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Exam A
Life insurance CA
| Question | Answer |
|---|---|
| An annuity that is purchased with a lump sums premium and whose benefits begin after 12 months is called a | Single premium deferred annuity |
| A Technique used to determine the amount of life insurance needed by focusing on the projected earning potential of an insured is called | Human life value approach |
| When replacing a policy the producer must present the applicant with a Notice Regarding Replacement of Life Insurance | At the time of taking the application |
| The possibility of a financial loss incurred by a life insurance company for the premature death of an insured is known as a | Risk |
| The Medical Information Bureau (MIB) is a nonprofit trade association that maintains | Medical information on applicants for life and health insurance |
| A person who signs a fraudulent claim form may be found guilty of | Perjury |
| Which policy is a combination of annual renewable term insurance and interest-sensitive cash value | Universal Life |
| The right to a full refund of premium for insureds age 60 or older is | 30 days |
| The premium modes can be best described as the | Frequency of premiums |
| Intentionally omitting a history of heart problems on an application is | Concealment |
| A Tax-Sheltered annuity (TSA) is a qualified plan available for | Nonprofit organizations |
| The intent of replacement regulations is to protect the | Policy Owner |
| Which provision allows a lapsed policy to be put back in force | Reinstatement |
| According to the California Department of Insurance an insurer whose articles of incorporation are registered in Oslo, Norway is considered a | Alien (Another Country) |
| Mortality is defined as the | Rate of death |
| Characteristics of a group life insurance | The insurance is written as a master policy Members receive a certificate of insurance Conversion rights without evidence of insurability must be offered |
| When a producer collects the initial premium and issues a conditional receipt, the receipt | May allow life insurance companies to start coverage before policy delivery |
| The law of large numbers allows an insurance company to predict the expected losses among | Members of a group of individuals with similar risk |
| If an insurers legal reserve funds are found to be less than the minimum required by law the insurer is considered | Insolvent |
| Which type of policy would be suitable to protect the balance of a home mortgage | Decreasing term |
| When must insurable interest exist | At the time of application |
| The rider that provides for partial payment of the death benefit in advance to help with nursing or convalescent home expenses is the | Long term care |
| Which annuity payout options guarantees the return of all the principal invested in the contract | Refund life annuity |
| Participating policies | Pay dividends to policyholders They have an intentional overcharge of premium They are commonly issued by mutual insurers |
| Insurance contracts are based upon a doctrine which requires all parties to the contract to be honest . This is known as the doctrine of | Utmost good Faith |
| According to the California Insurance Code, life-only producers must keep records of their transactions for at least | 5 years |
| Offer and Acceptance Consideration Competent parties | Characteristics of Contract |
| Fixed Annuity’s | Premiums are invested in the general account Interest rates are guaranteed Insurer assumes the investment risk |
| In a group policy, the employer receives | Master Contract |
| The risk of a loss to an insurance company is also referred to as a | Exposure |
| With a modified premium whole life contract, premium payments are | Lower in the early years of the contract: A modified life is a type of whole life policy that charges a lower premium and then a higher level premium for the remainder of the insureds life |
| If a misstatement of age is discovered during the prodcessing of a life insurance claim, the insurer will | Adjust the death benefit |
| The pay-in time for deferred annuities is known as the | Accumulation period |
| Statements made by an applicant on an application for insurance are considered to be | Representations |
| The cause of a loss is known as a/an | Peril |
| When a producer, broker, or solicitor handles premiums for an insurer, they are acting in which of the following capacities | A Fiduciary is a person acting in a position of trust, such as in handling of premiums |
| What is the risk classification for those who are incurable but have a higher than average risk? | Substandard- (higher risk) also referred to as rated |
| The option that pays a specified amount to the annuitant with no remaining value payable to a beneficiary is | Life only-(pure life or straight life) The payment ceases at the annuitants death and pays no payments to beneficiary |
| Money borrowed from a life insurance policy’s cash value is | Not Taxable- Money borrowed against cash value not taxable , however, the insurance co charges interest on outstanding policy loans. |
| An insured who submits a fraudulent claim to an insurer is an example of a/an | Moral hazard |
| Selling which of the following polices would require a license issued by FINRA | Variable Universal life |
| Premium mode means | Frequency of premiums |
| Social security was created to protect against | Sickness in old age Premature death Disability |
| What document describes a legal document which would dictate who can buy a deceased partners share of the business and for what | Buy-sell agreement |
| Which of the following must an insurer obtain in order to transact insurance within a given state. | Certificate of Authority |
