ca life exam

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jdeg238
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270680
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ca life exam
Updated:
2014-04-15 14:39:41
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life ca insurance
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Ca life insurance exam
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  1. Which one of the following does NOT affect the insured’s life insurance premium?
    A)Expense
    B)Reserves
    C)Interest
    D)Mortality
    B)Reserves
    (this multiple choice question has been scrambled)
  2. Which of the following settlement options does NOT guarantee that the entire death benefit will be paid out to the beneficiary?
    A)Fixed-period installments
    B)Fixed-amount installments
    C)Lump-sum payment
    D)Life income
    D)Life income
    (this multiple choice question has been scrambled)
  3. In reinsurance, the insurance company that transfers its loss exposure to another insurer is the
    A)Primary insurer.
    B)Reinsurer.
    C)Secondary insurer.
    D)Reciprocal insurer.
    A)Primary insurer.
    (this multiple choice question has been scrambled)
  4. In comparing the purchase of individual life insurance to group life, which statement is NOT true?
    A)Group insurance has a nondeductible premium while individual insurance has a tax-deductible premium to the payor.
    B)Group insurance is automatic and requires less medical information than the individual coverage.
    C)Group life tends to have a lower premium per person than individual life.
    D)Both types of coverage provide a tax-free death benefit.
    A)Group insurance has a nondeductible premium while individual insurance has a tax-deductible premium to the payor.
    (this multiple choice question has been scrambled)
  5. In a group life insurance plan, unmarried children who are attending college may be covered as eligible dependents until they reach the age of
    A)24.
    B)20.
    C)21.
    D)25.
    A)24.
    (this multiple choice question has been scrambled)
  6. Which of the following methods of calculating the amount of life insurance needed takes into account the insured's salary and years until retirement?
    A)The human life value approach
    B)An estate planning approach
    C)A traditional planning approach
    D)The needs analysis approach
    A)The human life value approach
    (this multiple choice question has been scrambled)
  7. Which of the following premium payment modes would result in the highest overall premium for life insurance?
    A)Semi-annual
    B)Monthly
    C)Annual
    D)Quarterly
    B)Monthly
    (this multiple choice question has been scrambled)
  8. A person has a history of DUIs. To his insurer, this presents what type of hazard?
    A)Moral
    B)Physical
    C)Morale
    D)Legal
    C)Morale
    (this multiple choice question has been scrambled)
  9. Two individuals 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?
    A)Deferred Compensation Plan
    B)Buy-sell Agreement
    C)Split-dollar Agreement
    D)Executive Bonus Plan
    B)Buy-sell Agreement
    (this multiple choice question has been scrambled)
  10. According to the California Insurance Code, any person legally capable of making an insurance policy is considered
    A)An underwriter.
    B)A broker.
    C)An agent.
    D)An insurer.
    D)An insurer.
    (this multiple choice question has been scrambled)
  11. An adjustable life policy allows the policyowner to do any of the following EXCEPT
    A)Decrease the premium amount.
    B)Change the period of protection.
    C)Shorten the premium paying period.
    D)Skip premium payments.
    D)Skip premium payments.
    (this multiple choice question has been scrambled)
  12. Which of the following is a characteristic of a revocable beneficiary designation?a)Beneficiary may return control of policy to owner with written approval
    b)Beneficiary has a vested interest in the policy
    c)Policyowner requires beneficiary’s permission to borrow against the cash value
    d)Policyowner can change beneficiary designation anytime without consent of beneficiary
    d)Policyowner can change beneficiary designation anytime without consent of beneficiary
  13. All of the following are true about the Social Security System EXCEPT
    A)The majority of workers in the U.S. are required to pay into the system.
    B)Benefits are prescribed by law, not by contract.
    C)The system has been largely privatized.
    D)Meant to supplement other retirement income, it provides a minimum floor of income.
    C)The system has been largely privatized.
    (this multiple choice question has been scrambled)
  14. An applicant for an insurance license has had a previous application for a professional license denied for cause within the last 5 years. The insurance Commissioner may
    A)Accept the application for a 2-year provisional license.
    B)Deny the application without a hearing.
    C)Accept or deny the application after an exploratory hearing.
    D)Accept the application as other licenses have no bearing on this application.
    B)Deny the application without a hearing.
    (this multiple choice question has been scrambled)
  15. Which of the following is NOT an IRS requirement for a qualified retirement plan?a)The plan must be formally communicated to the employees.
    b)The plan must be permanent and approved by the IRS.
    c)The plan must satisfy vesting requirements.
    d)The plan must favor shareholders.
    d)The plan must favor shareholders.
