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Life License-Test#1
Part 1
| Question | Answer |
|---|---|
| 1. The purchase of an insurance policy by a consumer is the process of risk: | Transfer- getting someone else to handle the risk (an insurance company) b/c the risk is too large for the consumer to handle on their own |
| 2. the concept of "adhesion" refers to: | a court making a decision in favor of an insured b/c there was unclear wording in the policy document |
| 3. They type of life insurance policy which will pay the face amt to a beneficiary if the insured dies during the policy's term, or will pay the face amt to the insured who is living at the end of this period of time is a/an: | Endowment policy (definition) |
| 4. What does the "grace period" in a life insurance policy permit the insured to do after the premium due date? | pay the premium without losing coverage; purpose of grace period is to keep policy on the books without a lapse in coverages |
| 5. a policy names an irrevocable beneficiary. This beneficiary type: | Has a "vested" interest in the life contract; "vested" means that they have a valuable interest in the contract, and must approve everything that is done to the contract, but they do not have the same role as a policy co-owner |
| 6. of the following, which best describes an annunity? | the insurance company has an obligation that is different for both the accumulation period and the liquidation period; the insurer's obligation in accumulation period -invest the money entrusted to it, liquidation period is pay out money accumulated |
| 7. the life analyst is allowed to charge a fee for services provided, as long as it is stated in writing, in advance of performing the service. All following must be included in this written agreement, except: | the services which will be performed and provided,but for which no fee will be charged; (included: exact fee to be charged, commission received for sale of products if applicable, and info being analyzed can be obtained directly from insurer at no charge |
| 8. policy issued to 32 yr old w/ face amt of $100,000, when reaches 55, policy has built up $100,000 cash value- what type of policy is this? | an endowment at age 55 policy |
| 9. person is 65 yrs of age; who has the greatest need for comprehensive long term care insurance? | a person with $50,000 in yearly income and $130,000 in assets; this person has something to lose (income and assets) but is not wealthy enough that they would not have to worry about paying future expenses |
| 10. client has Medicare Pt A; client spends a wk in hospital for a small operation. this is 1st time in hospital for 3 yrs, which is true? | after paying deductible, client will have 100% coverage paid by Medicare |
| 11. in regards to representations, which is correct? | representations are statements made to the best of one's knowledge (definition of representation) |
| 12. premiums for a Variable Universal Life insurance contract: | can vary in payment schedule and amt; |
| 13. which of the following comprise a Family Income insurance policy? | permanent combined with decreasing term insurance |
| 14. what form of insurance usually found in Group Life Insurance? | 1 year term-used to keep the premiums low |
| 15. after receiving your insurance life agent license, if you change your address, you are to notify the Insurance Commissioner, in writing: | immediately; IC wants ability to find agent in case of possible violations |
| 16. "consideration", as it applies to a life insurance contract, is defined as: | the premium payment; "considerations" includes premium, info, and the promises made by the insurer |
| 17. in determining the rates to charge payers for life insurance premiums, a company will use: | mortality, interest, expenses (three components of premiums) |
| 18. scenario describes how dividends can work | if a company overestimates what is needed to issue policies a dividend can result |
| 19. what occurs during the accumulation period of an annuity? | allows the annuity to build on a tax deferred basis |
| 20. the usual elimination (waiting) period for a Disability Income rider is | 3 to 6 months; the long period of time is imposed to allow the insured to get back to work or prove they really are disabled. A longer period is also chosen so that the premium is more affordable |
| 21. which is true regarding an irrevocable beneficiary? | if the irrevocable beneficiary permits, the policy owner may borrow from the cash values; owner and the irrevocable beneficiary must both agree when a change is made to the policy |
| 22. which of the listed premium payment schedules would reflect the lowest overall premium? | annual; no interest is being charged |
| 23. a non-medical application: | may require an applicant to submit to a physical; even when application is taken non-medically the insurance company reserves the right to ask the applicant to take a medical exam |
| 24. if a policy is cancelled and the insurance company legally keeps the earned premium along with a penalty charged the premium payor it is called a | short rate cancellation; (def) |
| 25. which of the following would be considered an alien insurer? | a company located in England and doing business in California; alien insurers are domiciled outside o the U.S., but are allowed to do business in the state |
| 26. the doctrine of "utmost good faith" applies to the business of transacting insurance. Which of the following is an example of its application? | each party is entitled to rely upon the representations of the other party; key phrase is "rely on each other"-part of def |
| 27. all of the following statements are correct regarding a warranty, EXCEPT: (correct) - warranties made at or during execution of policy must be contained in policy, signed by insured and attached to contract; | it is a stmt merely made to the best of one's knowledge, and an only be express; (Correct ctd)-should either party violate a warranty it entitles other party to cancel contract, warranties can be made abt events in past, present, or future |
| 28. an agent makes a misleading comparison of a policy he is selling in order to convince a prospect to lapse an old insurance policy. What is this called? | twisting-def |
| 29. which of the following is not a legal activity in this state? | participating in a plan to offer free insurance if a person buys some form of service; no such thing as free insurance |
| 30. the term "consideration" applies to the issuance of an insurance policy. choose the best description of this term... | consideration is the exchange of value btw insured and insurer, specifically the exchange of premium for insurer's promise to pay benefits |
Created by:
jennyhqs2
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