| When the insured selects the extended term non forfeiture option, the cash value will be used to purchase term insurance with what face amount | Equal to the original policy for as long as the cash values will purchase. |
| If a policy allows the policy owner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a | Guaranteed insurability rider |
| What is true regarding the annuity period | It may last for the lifetime of the annuitant |
| Who can make a fully deductible contribution to a traditional IRA | Individual who has earned income |
| A married couple owns a permanent policy which covers both of their lives and pays the death benefit only upon the death of the first insured | Joint life policy |
| What is the term for a sales campaign conducted through the mail | Direct response |
| To sell variable life insurance policies, an agent must receive all of the following | A life insurance license FINRA registration A securities license |
| Indexed annuity | Medium risk has higher income potential and set amount will not drop below set level can change according to index like stock market |
| The transfer of a possible financial loss to another party refers to | Insurance |
| The Type of whole life insurance where premiums are payable over the whole life of the insured at age 100 is called | Ordinary ( straight) life |
| What are methods of handling risk (STARR) | Sharing, transfer, avoidance, reduction, and retention |
| What do Social Security benefits include | Retirement benefits, disability benefits, and survivor benefits |
| Life insurance death benefit paid in a lump sum to a beneficiary is | Generally free of taxes if taken as a lump sum |
| Two business partners own life insurance on each other. If one partner dies which contract will allow the surviving partner to use the death benefit to purchase the deceased business | Buy-Sell agreement |
| The type of policy that can be changed from one that does not have cash value to one that does is a | Convertible term policy |
| Which document describes the specific features and elements of a policy | Policy Summary |
| The Attempt that an insurer makes to keep its existing insurance policy in force after receipt of a notice of replacement from another company is called | Conservation |
| If an annuitant dies before the annuitization period, what proceeds will the beneficiary receive? | Accumulation value or the premiums paid, whichever is greater |
| Life-only agents are NOT Allowed | 24-hour care coverage this is only for accident and health agents |
| The Accelerated Benefit (living Needs) rider | Simply advance payment of the death benefit many insurance companies do not charge for the living rider |
| Characteristics if The Accelerated Benefit (living Needs) rider | Simply an advance payment of death benefit, Insured must be diagnosed with terminal illness, Provides early payment of a portion of death benefit |
| If the cash value exceeds the premiums paid in a whole life policy, what are the tax consequences if the policy is surrendered. | The portion that exceeds the premium paid is taxable |
| When one party prepares the contract and the other party either accepts or rejects the contract, it is a | Contract of adhesion (Take it or leave it) |
| Which rider may increase the value of the policy due to an increase in the Consumer Price Index (CPI) | Cost of living Rider |
| When completing an application for life insurance, a producer should do which of the following | Witness the applicant’s signature |
| Speculative risk are | Not insurable they involve the opportunity for either loss or gain like gambling |
| Which policy provision includes the application and the first premium from the insured and the promise to pay from the insurer | Consideration |
| The guaranteed insurability rider allows the policyowner to purchase additional insurance at the insureds | Attained age |
| A life policy that covers two lives and provides for payment of the death benefit upon the death of the first insured is called | Joint Life-the death benefit is paid upon the first death only |
| Whose signature is required to make changes to a written application for a life insurance policy? | Applicant-changes on an application must be initialed or signed by the applicant |
| A producer who knowingly misrepresents material information for the purpose of inducing a client to lapse, forfeit, change or surrender a life insurance policy or annuity has committed an illegal practice known as | Twisting |
| Underwriting is the process of | Determining the company’s risk regarding a proposed insured |
| An arrangement where the employer and employee agree to purchase and fund life insurance on an employee is known as a | Split dollar Plans |
| What is true about a joint and survivor life annuity | Benefits will stop when the last annuitant dies |
| A contract agreement for life insurance is composed of a | Offer and acceptance |
| Term limit on liability refers to the | Death Benefit of a life insurance policy |
| A policy that combines whole life on the breadwinner and term on the spouse and children is called a | Family policy (family protection) combines whole life with term insurance. To cover family members in a single policy, providing coverage on every member of a family |
| Which nonforfeiture values maintains the original face value of the contract but sacrifices the length of the contract | Extended term |
| What method of handling risk is self-insurance | Retention : self insurance when the insured accepts the responsibility for the loss before the insurance co pays |
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Sandradiazbohr
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