the following information is gathered during the personal financial planning process EXCEPT
A list of a person's civic and professional organization memberships.
Any situation that presents the possibility of a loss is known as:
A loss exposure
In a life settlement arrangement between a policyowner and a life settlement provider, how would the policyowner typically be paid?
A lump sum payment
Which of the following would be the best client to purchase a variable annuity?
A middle aged divorced housewife with a substantial portfolio, and $60,000 per year income.
A life insurance policy written after 1988 that fails to meet the seven pay test is known as
A modified endowment contract.
Within the scope of insurance contracts, what is "consideration?"
A monthly payment is made by the insured.
A schedule illustrating the probabilities of death each year for life insurance is called:
A mortality table
What type of life insurance policy gives the owner the right to share in the insurer's profits in the form of a dividend?
A participating policy
Which of the following is a description of a Life and Disability Analyst?
A person licensed to advise clients about life and disability insurance for a fee
Select the choice which best describes an insurance agent:
A person who, for compensation, transacts insurance on behalf of the insurer.
The price of insurance for each exposure unit is called the:
A rate
Which type of beneficiary designation gives the policyowner the right to change the beneficiary designation without requiring the beneficiary's consent?
A revocable beneficiary designation
Which distribution from an annuity would be subject to a penalty tax?
A single payment is made to a taxpayer who is age 55.
Joe receives a large bonus at work and decides to purchase an annuity with it. His monthly income payments from the annuity will begin the following month. Which of the following has Joe purchased?
A single premium immediate annuity
An insurer who offers rates for insurance coverage to insureds who have an average or better than average loss exposure is called
A standard market insurer.
A basic life insurance policy illustration must include all of the following EXCEPT
A statement that actual results will be as illustrated.
The replacement of life insurance and annuity contracts requires which of the following:
A statement to the effect that the policy being applied for is replacing a prior one.
Coverage cannot be obtained from an admitted insurer. Therefore an entity is identified that can sell insurance not underwritten in California. What is this entity?
A surplus lines broker
An annuity in which the underlying investment performance will cause a fluctuation in the value of the benefit is:
A variable annuity
An assignment which transfers all "incidents of ownership" to another party is a(n):
Absolute Assignment
Which provision will pay a portion of the death benefit prior to the insured's death due to a serious illness?
Accelerated death benefit
What refund is owed when a senior citizen elects the right to return and cancels an individual variable annuity policy invested in a mutual fund?
Account value
What refund is owned when a senior citizen elects the right to return and cancels an individual variable annuity policy invested in a mutual fund?
Account value
The insurance term for an insurer which has met the conditions required to transact insurance in the state of California is
Admitted
The tendency of a person who has greater than average exposure to loss to seek out insurance is called:
Adverse selection
Which of the following actions would NOT fall under the definition of execution of a policy?
Advertising
All of the following are considered insurance transactions EXCEPT:
An agency installs new premium accounting software.
Identify which of the following is not a deceptive act or practice, or unfair method of competition.
An agent tries to sell a prospect on three separate occasions. A second agent is able to sell the same prospect by convincing him to buy a more expensive, but better coverage policy.
"A contract whereby an individual deposits funds with a life insurance company, the individual defers taxes on the buildup of savings within the contract and the individual can choose to take money out in several ways upon retirement." What does this describe?
An annuity
A type of contract, which is considered a savings instrument used for accumulating investment funds for the purpose of eventually receiving those through a systematic program of withdrawal is a/an:
An annuity
How is the Insurance Commissioner selected?
An election by the people
A policy is issued to a 32 year old has a face amount of $100,000. When the insured reaches the age of 55, the policy has built up $100,000 of cash value. Choose from the selections below the type of policy this most likely descibes:
An endowment at age 55 policy
An example of a morale hazard in relation to a life insurance application would be:
An individual has an indifferent attitude about participating in activities that may be damaging to his health
Brad has a waiver of premium rider provision in his life insurance policy. Which of the following would be excluded from coverage?
An injury one inflicts on oneself. An injury incurred while robbing a bank. An injury sustained as the result of a war.
Which of the following describes a natural person employed to aid an agent or broker in transacting insurance other than life, disability, or health insurance?
An insurance solicitor
Which of these is the best way to define the concept of "indemnity"?
An insured cannot receive more than an actual economic loss in the event of a claim
All of the occurrences listed below are examples of an insurable event as defined by the CA Insurance Code, EXCEPT:
An insured suffers a financial loss in the state lottery.
Upon notification of a claim, a claimant may have access to the California Fair Claims Settlement Practices Regulations through all of the following means EXCEPT:
An interview appointment with the agent of record.
Upon notification of a claim, a claimant must be given access to the California Fair Claims Settlement Practices resolution by all of the following means EXCEPT:
An interview appointment with the agent of record.
How do the rights of an irrevocable beneficiary differ from those of a revocable beneficiary?
An irrevocable beneficiary has a vested right that neither the policy owner nor his creditors can impair without the beneficiary's consent.
There is a financial product that was created to address the risk of person outliving their life savings. What is this product called?
Annuities
Which contract provides for the systematic liquidation of a fund?
Annuity
All of the following are true statements concerning the treatment of federal income tax on life insurance, EXCEPT:
Annuity death benefit proceeds are exempt from all taxation.
An agent's appointment with an insurer will be discontinued if any of the following circumstances exist, EXCEPT:
Another insurer submits an employment application
If a dependent child covered by a group life plan is incapable of self-support, coverage under the plan may continue up to age:
Any age
What is the penalty for unlawfully acting as an agent or broker for, or aiding an insurer without a certificate of authority?