  16. An individual planning for retirement wants to completely pay up his life insurance policy before age 100. Which of the following life insurance products will best meet those requirements?
    A)Modified whole life
    B)Limited pay whole life
    C)Universal life
    D)Term life
    B)Limited pay whole life
    (this multiple choice question has been scrambled)
  17. For the purposes of life insurance underwriting, a 35-year-old male who is in excellent physical condition with no known medical problems would most likely be classified as a
    A)Rated risk.
    B)Standard risk.
    C)Substandard risk.
    D)Preferred risk.
    D)Preferred risk.
    (this multiple choice question has been scrambled)
  18. For a flexible premium deferred annuity, the time during which the owner makes premium payments and the time before benefit payments begin is known as the
    A)Accumulation period.
    B)Activity period.
    C)Annuity period.
    D)Annuitization period.
    A)Accumulation period.
    (this multiple choice question has been scrambled)
  19. An insured covered by a life insurance policy with an accidental death rider was injured in an accident and died 15 weeks later. The policy had $50,000 coverage with triple indemnity. The insurer will pay the beneficiary
    A)$150,000.
    B)The face amount.
    C)$100,000.
    D)The amount equal to the cash value.
    B)The face amount.
    (this multiple choice question has been scrambled)
  20. As guaranteed under HIPAA, which of the following is NOT a requirement a person must meet in order to be eligible to convert health coverage from a group plan to an individual health policy?
    A)Become eligible for Medicare or Medicaid
    B)Have been continuously covered under the group plan for 18 months
    C)Use up all COBRA coverage
    D)Apply for individual insurance within a specified period of time after losing group coverage
    A)Become eligible for Medicare or Medicaid
    (this multiple choice question has been scrambled)
  21. Which action by an insurer or its representatives is NOT considered an unfair claims violation?
    A)A claims adjustor misrepresents pertinent policy provisions to dissuade an insured from making a claim.
    B)The claims department fails to affirm or deny coverage within a reasonable period of time after proof of loss has been submitted.
    C)An agent advises a claimant to obtain the services of an attorney.
    D)An agent does not respond to a claimant’s communication concerning a claim where a response is required.
    C)An agent advises a claimant to obtain the services of an attorney.
    (this multiple choice question has been scrambled)
  22. After a policy was in effect for 18 months, the insured submitted a claim. The underwriters determined that the insured had made a material misstatement on the application for coverage. The insurer will probably do which of the following?
    A)Cancel the policy
    B)Adjust any future premiums
    C)Contest the claim
    D)Pay the claim
    C)Contest the claim
    (this multiple choice question has been scrambled)
  23. In life insurance, an insurable interest between the policyowner and the insured must exist
    A)At the time of application.
    B)At the time of death.
    C)When the policy is delivered.
    D)On the date specified in the policy.
    A)At the time of application.
    (this multiple choice question has been scrambled)
  24. Every admitted insurer in California must maintain a unit or a department responsible for investigating which of the following?a)Unfair trade practices by the insurers
    b)Possible arson activity
    c)Ratings and claims abuses by the insurers
    d)Possible fraudulent claims by the insureds
    d)Possible fraudulent claims by the insureds













  25. Because the insurer is the party who controls the language used in the policy, and the insured cannot change that wording, an insurance policy is considered what type of contract?
    a)Conditional
    b)Unilateral
    c)Aleatory
    d)Adhesion
    d)Adhesion
  26. Which of the following insurance principles states that the larger the number of people with a similar exposure to loss, the more predictable actual losses will be?
    a)Underwriting
    b)The law of large numbers
    c)Adverse selection
    d)Exposure units
    b)The law of large numbers
  27. What is the purpose of key-person insurance?a)To give senior managers the ability to purchase shares in the business
    b)To cover decreased business revenues as a result of the death or disability of a key employee
    c)To provide key employees with life insurance coverage
    d)To provide retirement benefits to key employees
    b)To cover decreased business revenues as a result of the death or disability of a key employee

















  28. Which of the following riders would provide for an insured to increase the face amount of their life insurance policy without proof of insurability?
    a)Waiver of premium
    b)Double indemnity rider
    c)Accelerated death benefit
    d)Guaranteed insurability
    • d)Guaranteed insurability
  29. Which of the following disability riders in life insurance allows the policyowner to keep coverage in force without paying policy premiums?
    A)Accelerated benefit
    B)Waiver of premium
    C)Disability income benefit
    D)Waiver of cost of insurance
    B)Waiver of premium
    (this multiple choice question has been scrambled)
  30. A person purchases an annuity that pays a monthly amount for the remainder of the person’s life. If death occurs before the principal is exhausted, the difference is paid to a designated beneficiary. Which payment option has this person selected?
