Profitable distribution of exposures serves the purpose of
a. Preventing the insurer from being estopped.
b. Helping the insurer determine payable benefits.
c. Proctecting the insurer against adverse selection
d. Helping the insurer select only the ideall
Proctecting the insurer against adverse selection.
What describes a situation when poor risks and balanced with preferred risks, and average risks are in the middle?
a. Equitable spread of risk
b. Ideally insurable risk
c. Profitable distribution of exposures
d. Adverse selection
Profitable distribution of exposures.
The causes of loss insured against in an insurance policy are known as
a. Perils
b. Losses
c. Risks
d. Hazards
Perils
When an individual purchases insurance, what risk management technique is he or she practicing?
a. Avoidance
b. Sharing
c. Retention
d. Transfer
Transfer
The legal defintinon of "person" would NOT include which of the following?
a. A business entity
b. A corporation
c. A family
d. An individual human being
A family
Peril is most easily defined as
a. Something that increases the chance of loss
b. The cause of loss insured against
c. An unhealthy attitude about safety
d. The chance of a loss occurring
The cause of loss insured against
In case of a loss, the indemnity provision insurance policies
a. Pays the insured a percentage of the loss above and beyond the loss
b. Pays the insured as much as 95% of the loss
c. Restores an insured person to the same financial state as before the los
Restores an insured person to same financial state as before the loss
The protection of the insurer from adverse selection is provided in part by
a. A profitable distribution of exposures
b. Reducing costs
c. A drop in applicants
d. A reduction in coverage
A profitable distribution of exposures
Which of the following insurance options would be considered a risk-sharing arrangement?
a. Surplus lines
b. Reciprocal
c. Stock
d. Mutual
Reciprocal
A contract which one party undertakes to indemnify another against loss is called
a. Indemnity
b. Insurance
c. Adverse Selection
d. Risk
Insurance
For the reported losses of an insured group to become more likely to equal the statistical probability of loss for that particular class, the insured group must become
a. Smaller
b. Older
c. More Active
d. Larger
Larger
Following a career change, an insured is no longer erquired to perform many physical acitivites, so he has implemented a program where he walks and jogs 45 minutes each morning. The insured has also eliminated most fatty foods from his diet. Which method
Reduction
The risk of loss may be classified as
a. Named risk and un-named risk
b. High risk and low risk
c. Pure risk and speculative risk
d. Certain risk and uncertain risk
Pure risk and speculative risk
When must insurable interest exist in a life insurance policy?
a. At the time of policy delivery
b. When there is a change of the beneficary
c. At time of loss
d. At the time of application
At the time of application
Events or conditions that increase the chances of an insured loss occuring are referred to as
a. Risks
b. Perils
c. Hazards
d. Exposures
Hazards
An individual was invloved in a head-on collision while driving home one day. His injutries were not serious, and he recovered. However, he deicded that in order to never be involved in another accident, he would not drive or ride in a car ever again. Whi
Avoidance
Which of the following individuals must have insurable interest in the insured?
a. Producer
b. Policyowner
c. Beneficiary
d. Underwriter
Policyowner
The risk managment technique that is used to prevent a specific loss by not exposing oneself to that avtivity is called
a. Avoidance
b. Transfer
c. Reduction
d. Sharing
Avoidance
Which law is the foundation of the statistical prediction of loss upon which rates for insurance are calculated?
a. Law of large numbers
b. Law of masses
c. Law of averages
d. Law of group evaulation
Law of large numbers
Installing deadbolt locks on the doors of a home is an example of which method of handling risk?
a. Avoidance
b. Transfer
c. Self-insurance
d. Reduction
Reduction
Which insurance principle states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost?
a. Indemnity
b. Stop-loss
c. Consideration
d. Reasonable expectations
Indemnity
All of the following are insurable events as defined in the Insurance Code EXCEPT
a. An insured goes to the hospital for a broken arm
b. An insured is sued for libel and slander
c. An insured loses a large sum in poker game
d. A guest trips and breaks his
An insured loses a large sum in a poker game.