Any penalty for applicable misdemeanor, plus $500, plus $100 per month that the agent continues the violation
Raymond, an agent who represents the Sterling Insurance Company advertises in the yellow pages: STERLING INSURANCE COMPANY Raymond Insurance Agency Raymond no longer has a contract to sell for Sterling but since Sterling has such a good name he decides to let the ad run again. This would be considered:
Apparent authority
Transferring ownership rights from the current owner to another person is known as:
Assignment
Senior citizens are given a 30-day right to return a life insurance policy"
At age 60 or older.
When is a Property & Casualty Agent required to inform an insured of any conditions which may be precedent to coverage regarding a personal auto policy?
At application
The premium loan rider on a life insurance policy kicks in:
At the end of the grace period
What is required when an application reveals conditions that require more information?
Attending Physician's Statement
Which of the following is an express authority of an agent in an agency agreement?
Authority to represent the insurer
An insurance company can transact any class of insurance:
Authorized by its articles of incorporation or charter, and is admitted to transact that class by the insurance commissioner.
How many days does the California Insurance Code give an individual to return a life policy for cancellation?
Between 10 and 30 days.
The period of time in which a housewife, who has survived the death of her husband, will not receive income from Social Security is called the:
Blackout period
Every licensee must indicate his or her license number on which of the following documents?
Business cards. Print advertisements. Written price quotations.
If the owner of a life insurance policy does not select a settlement option on behalf of the beneficiary, the beneficiary:..
Can choose a settlement since it was not chosen by the owner.
A life insurance policy has cash value build-up in it. This means:
Cash value can be used for loans, usually at lower rates of interest.
All of the following would be considered unfair trade practices, EXCEPT:
Committing an act of discrimination whether it be fair or unfair.
The policy provision which comes into affect when the insured and primary beneficiary die in a stimulus accident with no evidence as to who died first is:
Common disaster provision
A failure to communicate information which a party to an insurance contract knows and should communicate, is called an act of:
Concealment
In the business of insurance, concealment is defined by all of the following statements, EXCEPT:
Concealment does not occur if no inquiry is made
The best description of a hazard is a/an:
Condition that may increase the chance that a loss may occur
A type of receipt stating that coverage begins on the date of the application as long as the insurer approves the application is a:
Conditional Receipt
When one person applies for an insurance policy on the life of another the application must be signed by both the applicant and the person whose life is to be insured. The proposed insured's signature on the application indicates that he or she:
Consents to the issuance of insurance on his or her life that will owned and controlled by someone else.
An attempt by an agent to deter an insured from replacing an existing life insurance policy is called
Conservation
Any attempt by an existing insurer or their agent to dissuade a policy owner from replacing an existing life insurance or annuity contract is known as:
Conservation
Which report about an insurance applicant's creditworthiness and personal characteristics may influence eligibility for life and health insurance?
Consumer report
Oscar owns a whole life policy that he has been paying for many years. He would like to continue having life insurance and can't afford to make the premium payments, but needs about 30% of the cash value for a couple of years. What would be the best course of action for ask her to take?
Continue making the premium payments to keep the contract in force and borrow from cash value
Which of the following is considered ordinary life insurance
Continuous premium whole life
Which of the following applies to Social Security
Contributions are compulsory for most workers
Which of the following applies to Social Security?
Contributions are compulsory for most workers
Select the policy riders frequently found in life insurance policies:
Cost of living. Waiver of premium. Accidental death and dismemberment.
Insurers make an adjustment to the cash value of an account of a universal life policy each time a payment is made. They are the premium paid and:
Current interest adjust for morality and a general expense charge
A worker dies while he is credited with six quarters of the last 13 quarter period. What status does the worker have under social security?
Currently insured
What is the difference between deferred annuities and immediate annuities?
Deferred annuities have longer accumulation periods.
Which policy is a savings instrument designed to first accumulate funds and then systematically liquidate those funds?
Deferred annuity
What is the first step in the personal financial planning process?
Define objectives
According to the California Code of Regulations governing the settlement of claims, which of the following actions is fair and equitable in settling a claim?
Delaying a decision in order to investigate
The process whereby a mutual insurer becomes a stock company is called
Demutalization
Failure to report background changes within 30 days as required under Section 1729.2 of the California Insurance Code could subject a licensee or applicant to:
Denial. Suspension. Revocation of the license.
What would be the insurance commissioner's most likely course of action if an applicant for an insurance license had a pervious application for a professional license denied for cause by any licensing authority within 5 years of the date of the filing?
Deny the application without a hearing.
The mass marketing system that uses the mail as a method to reach people and gain interest on insurance products is:
Direct response
All of the following would be considered unfair claims practices, EXCEPT:
Directly advising a claimant to obtain the services of an attorney.
Which of the following is false about dividends paid from life insurance policies?
Dividends are a return of excess premium and are therefore taxable.
Insurable interest in a life insurance policy:
Does not need to exist at the time of loss, only at the time the policy is written
An insurer organized under the laws of the State of California is a:
Domestic insurer
What rider doubles the face amount of the policy?
Double indemnity rider
The doctrine of "utmost good faith" applies to the business of transacting insurance. Which of the following is an example of its application?
Each party is entitled to rely upon the representations of the other party
From the descriptions below, identify which one is a term policy.
Each year the premium increases as the insured grows older. After several years the coverage and premiums ends simultaneously. Cash value is not created.
When referring to an insurance contract, when must a representation be made?
Either at the time of or before policy issuance
The purchase of an insurance policy may not provide one of the following for the insured. Select the most complete answer:
Elimination of the risk
A group insurance plan is contributory when the:
Employee pays part of the premium.
Which type of policy pays the face amount if the insured survives to the end of a certain period?
Endowment insurance
What is required of the insured to attain group insurance coverage and not have to provide evidence of insurability?
Enrollment must occur during an eligibility period.
The rules regarding life insurance policy illustrations are intended to ensure all of the following, EXCEPT:
Ensure that the illustration specifies that both guaranteed and non-guaranteed elements will continue unchanged for all years shown.