    A)Life with guaranteed minimum
    B)Pure life
    C)Fixed-period installments
    D)Life only
    A)Life with guaranteed minimum
    (this multiple choice question has been scrambled)
  31. Which of the following characteristics would NOT stop an insurance company from accepting an insurance risk?
    A)The item to be insured presents a market value that is difficult to determine.
    B)The item to be insured presents no hardship to the owner should it be lost or damaged.
    C)The insured faces high catastrophic loss exposure.
    D)The insured is part of a large group of homogeneous exposure units.
    D)The insured is part of a large group of homogeneous exposure units.
    (this multiple choice question has been scrambled)
  32. The Medical Information Bureau (MIB) helps insurers compare medical information they have collected on a potential insured with the information received from
    A)Other insurers.
    B)Hospitals.
    C)Insured.
    D)Doctors.
    A)Other insurers.
    (this multiple choice question has been scrambled)
  33. Which of the following transactions would most likely be declined due to lack of insurable interest?
    A)A spouse insures the other spouse.
    B)A local hospital insures its chief of surgery.
    C)An employee insures the employer in the fear of losing a job.
    D)A parent buys insurance on their adult child.
    C)An employee insures the employer in the fear of losing a job.
    (this multiple choice question has been scrambled)
  34. Which of the following best represents what is meant by “life insurance creates an immediate estate”?
    A)The policy has cash values and nonforfeiture values.
    B)The policy generates immediate cash value.
    C)The death benefit will always be paid to the estate of the insured.
    D)The face value of the policy is payable to the beneficiary upon the death of the insured.
    D)The face value of the policy is payable to the beneficiary upon the death of the insured.
    (this multiple choice question has been scrambled)
  35. The Spendthrift Clause of a life insurance policy is designed to do all of the following EXCEPT
    A)Protect policy proceeds from creditors of the policyowner.
    B)Prevent the beneficiary’s reckless spending of the death benefit.
    C)Pay the death benefit in fixed-amount or fixed-period payments.
    D)Allow the beneficiary to change to another option when insured dies.
    D)Allow the beneficiary to change to another option when insured dies.
    (this multiple choice question has been scrambled)
  36. The policyowner chooses the annual mode for the payment of the life insurance premium. For the year, the owner will pay
    A)The same as compared to the other payment modes.
    B)Less as compared to the other payment modes.
    C)More as compared to the other payment modes.
    D)More in the first policy year, and then less in consequent years.
    B)Less as compared to the other payment modes.
    (this multiple choice question has been scrambled)
  37. All of the following are true about key-person insurance EXCEPT
    A)The death benefit is taxable to the business.
    B)The employee must give written consent by signing the application.
    C)The business is the beneficiary.
    D)The business is the applicant and owner.
    A)The death benefit is taxable to the business
    (this multiple choice question has been scrambled)
  38. Why is having a large number of similar exposure units important to insurance companies?
    A)The larger the number insured, the more premium collected, the more profitable the company.
    B)The larger the number insured, the larger the market share for the insurer. This is very important for advertising purposes.
    C)The larger the number insured, the more accurately the insurer can predict losses and set appropriate premiums.
    d)None of the above is the most important reason.
    C)The larger the number insured, the more accurately the insurer can predict losses and set appropriate premiums.
    (this multiple choice question has been scrambled)
  39. Which of the following is NOT excluded from the California Life and Annuity Replacement Law?
    A)Converting a convertible term policy to whole life insurance
    B)Purchasing a new policy that will take the place of an existing policy
    C)Purchasing group life insurance from a part-time employer
    D)Purchasing credit life insurance for the purchase of a second home
    B)Purchasing a new policy that will take the place of an existing policy
    (this multiple choice question has been scrambled)
  40. Slippery floors, a habit of lying, or reckless driving are examples of which of the following?a)Causes of loss
    b)Perils
    c)Hazards
    d)Pure risks
    c)Hazards
  41. What is the term for features such as cash values, loan provisions, and tax-deferred growth in life insurance policies?
    A)Policy Provisions
    B)Living Benefits
    C)Nonforfeiture Options
    D)Dividend Options
    B)Living Benefits
    (this multiple choice question has been scrambled)
  42. What is the minimum number of members required for group life insurance in this state?a)10
    b)15
    c)25
    d)100
    a)10
  43. Which of the following statements is true regarding an annuitant?
    A)The annuitant must also be the owner of the annuity.
    B)The annuitant may be a corporation.
    C)The annuitant is also the beneficiary under the annuity.
    D)The annuitant must be a natural person.
    D)The annuitant must be a natural person.
