Set A

Rank from lowest to highest, the amount of monthly income that would result from the following annuity settlement options:

Life with refund option, life with 10 years certain, straight life

Which best describes industrial insurance?

$2,000 or less in coverage and premiums collected by agent

Roger, who is 35 years old, has a whole life insurance policy with a death benefit of $150,000. At the age of 65 he will no longer make premium payments. When will the cash values of his policy be $150,000?

100

In a seven year vesting schedule, what percentage of employer contributions is vested after seven years

100%

In a non-contributory group policy:

100% of eligible employees must participate.

Which of the following statements about a resident life-only agent licensing is incorrect?

A licensee has 30 days to update a change in address. (Changes of address must be filed immediately.)

An insured has a terminal illness and needs access to 1/3 of his death benefit to pay mounting medical expenses. Which rider would meet the insured's current needs?

Accelerated (Living) Benefit

Which rider pays a multiple of the original face amount?

Accidental Death Benefit

Which statement about life insurance code and ethics is not true?

Acts of fair and unfair discrimination are prohibited.

According to the code, any person legally capable of making an insurance policy is considered:

An insurer

Bob and Neal are partners in a law firm together. If one of them were to pass away, they want to make sure that their surviving family will receive a fair value for their stake in the business. What life insurance arrangement would be most suited for transitioning the business during this time of loss?

Buy-Sell Agreement

In order to be financially solvent, an insurer must accomplish all of the following, except:

Contribute a specific amount of capital reserves to the state.

Agent Darren offers life insurance for no cost to people buying property in a local development. When the Commissioner investigates his actions, which of the following is not a likely consequence?

Darren will be charged with a felony and/or up to 10 years in jail.

An applicant for an insurance license has had a previous application for a professional license denied for cause within the last five years. The insurance commissioner will:

Deny the application without a hearing.

In disability insurance, the period of time between when the disability started and the commencement of benefits is the:

Elimination Period

Members of the MIB are required to report

Medical conditions found during underwriting

A life settlement broker

Negotiates life settlement contracts between an owner and providers.

Tommy Greene has a CLU certification. Which of the following names would be automatically approved for use as his agency's name?

None would ever be automatically approved.

E&O coverage

Protects an agent in the case of unintentional negligence.

Mrs. Anderson needs to invest the proceeds from her late husband's life insurance. She invests a portion of the money into an annuity. Since she is 62, and is still working, she decides to purchase a single premium deferred annuity. She won't need an income for a few more years. What should the agent make sure Mrs. Anderson understands?

She has a 30 day free look period in case she changes her mind.

In contrasting stock insurers with mutual insurers, which statement is not false?

Stock insurers are owned by the shareholders, and issue non-participating policies.

A life-only agent issues a binding receipt to his client since the client did include a check for the initial premium with his completed application. Which statement is true?

The agent faces potential suspension or revocation of their license.

According to the California Insurance Code, what information is the agent required to include on their business card?

All of the above. -Identification of their relationship to the insurance company. -License number must appear in the same size font as the phone number. -Must not include any titles, designations, or licenses that are not currently held.

Pete, who is 35 years old, has a life insurance policy with a death benefit of $150,000. At the age of 65 the cash values of his policy will be $150,000. What type of policy does he have?

An Endowment to the age of 65

Which of the following would not be considered a speculative risk?

Any action that could do harm to your clients well-being such as reckless driving.

A beneficiary decides to take the option that will pay the largest amount per payment, knowing after death no monies will be paid out to any descendents. The settlement option is:

Life Income (Straight Life)

Which of the following statements about the process of replacement is incorrect?

Copies of any written illustration or comparisons used in the process of making the replacement do not need to be included with the submitted application.

An agent follows the rules and terms of his agent contract. He is exercising his __________ authority.

Express

All of the following are characteristics of the social insurance program know as Social Security, except:

Full retirement age is 65 for all persons born after 1937.

All of the following are dividend options, except:

Interest only option

Candee owns a participating whole life policy and uses her policy dividends to buy more of the same type of coverage for herself. Candee has chosen the:

Paid-up additions option

All of the following statements about mutual insurance companies are correct except

Policy dividends issued by mutual companies are guaranteed and not taxable

How does the IRS classify the two different types of retirement accounts?

Qualified and non-qualified

Which qualified plan is characterized by having a non-deductible contribution and tax-free distributions?

Roth IRA

Which is a false statement? The California Insurance Commissioner is

Selected by the Governor as an appointee

All of the following statements about survivorship life are true, except:

The face amount is payable after the first death.

When a client is declined after submitting a prepaid application for life insurance:

The insurance company must refund the entire premium paid.

Which of the following characteristics would not stop an insurance company from accepting an insurance risk?

The item to be insured is part of a large group of homogeneous exposure units.

An employee has lost access to their group term life insurance plan, but they are allowed to convert to a new plan. Which best describes this new plan?

The new policy will be cash value. The employee pays all the premiums.

After 12 years, the policyowner decides she no longer needs the large death benefit on her whole life policy. She calls you, her agent, and you tell her she can use the reduced paid-up non-forfeiture option. Which of the following is not true about the new policy?

The new policy will expire in 10 years.

In the insurance planning processes, the blackout period is:

The period of time after the youngest child reaches 16, but before the widow reaches 60, in which the surviving spouse receives no Social Security benefits.

What is not likely to happen with a return of premium policy?

The total premium paid is returned to the insured when the policy is cancelled

Any person who misappropriates fiduciary funds for personal use is guilty of:

Theft

A policy illustration may not include:

Vanishing premiums if the policy becomes paid up with non-guaranteed elements paying future premiums.

A client's flexible premium is invested into a separate account. What type of insurance product did he purchase?

Variable Universal Life