What type of annuity has a minimum fixed interest rate and can also achieve stock-market-like gains?
Equity Indexed annuity
Which is NOT part of transacting insurance?
Establishing a list of clients
If an applicant has been convicted of a misdemeanor and that misdemeanor conviction is later expunged pursuant to California Penal Code section 1203.4, which of the following is true?
Even though the misdemeanor conviction was expunged, the applicant must still disclose the conviction on the application for an insurance license.
When children are covered under a Family Life policy:
Evidence of Insurability is not required if conversion is made to permanent insurance for those children.
Life insurance settlement options included all of the following, EXCEPT:
Extended term option
All of the following are true about term life Insurance policies EXCEPT the:
Face amount is paid if the insured survive to the end of the policy period
What would we call a representation which fails to correspond with its stipulations or assertions?
False
All of the following would be considered one of the four major types of loss exposures, EXCEPT:
Financial loss exposure
Your insured is to blame for an auto accident. He files a claim with his own insurer for the collision damage to his car. This called
First party claim
Assuming all of the following would have an equivalent face amount, which would have the lowest premium in the first year if the insured were 22 years old?
Five-year term insurance
Unless the applicant indicates otherwise during the right-to-return period in an individual annuity, the premium for a variable annuity would be invested only in:
Fixed income investments and money market funds
Which of the following replaces the universal life's purely fixed fund cash value with a facility for the policyowner to select the investment media in which the cash value is placed?
Flexible premium variable life
Which of the following is NOT an option for the use of the policy dividends?
Found the distribution of monthly income payments.
Retirement benefits under social security are available only for workers who are:
Fully insured
Which of the following is NOT one of the common personal uses for life insurance?
Funding a buy-sell agreement.
Exclusive agents:
Generally represent only one insurer
The conversion privilege of a terminating employee would be:
Group life to term
which of following gives individuals the right to purchase additional life insurance regardless of their insurability?
Guaranteed insurability
Chuck Harris has earned a Charactered Life Underwriter (CLU) designation. From the selections below choose the one that the California insurance Code would find acceptable when publishing his name:
Harris Insurance Company
If a licensee needs to renew his license on the last day for renewal:
He can apply and pay the renewal fee online and get a receipt so that he can continue operating as an agent.
When applying for health insurance which of the following on the application is NOT an acceptable question to ask?
How do you think your health in these days?
Which of the following is true regarding an irrevocable beneficiary?
If the irrevocable beneficiary permits, the policy owner may borrow from the cash values.
Which of the following is true about life insurance beneficiary designations?
If there is no surviving beneficiary, the death benefit is paid to the insured's estate.
Which of the following is true regarding an aleatory contract?
If there were a loss, the insurer would pay out considerably more compared to the insured's premium.
When any change in residence address occurs, every licensee and every applicant for a license must notify the Commissioner _____________.
Immediately
In the state of California a rate will not remain in effect if it is considered to be any of the following, EXCEPT:
Impartial
Julie is a licensed insurance salesperson who represents the Silver Dollar Insurance Company. If you were to look at the front of their office you would see a sign that reads: SILVER DOLLAR INSURANCE COMPANY Julie Insurance Agency If Julie performs acts that are not specifically named in the written contract she has with Silver Dollar she is exercising her _________ authority.
Implied
What factor supports the principle of indemnity?
Insurable interest
A written contract attempts to indemnify another party against loss, damage, or liability arising from a contingent or unknown event. This describes:
Insurance
All of the following are characteristics of adverse selection EXCEPT
Insurance companies can not discriminate against applicants who have a higher probability of loss.
All of the following are characteristics of adverse selection EXCEPT
Insurance companies can't discriminate against applicants who have a higher probability of loss
The person whose life is covered by a life policy is the:
Insured
A group life policy is issued on a contributory basis. This means that the
Insured employees will pay part of the premium.
The use of non-medical life insurance accomplishes all of the following EXCEPT:
Insureds can avoid answering medical questions on the application
Which of the following statements about policy dividends is TRUE?
Insureds elect a dividend option at the time of policy purchase.
Which settlement option allows only the death benefit earnings to be paid to the beneficiary?
Interest option
From the choices below, select the best description of a speculative risk.
Involving the possibility of a gain in addition to the uncertainty of loss.
Which of the following is true concerning an implied warranty?
It doesn't have to be in writing
All of the following are true of insurance EXCEPT:
It eliminates risk
Of the following, which best describes an annuity?
It has an obligation that is different to the insurance company for both the accumulation period and the liquidation period.
Select the correct statement about the Social Security system.
It is only meant to be a supplement to an individual's major income; it only supplies a minimum floor of income.
Which of the following is characteristic of term life insurance?
It may be based strictly on an oral agreement.
Which is correct about the "Notice Regarding Replacement of Life Insurance" that agents are required to deliver to life insurance applicants:
It must be delivered to the applicant at least by the date of the application.
The professional liability insurance that an agent should purchase is known as Errors & Omissions coverage. Which of the following statements concerning this type of insurance is correct?
It would cover an agent who creates a financial loss by forgetting to renew a policy - a negligent act.
Which policy covering two or more individuals pays the face amount only when the first person dies?
Joint life policy.
Domestic life insurance companies can invest in all the following, EXCEPT:
Junk bonds of small European countries
All of the following statements about universal life insurance are correct, EXCEPT:
Just a small minimum premium payment is required each year.
Which of the following is NOT a type of authority associated with the authority of agents?
Justified
A life insurance policy dividend is
Legally defined as a return of excess premium and not taxable.
If a premium is overcharged in the early years, and then remains constant throughout the premium paying period, though the risk of dying increases, it is called a _________ premium.
Level
According to the CA Insurance Code, in which of the following classes of insurance can be binder NOT be issued?