    (this multiple choice question has been scrambled)
  44. Which of the following is a characteristic of an equity indexed annuity?
    A)Annuitants cannot share in excess interest.
    B)Interest rates are often associated with a stock index.
    C)Interest rates are not guaranteed.
    D)It is a variable annuity.
    B)Interest rates are often associated with a stock index.
    (this multiple choice question has been scrambled)
  45. Which of the following principles describes restoring the insured to his or her original financial status after a loss?
    A)Indemnity
    B)Warranty
    C)Reasonable expectations
    D)Utmost good faith
    A)Indemnity
    (this multiple choice question has been scrambled)
  46. Which of the following class designations for naming beneficiaries means “by the bloodline”?
    A)Revocable
    B)Irrevocable
    C)Per stirpes
    D)Per capita
    C)Per stirpes
    (this multiple choice question has been scrambled)
  47. Over several years, a policyowner paid $10,000 in premiums for his insurance policy. When he suffered a loss, the insurance company paid out $50,000 in benefits. What characteristic of an insurance contract does this describe?
    A)Aleatory
    B)Conditional
    C)Adhesion
    D)Unilateral
    A)Aleatory
    (this multiple choice question has been scrambled)
  48. The insurance component of a Universal Life policy is what type of insurance?
    A)Convertible Term
    B)Annual Renewable Term
    C)Flexible Premium Adjustable Life
    D)Modified Whole Life
    B)Annual Renewable Term
    (this multiple choice question has been scrambled)
  49. According to the Fair Credit Reporting Act, consumer reports are prohibited from reporting negative information about a customer after how many years?
    A)6 years
    B)5 years
    C)3 years
    D)7 years
    D)7 years
    (this multiple choice question has been scrambled)
  50. In comparing the purchase of individual life insurance to group life, which statement is NOT true?
    A)Both types of coverage provide a tax-free death benefit.
    B)Group insurance is automatic and requires less medical information than the individual coverage.
    C)Group insurance has a nondeductible premium while individual insurance has a tax-deductible premium to the payor.
    D)Group life tends to have a lower premium per person than individual life.
    C)Group insurance has a nondeductible premium while individual insurance has a tax-deductible premium to the payor.
    (this multiple choice question has been scrambled)
  51. At age 72, an individual is considering applying for MediCal so she can afford her medical bills. Today an agent is visiting the applicant's home in order to sell her an annuity product. Which of the following is true?
    A)The agent should recommend an annuity instead of MediCal.
    B)The agent should recommend the annuity purchase to generate a commission.
    C)The agent cannot allow the applicant to purchase an annuity if after the purchase, she wouldn’t qualify for MediCal.
    D)It is permissible for the agent to visit the applicant for the first time without providing a 24-hour advanced notice in writing.
    C)The agent cannot allow the applicant to purchase an annuity if after the purchase, she wouldn’t qualify for MediCal.
    (this multiple choice question has been scrambled)
  52. For federal tax purposes, which of the following is true regarding lump-sum life insurance benefits?
    A)It is taxed as ordinary income.
    B)It is taxed as a percentage of income.
    C)It is subject to capital gains tax.
    D)It is received tax free.
    D)It is received tax free.
    (this multiple choice question has been scrambled)
  53. A fixed annuity has a guaranteed interest rate of 4%. This means that the annuitant will
    A)Always receive the current interest rate adjusted for inflation.
    B)Always receive the current interest rate plus 4%.
    C)Never receive more than 4% interest.
    D)Never receive less than 4% interest.
    D)Never receive less than 4% interest.
    (this multiple choice question has been scrambled)
  54. Life settlement contracts are put into effect by which of the following?
    A)An absolute assignment
    B)The settlement options listed in the policy
    C)A collateral assignment
    D)A nonforfeiture provision
    A)An absolute assignment
    (this multiple choice question has been scrambled)
  55. Which of the following nonforfeiture options of a life insurance policy allows a policyowner to use the cash value to purchase more insurance of the same type?
    A)One-year term
    B)Cash surrender
    C)Reduced paid-up
    D)Extended term
    C)Reduced paid-up
    (this multiple choice question has been scrambled)
  56. In comparing the purchase of individual life insurance to group life, which statement is NOT true?
    A)Group insurance is automatic and requires less medical information than the individual coverage.
    B)Group life tends to have a lower premium per person than individual life.
    C)Both types of coverage provide a tax-free death benefit.
    D)Group insurance has a nondeductible premium while individual insurance has a tax-deductible premium to the payor.
    D)Group insurance has a nondeductible premium while individual insurance has a tax-deductible premium to the payor.
    (this multiple choice question has been scrambled)

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