Life Insurance Test
According to the California Insurance Code, what is the maximum penalty per violation for anyone who unwillfully commits an unfair method of competition?
$5,000
How long is a person expected to be disabled in order to receive social security disability benefits?
12 months
How long must life agents keep their transaction records?
5 years
In order to be considered "currently insured" under social security, an individual must be credited with
6 quarters of coverage during the last 13-quarters period
At what age is a surviving spouse without dependents eligible for social security survivor benefits?
60
Who is NOT elegible for social security surivor benefits
A deceased worker's dependent parent of any age
An insurance policy written after 1988 that fails to pass the seven-pay test is known as
A modified endowment contact
Which provision will pay a portion of the death benefits prior to the insured's death due to a serious illness?
Accelerated death benefit
When an insurer has met the qualifications necessary to transact business in California, it is said to be
Admitted
Which of the following is NOT considered to be an unfair claims settlement practice?
Advising a claimant to hire an attorney
Which of the following pieces of information is NOT gathered during the personal financial planning process?
An individual's civic organization memberships
The systematic liquidation of a sum of money is provided by a(n)
Annuity
Which of the following is NOT a true description of non-medical life insurance?
Applicants are not required to answer medical questions on the application
When selling a long term care insurance rider to an applicant, a life agent must take into consideration all of these factor EXCEPT
Attending physician's statement
What are collateral assignments normally associated with?
Bank Loans
The California insurance code allows an individual how many days to canal a life policy for a full-refund?
Between 10 and 30 days
How does a conditional receipt differ from a binding receipt?
Binding receipts always provide insurance which starts from the date of receipts
Which of the following is an insurer established by a parent company for the purpose of insuring the parent company's loss exposure?
Captive insurer
A person who asserts a right of recovery under an insurance policy is called
Claimant
Before an insurer is allowed to test an individual for HIV, what must be completed?
Consent form
An agent's attempt to stop the replacement of an existing life insurance policy is known as
Conservation
Which statement is CORRECT when describing a contract of adhesion?
Contract may be accepted or rejected by the insured
What is a participating life insurance policy
Contract that allows the policyowner to receive a share of surplus in the form of policy dividends
Tim was recently terminated from his employment and opted to change his existing group term life insurance to individual permanent life insurance. What is the process called?
Conversion
When an insurance company requests an attending physician's report, the request must be accompanied by a
Copy of the signed authorization
According to social security, an individual with 6 credits of coverage during the previous 13-quarter period is considered to be
Currently insured
Which of the following is NOT a component of determining policy premiums?
Dividends
Which of the following is NOT a characteristic of the conversion privilege?
Employer pays the premium for the converted policy
ESOPs are typically invested in
Employer stock
Which of the following is NOT a requirement of a contract?
Equal consideration is required between the involved parties
Which of the following types of information is NOT required for a life insurance application?
Ethnicity
Which of the following is NOT a common life insurance policy ride?
Extended term
In California, an insurer organized under state laws of Oregon is called a(n)
Foreign insurer
An individual that has 40 quarters of coverage, for social security purposes, is considered to be
Fully insured
What time period allows an insured's life insurance policy to remain in force even if the premium was not paid on the due date?
Grace period
Which principle is accurately described with the statement "insureds are entitled to recover an amount NOT greater than the amount of their loss"?
Indemnity
Which of the following contracts is defined as "one that restores an injured party to the condition that was present before the loss?
Indemnity contract
All of the following are considered characteristic of group life insurance EXCEPT
Individual policies
When does a life insurance policy's waiver of premium take effect?
Insured becomes totally disabled
When calculating life insurance premium rates, which components would an agent's commission fall under?
Insurer's expense
Which of the following does the California Insurance Code NOT require an insurance policy to specify?
Insurer's financial rating
Which of the following is NOT protected under the California Life and Health Guarantee Association?
Insurers
Which of the following is NOT a primary objective of insurance regulation?
Interpret policy provisions
The California Insurance Code requires that an insurer must have enough asserts to cover its liabilities and for reinsurance of all outstanding risks. To remain solvent, it must also possess additional assets equal to what amount?
It's paid-in capital
Jim is applying to become an insurance agent and has a past misdemeanor conviction that was late expunged due to California Penal Code 1203.4. Which of the rolling statements is correct?
Jim is not required to disclose the conviction on his insurance license application
Which of the following describes the statement "The more times an event is repeated, the more predictable the outcome becomes"?
Law of large numbers
What type of license is required for an individual who charges a fee to review an insured's existing life insurance policy?
Life and disability analyst
The Medical information Bureau consists of
Life and health insurance companies
Which of the following is considered to be a situation that has the potential for loss?