Life
How would a "pure" risk best be described?
Losing some pay from work because of an injury
The main purpose of an insurance Guarantee Association is to protect the public against:
Loss as the result of insurer insolvency
According to the definition of an ideally insurable risk, which of the following is NOT a requirement?
Loss must be the result of a catastrophic event
One of the provisions commonly found in life insurance is the "misstatement or age" clause. If the age of the insured is in error but not discovered until much later, the insurance company will:
Make an adjustment to the face amount to properly reflect the premiums that have been paid.
As used in the California Insurance Code, the word "shall" means which of the following?
Mandatory
Marvin is involved in a serious car accident. No one is surprised because Marvin is known to drive too fast. Identify the hazard here.
Marvin drives too fast
most life insurers belong to which of the following industry organizations?
Medical information bureau
Select from below the potential costs related with a person's death:
Medical payments Paying off a new car *Both of the above
Which of the following is included in the application process for non-medical insurance?
Medical questions
Which coverage is available at no cost to persons at age 65?
Medicare Part A
A person who acts in a capacity that requires an active license without having a valid license is guilty of a:
Misdemeanor
All of the following qualify as "background information" as defined in Section 1729.2 of the California Insurance Code, EXCEPT:
Misdemeanor charges filed, not resulting in a conviction.
It is a Federal offense for an insurance agent to do all of the following EXCEPT:
Misrepresent facts on an insurance application
An example of a moral hazard in relation to a life insurance application would be:
Misstating your health history to an insurance company.
From lowest to highest, which is the CORRECT order of initial premiums for life insurance policies
Modified premium, ordinary life, single premium.
which component of life a life insurance premium is based not he insureds age and gender?
Mortality
What uses the law of averages to determine life rates?
Mortality table
In determining the rates to charge for life insurance premiums, a company will use:
Mortality, interest, expenses
Which type of insurance policy provides a death benefit that matches the projected outstanding debt on an individual's home?
Mortgage redemption.
An insurer owned by policyholders is a:
Mutual insurer
Which of the following is not legal when determining premium rates for life or disability insurance?
Nationality
When are parties to a contract REQUIRED to communicate information solely based on personal judgment for a matter in question?
Never
When are parties to a contract required to communicate information solely based on personal judgment for a matter in question?
Never
To which of the following classifications of transactions do the regulations regarding the replacement of life insurance and annuity contracts not apply?
New agents who are contacting the clients of other agents.
Identify the penalty for each violation for a person engaging in any unfair method of competition.
No more than $5,000 for each act, or no more than $10,000 for each act if the act is judged to be willful.
What does the term non-medical life insurance mean?
No physical examination is requred.
All of the following statements regarding policy dividends are true EXCEPT
Non-participating policies generally pay large dividends
The insurance term used for an insurer who has not complied with the requirements to obtain a certificate of authority from the California Insurance Commissioner is:
Nonadmitted
Under which policy provisions can a policy be surrendered for its net cash value?
Nonforfeiture options
From the following choices, select the one that best describes the concept of "concealment."
Not communicating that which a party knows and ought to communicate.
All of the following are requirements for a notice by mail to an insured by an insurer, EXCEPT:
Notice must be sent with return receipt required
What document informs the insurance applicant about their rights to information privacy?
Notice of information practices
When an insured reports a loss, the agent becomes obligated by the California Code of Regulations to:
Notify the insurer immediately
The guaranteed insurability rider provides that the policyholder can purchase more insurance:
On his own life at certain specified ages without proof of insurability.
An individual license is considered terminated:
On the death of the licensee
In life insurance policies, naming beneficiaries is an important part of the application process. Choose from below the best description of a contingent beneficiary.
One with the first right to receive proceeds if there is no surviving primary beneficiary and the insured dies.
What is the difference between a conditional premium receipt and a binding premium receipt?
Only a binding receipt always provides insurance that is effective from the date the receipt is given.
When may a representation be withdrawn?
Only before the insurance is in effect
If an agent has several different licenses, which would be required on all printed material?
Only one license number
If the rates an insurance company uses do not have to be filed with the state prior to use, the insurer would be operating under which type of the following jurisdictions?
Open competition
Insurance negatively affects society in all of the following ways EXCEPT
Paid claims do not actually replace the damages as a whole
What refund is owned when a senior citizen elects the right to return and cancel an individual variable annuity policy invested in a money market fund?
Paid premiums and policy fees
Social Security survivor benefits are available for all of the following EXCEPT
Parents of any age who were dependent upon the deceased worker.
Which type of life insurance policy gives the policy owner the right to share in the insurer's surplus?
Participating
John pays the premium for a $200,000 life insurance policy insurance policy and is issued a binding receipt. John dies in an accident the next day. In the course of underwriting, the company determines John was not insurable by their guidelines at the time the binding receipt was issued. What must the insurer do?
Pay the claim in full.
The life insurance grace period allows the insured to
Pay the premium after the due date without loss of coverage
In life insurance, the only measure of liability is the amount:
Payable as provided in the policy
Which benefits are provided by key employee insurance?
Payment to a business when an important employee dies
Choose the best beneficiary designation for the following case: The children are to receive equal shares of the benefit. If any of the children die before the insured does, the insured wishes the remaining children to receive the deceased child's share equally divided among them.
Per capita
The class beneficiary designation which means that the beneficiaries will receive equal shares of the death benefit divided among the surviving members of the class is:
Per capita
What must a surplus line broker do before procuring insurance from a nonadmitted insurer?
Perform a diligent search that establishes that three admitted insurers have declined the risk OR that fewer than three admitted insurers actually write the particular type of insurance sought.
Which of these categories of insurance combine insurance protection together with cash accumulation?
Permanent insurance
As used in the California Insurance Code, the word "may" means which of the following?
