ca life exam

  1. Which one of the following does NOT affect the insured’s life insurance premium?



    B) Reserves
  2. Which of the following settlement options does NOT guarantee that the entire death benefit will be paid out to the beneficiary?



    A) Life income
  3. In reinsurance, the insurance company that transfers its loss exposure to another insurer is the



    B) Primary insurer.
  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.
  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



    B) 24.
  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?



    D) The human life value approach
  7. Which of the following premium payment modes would result in the highest overall premium for life insurance?



    C) Monthly
  8. A person has a history of DUIs. To his insurer, this presents what type of hazard?



    B) Morale
  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?



    C) Buy-sell Agreement
  10. According to the California Insurance Code, any person legally capable of making an insurance policy is considered



    A) An insurer.
  11. An adjustable life policy allows the policyowner to do any of the following EXCEPT



    D) Skip premium payments.
  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



    B) The system has been largely privatized.
  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



    C) Deny the application without a hearing.
  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?



    B) Limited pay whole life
  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



    D) Preferred risk.
  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



    D) Accumulation period.
  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



    C) The face amount.
  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
  21. Which action by an insurer or its representatives is NOT considered an unfair claims violation?



    D) An agent advises a claimant to obtain the services of an attorney.
  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) Contest the claim
  23. In life insurance, an insurable interest between the policyowner and the insured must exist



    C) At the time of application.
  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?



    C) Waiver of premium
  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?



    C) Life with guaranteed minimum
  31. Which of the following characteristics would NOT stop an insurance company from accepting an insurance risk?



    A) The insured is part of a large group of homogeneous exposure units.
  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.
  33. Which of the following transactions would most likely be declined due to lack of insurable interest?



    D) An employee insures the employer in the fear of losing a job.
  34. Which of the following best represents what is meant by “life insurance creates an immediate estate”?



    C) The face value of the policy is payable to the beneficiary upon the death of the insured.
  35. The Spendthrift Clause of a life insurance policy is designed to do all of the following EXCEPT



    C) Allow the beneficiary to change to another option when insured dies.
  36. The policyowner chooses the annual mode for the payment of the life insurance premium. For the year, the owner will pay



    A) Less as compared to the other payment modes.
  37. All of the following are true about key-person insurance EXCEPT



    D) The death benefit is taxable to the business
  38. Why is having a large number of similar exposure units important to insurance companies?



    A) The larger the number insured, the more accurately the insurer can predict losses and set appropriate premiums.
  39. Which of the following is NOT excluded from the California Life and Annuity Replacement Law?



    A) Purchasing a new policy that will take the place of an existing policy
  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?



    D) Living Benefits
  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?



    B) The annuitant must be a natural person.
  44. Which of the following is a characteristic of an equity indexed annuity?



    D) Interest rates are often associated with a stock index.
  45. Which of the following principles describes restoring the insured to his or her original financial status after a loss?



    A) Indemnity
  46. Which of the following class designations for naming beneficiaries means “by the bloodline”?



    D) Per stirpes
  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?



    C) Aleatory
  48. The insurance component of a Universal Life policy is what type of insurance?



    B) Annual Renewable Term
  49. According to the Fair Credit Reporting Act, consumer reports are prohibited from reporting negative information about a customer after how many years?



    C) 7 years
  50. In comparing the purchase of individual life insurance to group life, which statement is NOT true?



    C) Group insurance has a nondeductible premium while individual insurance has a tax-deductible premium to the payor.
  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 cannot allow the applicant to purchase an annuity if after the purchase, she wouldn’t qualify for MediCal.
  52. For federal tax purposes, which of the following is true regarding lump-sum life insurance benefits?



    C) It is received tax free.
  53. A fixed annuity has a guaranteed interest rate of 4%. This means that the annuitant will



    A) Never receive less than 4% interest.
  54. Life settlement contracts are put into effect by which of the following?



    C) An absolute assignment
  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?



    C) Reduced paid-up
  56. In comparing the purchase of individual life insurance to group life, which statement is NOT true?



    C) Group insurance has a nondeductible premium while individual insurance has a tax-deductible premium to the payor.
Author
jdeg238
ID
270680
Card Set
ca life exam
Description
Ca life insurance exam
Updated