Life test questions
What is the minimum number of members required for group life insurance in this state?
10
Policy loan requests, except for loan requests for payment of due premiums, may be deferred for a period of up to
6 months
According to the life insurance replacement regulations, which of the following would be an example of policy replacement?
A policy is reissued with a reduction in cash value.
Which statement about Life Insurance Code and Ethics is NOT true?
Acts of fair and unfair discrimination are prohibited.
Life settlement contracts are put into effect by which of the following?
An absolute assignment
When an insurer tries to discourage a policyholder from replacing an existing policy, this is called
Conservation effort.
A whole life policy is surrendered for a reduced paid-up policy. The cash value in the new policy will
Continue to increase
During policy solicitation, an insurer exaggerates the financial condition of one of its competitors, and makes it sound worse than it is. This is an example of an unfair trade practice of
Defamation
At what point would an automatic premium loan be generated?
Following the grace period
How will life insurance proceeds that are paid as a lump sum received by the beneficiary?
Free of federal income taxation
Where are premiums from fixed annuities invested?
General account
Slippery floors, reckless driving, or providing false information are examples of
Hazards
All of the following are features of catastrophic plans EXCEPT
High premiums.
A representation in an insurance contract qualifies as a(n)
Implied warranty.
If a soliciting producer suspects that there could be misrepresentation on the part of the applicant for insurance, what must the producer do?
Inform the insurance company
To purchase insurance, the policyowner must face the possibility of losing money or something of value in the event of loss. What is this concept called?
Insurable interest
Which of the following is NOT true regarding an optionally renewable policy?
Insurer can only cancel the policy for reasons stipulated in the contract.
Which portion of a nonqualified annuity payment is taxable?
Interest earned on principal
Gross premium for a life insurance policy is determined by adding which two components?
Net premium and expenses
Cash Value guarantees in a whole life policy are called
Nonforfeiture values.
Which of the following is NOT a component of an insurance policy premium?
Number of beneficiaries
When may a representation be withdrawn by the applicant?
Only before the insurance is in effect
A married couple purchase a life insurance policy on their newborn baby. They are concerned about what would happen to the policy if either one of them were unable to continue making the premium payments due to death or disability. Which policy rider should their agent recommend?
Payor benefit
In a group life policy with a death benefit of more than $50,000
Premium cost above $50,000 is taxable as income to the employee.
All of the following are true regarding key person disability income insurance EXCEPT
Premiums are tax deductible as a business expense.
In reinsurance, the insurance company that transfers its loss exposure to another insurer is the
Primary insurer.
An insured purchased a health insurance policy with a renewability clause that states the policy is "Guaranteed Renewable." This means that as long as the required premiums are paid, the policy will continue until the insured
Reaches age 65.
What type of insurer uses a formal sharing agreement?
Reciprocal insurers
If an insured purchases an insurance policy with a large deductible, what risk management technique is the insured exercising?
Retnetion
Variable insurance and variable annuities are regulated by
SEC, FINRA and Departments of Insurance.
What does the application of contract of adhesion mean?
Since the insured does not participate in preparing the contract, any ambiguities would be resolved in favor of the insured.
Which of the following individuals would be a likely candidate to purchase a deferred annuity?
Someone who wants to grow retirement funds tax deferred
When an agent delivered an insurance policy to the insured, he collected the initial premium, as well as a document verifying that the insured had not had any injuries or illness since the application date. What is this document called?
Statement of Good
Which is a FALSE statement about the California Insurance Commissioner?
The Commissioner is selected by the Governor as an appointee.
All of the following are true of a Multiple Employer Trust (MET) EXCEPT
The employee has a right of conversion upon leaving the group coverage.
What happens to the face amount of a whole life policy if the insured reaches the age of 100?
The face amount is paid to the insured.
A warranty may relate to which of the following?
The past, the present and the future
An aleatory contract is based on what kind of exchange?
Unequal exchange of values
An insured has a life insurance policy in the amount of $250,000 naming his wife as beneficiary. Upon his death, his beneficiary decides not to receive the death benefit for some time. When she finally receives the death benefit check, it's in the amount of $250,530. Is any portion of the proceeds that the beneficiary receives taxable?
Yes, proceeds in excess of face amount are taxable as interest.