Permissive
Which type of exposure can be best defined as a condition or situation where the exposure to financial loss is presented to an individual or family from causes such as injury, disability, death, sickness, or unemployment?
Personal loss exposure
Which type of loss is a business exposed to death, retirement, resignation or disability of a key employee?
Personnel Loss Exposure
In life insurance, the loss of a key employee is considered a:
Personnel loss
The CLHIGA covers all of the following types of insurance, EXCEPT:
Plate glass
Regarding the difference between mortality tables for annuities and life insurance, choose the correct statement from the following:
Policy insureds die sonner.
Social Security provides protection against the financial consequences of all of the following, EXCEPT:
Poor investments
According to the CA Insurance Code, all insurers must maintain a department to investigate:
Possible fraudulent claims from insureds
According to the Unfair Practices Act, it is permissible for:
Premium and annuity payments to be different for men and women if based on information found on gender-separated mortality tables.
According to the unfair Practices Act, it is permissible for:
Premium and annuity payments to be different for men and women if based on information found on gender-separated mortality tables.
The incontestable clause of a life insurance policy:
Prevents the insurer from voiding the policy after 2 years on the grounds of misrepresentation, concealment or fraud of the insured.
A significant benefit to the insured in group underwriting versus individual is:
Previous claims are not aconsideration.
A life agent's records must included all of the following, EXCEPT:
Printed material in general use which has been distributed by the insurer
If an insurer must have its rates accepted by the insurance Department prior to using them, the insurer would be operating in which of the following types of jurisdictions?
Prior approval
Unless it is merely a statement of an expectation or a belief, a representation as to the future is considered which of the following?
Promise
"Fiduciary Responsibility," as it pertains to an insurance agent, is BEST defined as:
Prompt and timely forwarding of the insured's premium payment to the home office.
A possibility of financial loss resulting from the ownership of property is known as:
Property loss exposure
When premium payments on a whole life insurance policy are being waived because the person whose life is insured is totally disabled, the actual effect on the policy's cash value will be to:
Provide for the continued increase in the cash value during the period of disability
A return of premium rider is a rider that
Provides for the return of a percentage of premiums paid at periodic intervals, provided the insured has made no claims
In the state of California:
Providing free insurance coverage in connection with an inducement to complete the transaction is prohibited.
Under the California Code Regulations, all of the following would be considered proof of claim EXCEPT:
Public Adjuster's letter of representation
Insurance solicitation includes all of the following activities EXCEPT:
Publishing a newspaper in which one of the advertisers is an insurance agent
Agents must act on behalf of their clients in such a way that upholds their "Fiduciary duty." Select the best example of this duty from the choices below.
Quickly sending an insurance premium to the home office
The purpose of the state insurance laws include everything EXCEPT:
Rate determination
How would a "peril" best be defined?
Reason for the loss
One important method of dealing with risk is to avoid it. All of the following describes risk avoidance except the insured
Recognizing that his driving skills are D terrorizing and therefore increasing the liability limit on his auto policy
Which nonforfeiture option uses an existing policy's cash value to purchase a paid-up policy with a lower face value than the original policy?
Reduced paid-up insurance
According to the terms of the suicide clause found in a life insurance policy, if an insured commits suicide 6 months after the policy is issued, what will the insurer do?
Refund all the premiums paid.
The process whereby an insurer has an agreement with other insurers to share amounts of insurance over established retention limits is known as:
Reinsurance
Which type of insurance guarantees the right to renew the policy each year, regardless of health, but at an increased premium?
Renewable term.
In regards to representations, which of the following is correct?
Representations are statements made to the best of one's knowledge
What recourse does an insurer have if a violation of a material warranty on the part of the insured is discovered?
Rescission of the policy
The principle of indemnification is best described as:
Restoring an individual to a condition they enjoyed in the past thus making them whole.
All of the following would be considered benefits of insurance, EXCEPT:
Retention of the loss exposure risk by the intsured
In order for an entity to be eligible to hold a license, a co-partnership whose membership has changed must do all of the following, EXCEPT:
Return the old license with signatures of the original partners to the Commissioner with an explanation.
A sailor in the merchant marines has contacted you and expressed interest in life insurance. What important planning step will you take to determine this sailor's needs in order to provide an appropriate policy?
Review the persons overall financial goals
According to the California Insurance Code, which of the following MUST be specified in an insurance contract?
Risks insured against
What is the performance of an Equity index annuity based on?
S&P 500
Variable life insurance policies and variable annuities are primarily governed by which agency?
SEC
A husband and wife have a disabled child who is financially dependent upon them. The death of one parent would not result in financial disaster for the disabled child, but the death of both parents would. Which policy should they purchase?
Second to die policy.
If an insurer indicates that an illustration will be used, they must do which of the following?
Send a summary status report to the policyowner annually.
To authorize the release of an attending physician's report, the applicant MUST:
Sign a HIPAA consent form
A very serious accident occurs rendering a 47-year-old warehouse manager completely disabled. He is not expected to recover from his total paralysis. Select the program(s) below which could most likely entitle him to disability income benefits.
Social security
Which of the following is not an acceptable risk to the underwriting department of an insurance company?
Standard. Preferred. Sub-standard.
when the state specifies the rates that must be used by insurers for a particular kind of insurance, it is known as?
State-mandated
Select the type of annuity payment option that has the least amount of risk for the insurer, and therefore, pays the highest amount of income to the insured over time.
Straight/ pure life
An agent who replaces an existing life insurance contract must do all of the following, EXCEPT:
Submit a copy of the replacement notice to the existing insurer.
The adjustments that insurers make to the cash value account in a universal life policy each time a payment is made include all of the following EXCEPT:
Subtract the policy surrender chargers
What would the commissioner likely do if an agent induces a client to co-sign a loan?
Suspend the agent's license
Which retirement plan was designed for employees of public school systems?