Loss exposure
Which of the following is NOT an element of an insurable risk?
Loss must be catastrophic
Which of the following is NOT a benefit of insurance?
Losses due to fraud are eliminated
According to the California Insurance Code, what term is used to describe a fact so important it cold affect the policy premium?
Materiality
The importance of a representation is demonstrated in what rule?
Materiality of concealment
Most U.S. life insurance companies belong to the
Medical information bureau
What is the proper order of initial life insurance premiums, from lowest to highest?
Modified premium, ordinary life, single premium
Which of the following describes the increase in the probability of a loss due to an insured's dishonest tendencies?
Moral Hazards
When calculating life insurance premium rates, which component is affected an insured's age and gender?
Mortality
The probability of death, listed by year, are demonstrated in
Mortality tables
A participating company is also referred to as which type of insurer?
Mutual Insurer
Which of the following is a life insurance policy that does NOT require a physical exam?
Non-medical
Retirement plans are prevented from favoring highly compensated employees under which government regulation?
Nondiscrimination
A life insurance policy can be surrendered for its cash value under which policy provision?
Nonforfeiture options
What is required after a life agent sells an insurance policy to an applicant without being appointed by the insurer?
Notice of appointment must be submitted to the commissioner
Which of the following statements correctly describes a contract of indemnity?
One party is restored to the same financial position the party was in before the loss occurred
Which of the following describes a contributory group insurance plan?
Part of the premium is paid by the employee
Who is issued a certificate of insurance with a group insurance policy?
Participant
John has an insurance policy that gives him the right tot share in the insurer's surplus. What kind of policy is this?
Participating
In a life insurance policy, the entire contact consists of the
Policy and attached application
How are acts of war considered under a group life insurance policy?
Policy exclusion
When an accidental death benefit is added to a whole life policy, how does this affect the policy's cash value?
Policy's cash value is not affected
Restoring an insured to the same condition as before a loss is known as
Principle of indemnity
which type of jurisdiction requires an insurer to have its rates accepted by the insurance department prior to using them?
Prior approval
Which of the following is NOT required in the content of a policy?
Probability of loss
Which of the following is NOT considered to be an act of insurance solicitation?
Publishing a magazine where one of the advertisers is an insurer
A situation in which there is ONLY a chance of loss or no loss is a
Pure risk
After a policy has lapsed, which provision allows the insured to continue coverage?
Reinstatement provision
In a renewable term life insurance policy, the contact will usually
Require a higher premium payable at each renewal
Which course of action is the insurer entitled to when deliberate concealment is committed by the insured?
Rescinding the contract
When intentional concealment is involved, what course of action is the injured party entitled to?
Rescission of the contract
The California life and health insurance guarantee association covers all of these types of policies EXCEPT
Self-funded plans
Anyone employed in California to assist an insurance agent in transacting insurance is called an insurance
Solicitor
Which of the following is a circumstance in which there is a possibility of both a loss or a gain?
Speculative risk
Which type of risk is gambling?
Speculative risk
Which of the following does not have to be included on life insurance policy illustrations?
Statement that all values and benefits are guaranteed
A terminated employee that has exercised the conversion privilege is able to convert
Term group life coverage into permanent insurance
A creditor would be allowed rights to life insurance policy proceeds if which of the following beneficiaries is chosen?
The insured's estate
When a life insurance policy is surrendered, how does the cost recovery rule apply?
The policy's cost basis is exempt form taxation
A life insurance policy's limit of liability would be
The policy's face amount
What distinguishes a deferred annuity from an immediate annuity?
The time at which benefit payments start
Pete is a life agent who has misappropriated fiduciary funds to his own use. What is Pete guilty of?
Theft
What does the term "indemnity" mean as it pertains to insurance?
To make whole
What is considered to be the definition of disability, according to social security?
Unable to engage in any substantial gainful activity
An agent has advertised that the insurer to which the agent is appointed with is a member of the insurance Guarantee Association. This agent has committed a(n)
Unfair method of competition
Paul has an existing annuity and is sold a new one, in which the new policy holds on greater financial benefit to him than the existing contract. This is considered a(n)
Unnecessary replacement
A worker is entitled to social security disability benefits if all of the following are true EXCEPT for
Worker cannot perform his or her current job, but is actively seeking other employment
Which of these factors affects the social security normal retirement age?
Year in which worker was born
A contract requires
an offer and acceptance of the contract terms
Which social security status does a worker with 6 quarters of coverage during the last 13-quarter period have?
currently insured
Which of the following is NOT a feature of equity-indexed annuities?
offers a maximum interest rate the increases annually
A life insurance policy where the insured can choose where the cash value can be invested is called
variable life