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CA Life Exam
To study and to get it over with
| Question | Answer |
|---|---|
| Which of the following types of information is NOT required for a life insurance application? | Ethnicity |
| Which of the following is NOT a feature of equity-indexed annuities? | Offers a maximum interest rate that increases annually |
| When calculating life insurance premium rates, which component would an agent's commission fall under? | Insurer's expenses |
| Which of the following is NOT a benefit of insurance? | Losses due to fraud are eliminated |
| Which of the following is NOT considered to be an unfair claims settlement practice? | Advising a claimant to hire an attorney |
| Which Social Security status does a worker with 6 quarters of coverage during the last 13-quarter period have? | Currently insured |
| Who does a life settlement broker represent? | Individual wanting to sell their life policy to a third party |
| What time period allows an insured's life insurance policy to remain in force even if the premium was not paid on the due date? | Grace period |
| John and Mary have a handicapped child that is financially dependent upon them. The death of one of the parents would not be financially disastrous, however the death of both likely would be. Which policy would be best suited for them? | Second-to-die policy |
| John owns an insurance policy that gives him the right to share in the insurer's surplus. What kind of policy is this? | Participating |
| What does ESOP stand for? | Employee Stock Ownership Plan |
| When an applicant applies for insurance, the process by which the insurer determines whether to issue a policy is called | underwriting |
| An insurance policy written after 1988 that fails to pass the seven-pay test is known as | a modified endowment contract |
| Mark, age 45, has a Modified Endowment Contract (MEC). What is the tax penalty for taking a loan against this policy prior to age 59 1/2? | 10% |
| Retirement plans are prevented from favoring highly compensated employees under which government regulation? | Nondiscrimination |
| What are members of the Medical Information Bureau (MIB) required to report? | Medical ailments discovered during the underwriting process |
| In a modified endowment contract, the penalty tax imposed on premature withdrawals is | 10% |
| According to the California Insurance Code, how is the word "may" interpreted? | Permissive |
| Which statement is CORRECT when describing a contract of adhesion? | Contract may be accepted or rejected by the insured |
| The importance of a representation is demonstrated in what rule? | Materiality of concealment |
| What does the term "illustration" mean when used in the phrase "life insurance policy illustration", according to the California Insurance Code? | Presentation of policy features that includes non-guaranteed elements |
| What does the insurance term "indemnity" refer to? | Make whole |
| A beneficiary receives only the death benefit earnings in which settlement option? | Interest Option |
| What is the price of insurance for each exposure unit? | Rate |
| Which of the following best describes the statement "The more times an event is repeated, the more predictable the outcome becomes"? | Law of large numbers |
| Which of the following pieces of information is NOT gathered during the personal financial planning process? | An individual's civic organization memberships |
| The probability of death, listed by year, is demonstrated in | mortality tables |
| A life insurance policy can be surrendered for its cash value under which policy provision? | Nonforfeiture options |
| When an insurance company requests an attending physician's report, the request must be accompanied by a | copy of the signed authorization |
| An insurer owned by its policyholders is called a | mutual insurer |
| How long must life agents keep their transaction records? | 5 years |
| What is an "insurance broker" according to California Insurance Code? | A person compensated for transacting insurance on behalf of another person with an insurer |
| Which type of worker has Social Security benefits available to them? | Fully insured |
| Which of the following acts is NOT a Federal offense committed by an insurance agent? | Misrepresentation on an insurance application |
| How are acts of war and aviation treated under a group life insurance policy? | Policy exclusion |
| A report which is based on creditworthiness and personal characteristics that influences an insurance applicant's eligibility for life and health insurance is called a(n) | consumer report |
| The California Insurance Code allows an individual how many days to cancel a life policy for a full-refund? | Between 10 and 30 days |
| Which of the following describes the increase in the probability of a loss due to an insured's dishonest tendencies? | Moral hazard |
| A spendthrift clause in a life insurance policy | restricts the ability of the beneficiary to assign benefits |
| Which of the following is NOT a true description of non-medical life insurance? | Applicants are not required to answer medical questions on the application |
| In a renewable term life insurance policy, the contract will usually | require a higher premium payable at each renewal |
| The California Insurance Code has authorized standards for names used by life insurance agents. Which of the following, if any, are automatically acceptable for Lance Manyon, a holder of the CLU designation? | Lance Manyon Insurance Services |
| Which of the following does the California Insurance Code NOT require an insurance policy to specify? | Insurer's financial rating |
| A person who asserts a right of recovery under an insurance policy is called | claimant |
| Which of the following does NOT have to be included on life insurance policy illustrations? | Statement that all values and benefits are guaranteed |
| What is a participating life insurance policy? | Contract that allows the policyowner to receive a share of surplus in the form of policy dividends |
| Select the appropriate response What determines the Social Security normal retirement age? | Year in which worker was born |
| What is an insurance solicitor authorized to do? | Help an agent or broker sell insurance |
| The California Insurance Code defines "policy" as a(n) | written contract |
| Which of the following is NOT a characteristic of reinsurance? | Increases the unearned premium reserve |
| Which provision will pay a portion of the death benefit prior to the insured's death due to a serious illness? | Accelerated death benefit |
| What is considered to be the definition of disability, according to Social Security? | Unable to engage in any substantial gainful activity |
| A participating company is also referred to as which type of insurer? | Mutual insurer |
| Which of the following types of life insurance is normally associated with a mortgage loan? | Decreasing term |
| A creditor would be allowed rights to life insurance policy proceeds if which of the following beneficiaries is chosen? | The insured's estate |
| Paul has an existing annuity and is sold a new one, in which the new policy holds no greater financial benefit to him than the existing contract. This is considered a(n) | unnecessary replacement |
| Which of the following is a contract that involves one party which indemnifies another when a loss arises from an unknown event? | Insurance policy |
| What distinguishes a deferred annuity from an immediate annuity? | The time at which benefit payments start |
| Who is NOT eligible for Social Security survivor benefits? | A deceased worker's dependent parents of any age |
| Moral hazard is described as the | increased chance of a loss because of an insured's dishonest tendencies |
Created by:
Meiden