TSA
Which of the following is a characteristic of nonqualified annuities?
Tax-deferred earnings.
Tax laws have established the Modified Endowment Contract or "MECs." Select the correct response:
Taxing their living benefit is not like a non-MEC
The direct response distribution of insurance utilizes all of the following to promote the sale of insurance EXCEPT
Telephone call from an agent
An individual with a low income and high insurance needs should buy:
Term insurance
Which of the following is a true statement?
The "free look" clause allows the insured to review the contract for a number of days (e.g. 10d days). If they so desire, they may return it and received a full refund of premiums paid.
Who will ultimately be held responsible for the information on an agent's website?
The Agent
"An entity that exists to protect life and health policyowners and insureds in the event of impairment or insolvency of a member insurer." This statement describes which of the following?
The California Life and Health Insurance Guarantee Association
Index-linked life insurance plans have their benefit determined by an index which provides an indication of the effects of inflation on the purchasing power of the dollar. Which index is typically used to do this?
The Consumer Price Index
What does it mean if an agent's license is inactive?
The agent cannot transact any insurance business for which a valid, active license is required.
When a licensed agent submits a renewal application with applicable fee on or before the expiration date:
The agent will be able to operate for up to 60 days after the specified expiration date.
When an insurance agent advertises on the internet for insurance transacted in the State of California, all of the following information must be provided EXCEPT:
The agent's business phone number
All of the following are required on a life insurance application, EXCEPT:
The amount of disability income insurance in force
A person invests $10,000 in a single premium annuity and other $10,000 in a certificate of deposit (cd). Both pay 10% interest annually. The person is in a 31% income tax bracket. For 40 years, this person does not touch his annuity and reinvests all income from the CD at 10%. Which of the following statements is true?
The annuity would be worth several hundred thousand more because of the tax deferral of the earnings.
Who MUST sign a statement acknowledging that a life insurance policy illustration was given to an applicant?
The applicant and the agent
Who MUST sign a statement acknowledging that a life insurance policy illustration was given to an applicant?
The applicant and the agent.
Which party has rights in a life insurance policy only after death of the insured?
The beneficiary
A life insurance application is important for all of the following reasons EXCEPT:
The beneficiary must sign the application before the insurer will issue the policy
A life insurance application is important for all of the following reasons EXCEPT:
The beneficiary must sign the application before the insurer will issue the policy.
Insurance companies have an obligation to pay death benefits to:
The beneficiary upon the death of the insured.
The common disaster provision is designed to protect the interest of which of the following?
The contingent or secondary Beneficiary
What are the tax consequences when an employer provides an employee with more than $50,000 of coverage under the employer's group life insurance plan?
The cost of the coverage in excess of the first $50,000 will be included as income and appear on the employee's W-2.
On which of the following dates does the authority given to a licensee from an insurer to transact insurance become effective?
The date the insurer signs the Notice of Appointment.
Choose the payments from an insurance policy which are not subject to federal income taxes:
The death benefit paid to a beneficiary in a lump sum.
Who has ownership of renewals between a direct writer and a captive agent?
The direct writer
All of the following are true regarding a policy owner that ceases making premium payments on a 10-pay life policy and selects the extended term insurance option, EXCEPT:
The extended term policy will reflect the same cash value as the original policy.
All of the following applying to the life insurance cost of living rider, EXCEPT:
The face value of the policy raises or lowers as the cost of living index increases or decreases.
According to the CA Insurance Code, an insured's policy must specify all of the following, EXCEPT:
The financial rating of the insurer
Why is the delivery of a life insurance policy important?
The free-look period begins on the policy delivery date.
Why is having a large number of similar exposure units important to insurers?
The greater the number insured, the more accurately the insurer can predict losses and set appropriate premiums
From the choices listed below, choose the one that best describes "insolvency" as it relates to insurance.
The inability of an insurer to meet financial obligations to policy owners as a result of a deficient amount of paid in capital.
Who has ownership of renewals between an insurer and an independent agent?
The independent agent
When does an individual have an insurable interest in the life of another person?
The individual depends on the other person for financial support.
Which of the following is a correct statement about life insurance policy types?
The initial premium for term insurance is lower than the initial premium for whole life insurance.
All of the following statements regarding variable life insurance are true, EXCEPT:
The insurance company assumes the investment risk.
Which of the following would be considered a morale hazard?
The insured drives too fast
The mathematical rule that says that as the number of individual but similar exposure units increases the easier it is to predict losses is which of the following?
The law of large numbers
What rule is used to determine the importance of a representation?
The materiality of concealment
All of the following are required to be included in life insurance illustrations, EXCEPT:
The name of the insured.
Which of the following is not a factor in determining the premium for a life insurance contract?
The number of new policy owners expected in the next anniversary year
Determination of a worker's insured status for Social Security uses:
The number of quarters worked
A life settlement broker earns a commission and/or fee for the work he/she does on whose behalf?
The owner
Which of the following is not correct regarding the disability benefits provided by Social Security?
The payments received from this program are meant to entirely replace a worker's lost earnings.
In the life insurance planning process, the "blackout period" is:
The period of time when a surviving spouse does not receive any social security benefits.
A variable annuity applicant requests that the premium be immediately invested in a stock portfolio. The policy is returned to the insurer within the cancellation period. What is the applicant entitled to receive?
The policy amount value on the date the policy was received by the insurer
What makes up the entire contract in a life insurance policy?
The policy and ,when attached, the application.
Listed below are descriptions of four types of policies. Which is the term policy?
The policy has a face amount of $100,000. Every five years, the premium paid increases. After ten years, the policyholder stops paying premiums and the coverage stops. The policy has no cash value.
From the choices below, identify the party able to exercise the right of borrowing from cash value.
The policy owner
Which statement best describes how the Return of premium (ROP) rider works on a term life policy?
The policy owner will receive all or a portion of the premiums paid in over the life of the policy if the insured is still living at the end of the policy's term.
When an employee has group term life insurance provided by his employer, how will the policy proceeds paid to the employee's beneficiary be taxed?
The policy proceeds will generally be tax-free to the beneficiary.
While an insurer is paying the premium for a life insurance policy under the waiver of premium rider:
The policy remains in full force in every respect
The Free Look provision of life insurance issued in California states that certain conditions exist in order for a policy to be delivered to the policyowner properly. Which of the following is not correct in determining good delivery?
The policy was hand delivered personally, no receipt of delivery needed.
Certificates of insurance are issued to employees covered under group plans. These certificates may not contain which of the following?
The premium
Frequently, juvenile life policies contain a payor rider. This rider states that in the event the payor of premiums is disabled or dies, and the juvenile has yet to reach a specific age:
The premiums will be paid by the insurer until the child reaches the age of 21 or 25.
Loss retention is an effective risk management technique when all of the following conditions exist, EXCEPT:
The probability of loss is unknown
It is a violation of the California Insurance Code to act as an agent for a non-admitted carrier unless:
The producer is a surplus line broker
Which of the following is required to be included in the writing of an insurance contract?
The risks are insured against. The period in which the insurance is to continue. The parties between whom the contract is made.
The life analyst is allowed to charge a fee for services provided as long as it is stated in writing in advance of performing the service. Each of the following must be included in this written agreement, except:
The services which will be performed and provided, but for which no fee will be charged.
The California Insurance Code dictates good faith communication in insurance contracts and claims. The parties to the contract include all of the following, EXCEPT:
The state
Regarding the handling of personal funds with fiduciary funds, which of the following is true?
The two funds can never commingle.
The department responsible for evaluation, selection and distribution of risks is:
The underwriting department
Assume two people apply for life insurance with exactly the same monthly premiums. One individual buys a whole life policy, and the other, a 10-year renewable term plan. Both are standard risks with no difference in their age or health rating. Select the statement from below which is false.
The whole life policy will pay a higher amount to the beneficiary should the insured die within the first 10 years.
According to the California Insurance Code governing advertising standards what must appear on all printed insurance proposals?
The word "insurance."
When an eligible worker dies, all of the following may be entitled to survivors benefits through Social Security, EXCEPT:
The worker's 41-year old window
Any person who diverts or misappropriates fiduciary funds is guilty of:
Theft
Life insurance policies are:
There are no standard life insurance policies
A type of life insurance policy called a first to die policy is very helpful in business situations whereby a partner can purchase the interest of a deceased partner at death. This policy can also be used by a husband and wife by naming each other as beneficiaries. Select the incorrect statement about first to die plans from below.
They pay a reduced amount upon the death of the last surviving insured.
The usual elimination (waiting) period for a disability income rider is
Three to six months
All of the following are reasons for an individual to purchase personal life insurance, EXCEPT:
To cover a buy/sell agreement.
What is the purpose of key person insurance
To cover decreased business earnings due to the death of a key employee
Why would a business use a key person life insurance policy?
To protect the company from the financial consequences of the death of a vice president.
Which of the following is false about beneficiaries?
Trusts are only documents, and therefore cannot be named as beneficiaries
According to state law that size print must be used for the licensee's license number on all price quotes, business cards, and printed material?
Type size that is at least as large as any indicated telephone number, address, or fax number or in 12-point type, or in 8-point type for business cards, whichever is LARGE.
Which type of insurance coverage has both a saving element and a flexible premium option?
Universal life.
The policyowner, age 50, has been paying the premiums on his whole life policy for fifteen years. He needs the equivalent of one-third of his policy's cash value for two years. He wants to continue to have the same amount of like insurance protection and he can afford to continue to pay the policy's premium. Which of the following would appear to be his BEST course of action?
Use the policy loan provision to borrow money from the policy, but keep making the premium payments to keep the policy in force.
A product provides annuity benefits that may vary according to any separate account or accounts maintained by the insurer. This describes:
Variable annuity
Which policy allows the insured to choose where the assets backing the cash value are invested?
Variable life
Which of the following contracts provides benefits that fluctuate automatically with investment results?
Variable life insurance
The dividends and cash value continue, and all features of the policy remain in force, even though the insurance company, not the owner, is making the premiums. This is a description of a ________ rider.
Waiver of premium
Assuming Julie has a total and permanent disability, which of the selections below states her policy still covers her even though premium payments are not made?
Waiver of premium provision
John , who is 65 years old, makes the last premium payment on his $125,000 whole life policy today. When will his policy's cash value reach $125,000?
When John turns 100 years old.
All of the following statements about the election of a life insurance policy's settlement options are true, except:
When no settlement option is chosen, the proceeds are automatically paid to the policy owners estate.
Non-participating policies:
Will not pay a dividend
An automatic premium loan, found only in cash value policies:
Will pay a premium that is due by using the policy's cash value.
Ben is a life-only agent who would like to do business with the Rock Solid Insurance Company but he doesn't have an appointment to sell their policies. Assuming Rock Solid does not require exclusive representation, can Ben submit an application to them from a prospect?
Yes, and if the insurer approves the application they must appoint Ben within 14 days.
All of the following statements apply to a producer acting as an insurance BROKER (as distinguished from an insurance AGENT), EXCEPT:
a broker acts on behalf of the insurer
Equally sharing the death benefit among children can be done most effectively by:
a class beneficiary designation
An agent must submit all of the following to the insurer, EXCEPT:
a copy of all printed communications used for the presentation
According to the California Insurance Code governing the use of life insurance policy illustrations, the term "illustration" means
a presentation of policy features that includes non-guaranteed elements.
In insurance terms a representation can be considered:
an implied warranty
Subject to the restrictions of the California Insurance Code, any person capable of making a contract may be considered
an insurer.
An insured replaces an existing annuity with a new one and must pay a surrender charge for canceling the existing annuity. The new policy holds no greater financial benefits to the insured than the existing contract. This is an example:
an unnecessary replacement.
From the following, identify that which constitutes the " Entire contract" In a life insurance policy. The policy:
and a copy of the application when attached
Collateral assignments on life policies are most often used for:
bank loans
As defined by the California Code of Regulations, a person who asserts a right of recovery under an insurance policy is called a
claimant
All of the following statements apply to the child coverage in a family policy, EXCEPT
coverage applies only to children born before the policy is issued.
The face amount of a mortgage redemption life insurance policy
decreases to match the principal amount owed under a mortgage loan.
A policyowner has the right to change all the following EXCEPT the
dividend schedule.
The components of determining policy premiums include all of the following EXCEPT
dividends
All of the following are benefits of insurance EXCEPT it
eliminates fraudulent losses.
In a group insurance policy acts of war and aviation are considered examples of
exclusions
Common life insurance policy riders include all of the following EXCEPT
extended term.
In financial planning, what is the needs Approach concept based on?
family's needs
A beneficiary wants to receive $2,000 per month until the principal and interest are exhausted. Which settlement option should be chosen?
fixed amount option
A person owns a life annuity. He elects to receive his annuity payments monthly for the remainder of his life with "ten years certain". The annuity will make payments
for a minimum of 120 months and a maximum of the remainder of his life.
For Social Security purposes, a person with 40 quarters of coverage is considered
fully insured.
choose from the following selections the best description of a premium.
funds received by an insurer from an insured to realize the benefits of the policy
With the cost of living rider, the life insurance policy holder:
gets the automatic increase in the face value if there is an increase in the cost of living index. There is an additional premium for the additional coverage.
The California Insurance Code requirements regarding the return of life or annuity contracts issued to seniors:
gives a senior at least 30 days to return specified life and/or annuity contracts for a full refund.
According to the California Insurance Code, an insurance policy must be
in writing.
Which entity or entities financially support(s) the non-profit Medical Information Bureau?
insurance companies
The person whose life is the object of a life insurance policy is the:
insured
Creditors have rights to life insurance policy proceeds when the beneficiary is the
insured's estate.
If a life agent sells a whole life policy to a prospect on behalf of an insurer without an appointment, the
insurer must submit a notice of appointment to the Commissioner.
The payor rider on a juvenile life policy provides that if the payor dies or becomes disabled before the insured juvenile reaches the age specified in the policy the
insurer will make the payments until the insured juvenile reaches a specified age - usually twenty-one or twenty-five.
The insured cannot borrow against the loan value of the policy without the permission and consent of which the following?
irrevocable beneficiary
In order to deal with the financial consequences of the death of a senior sales manager, a corporation could purchase:
key person insurance
which two insurance products are commonly used to fund buy-sell agreements.
life insurance and disability insurance
When notifying the insured of a policy information change, the California Insurance Code rules that notification must be sent by:
Members of the Medical Information Bureau are required to report:
medical impairments found during the underwriting process.
The theory of probability is applied to life insurance through the use of
mortality tables.
The term "consideration" applies to the issuance of an insurance policy. Choose the best description of this term from the choices below:
none of the above
For income tax purposes, premiums for personal life insurance are
not deductible.
According to the California Insurance Code, how must an agent publicize the right to return information to a senior citizen purchasing an annuity policy?
on the cover page of a policy jacket
An employer allows each employee to choose insurance in addition to the basic insurance plan. Who pays the premium for voluntary life insurance?
only the employees who choose to purchase it
What refund is owed when a senior citizen elects the right to return and cancels an individual variable annuity policy invested in a mutual fund?
paid premiums and policy fees
Choose the correct statement about a cost of living rider. The policy owner:
pays an additional premium for the extra protection the ruder provides and will see the face amount of the contract increase according to the increase of the index.
All of the following are included in mortality tables, EXCEPT:
probability of living at end of year
Individual life insurance policies sold to seniors in the State of California must include a prominently placed statement that divulges all of the following information EXCEPT
proof of surrender must be notarized at the agent's principal office.
A contract that an insurer obtains to insure itself against loss to its book of business is known as
reinsurance.
Any transaction that involves purchasing a life insurance policy and terminating an existing policy is known as:
replacement
An employee has just received a huge bonus check. She uses the bonus money to buy an annuity that will immediately begin paying $400 a month to her. This is called a
single-premium immediate annuity
Which life insurance classification carries the highest premium?
substandard
A terminating employee who wants to exercise the conversion privilege must meet all of the following requirements EXCEPT:
supply evidence of insurability.
What is used to determine the amount of an annuity distribution that is exempt from taxation?
the exclusion ratio.
From the choices below, select the best answer that reflects the concept of indemnification.
the insured can not get back nay more than the loss they have experienced
When a credit report is requested by the insurer, the report is sent directly to:
the insurer
"Twenty-four hour coverage" can be defined as
the issuance of a workers compensation policy with a disability insurance policy
All of the following statements about mortality tables are true EXCEPT
the tables tracks a group of people from the year they were born until they all die.
The term "assignment" refers to:
the transfer of the insured's interest in a policy to another party
The purpose of laws regarding the replacement of life and annuity contracts includes all of the following, EXCEPT:
to protect the interests of life insurers and their agent
According to the California Insurance Code, if a company's Certificate of Authority is revoked, the Commissioner may do any of the following EXCEPT:
use Guarantee Association funds to pay salaries.
If a insurance company knowingly allows one if its life agents or brokers to guarantee interest income to an insured on one of its policies, the Department of Insurance can do all of the following EXCEPT:
use the Insurance Guarantee Association to pay the salaries of employees