To achieve the profitable distribution of exposures,
a. Preferred risks and poor risks are balanced, with average risks in the middle
b. The most coverage goes to average risks and preferred risks, while less goes to poor risks
c. Poor risks and average r
Preferred risks and poor risks and balanced, with average risks in the middle.
Which of the following statements is NOT true concerning insurable interest as it applies to life insurance?
a. Business partners have an insurable interest in each other.
b. A husband or wife has an insurable interest in their spouse.
c. An individual ha
A debtor has an insurable interest in the life of a lender.
All of the following actions by a person could be described as risk avoidance EXCEPT
a. Investing in the stock market
b. Refusing to scuba dive.
c. Never flying in an airplane
d. Not driving after being in an accident.
Investing in the stock market
Which of the following is NOT an example of insurable interest?
a. Child in parent
b. Debtor in creditor
c. Business partners in each other
d. Employer in employee
Debtor in creditor
Which of the following factors is NOT considered by an underwriter when determining the premium rates for an individual seeking insurance?
a. Race
b. Age
c. Medical history
d. Sex
Race
According to California Insrance Code, which of the following can be classified as an insurable event?
a. Extreme levels of loss
b. Pure risks
c. Unpredictable losses
d. Speculative
Pure risks
When an individual purchases insurance, what risk management technique is he or she practicing?
a. Retention
b. Transfer
c. Avoidance
d. Sharing
Transfer
A tornado that destroys property would be an example of which of the following?
a. A loss
b. A physical hazard
c. A peril
d. A pure risk
A peril
Not all losses are insurable, and there are certain requirements that must be met before a risk is a proper subject for insurance. These requirements include all of the following EXCEPT
a. The loss must not be catastrophic
b. There must be a sufficient nu
The loss may be intentional
If an applicant for a life insurance policy and the potential insured are two different people, the underwriter would be concerned about
a. Which individual will pay the premium
b. Whether an insurable interest exists between the individuals
c. The gender
Whether an insurable interest exists between the individuals
A situation in which a person can only lose or have no change represents
a. Pure risk
b. Speculative risk
c. Adverse Selection
d. Hazard
Pure risk
Insurance is a contract by which one seeks to protect another from
a. Hazards
b. Loss
c. Exposure
d. Uncertainty
Loss
Which statement regarding insurable risks is NOT correct?
a. Insurance cannot be mandatory
b. The insurable risk needs to be statistically predictable
c. An insurable risk must involve a loss that is definite as to cause, time, place and amount
d. Insured
Insureds cannot be randomly selected
Insurance is the transfer of
a. Loss
b. Hazard
c. Peril
d. Risk
Risk
Which of the following is the most common way to transfer risk?
a. Name a beneficiary
b. Purchase insurance
c. Increase control of claims
d. Lessen the possibility of loss
Purchase insurance
For the purpose of insurance, risk is defined as
a. The certainty of loss
b. The cause of loss
c. An event that increases the amount of loss
d. The uncertainty or chance of loss
The uncertainty or chance of loss
What do individuals use to transfer the risk of loss to a larger group?
a. Insurance
b. Insurable interest
c. Exposure
d. Indemnity
Insurance
The insurer may suspect that a moral hazard exists if the policyholder
a. Always drives over the speed limit
b. Is not honest about his health on an application for insurance
c. Is prone to depression
d. Is indifferent to activites that may be dangerous
Is not honest about his health on an application for insurance
The growing tendency of individuals to file lawsuits and to claim tremendous amounts for alleged damages is known as
a. Fraud
b. Legal hazard
c. Double indemnity
d. Legal risk
Legal hazard
Which of the following is NOT a goal of risk retention?
a. To fund losses that cannot be insured
b. To minimize the insured's level of liablity in the event of loss
c. To reduce expenses and improve cash flow
d. To increase control of claim reserving and
To minimize the insured's level of liablity in the event of loss
The risk of loss may be classifed as
a. High risk and low risk
b. Pure risk and speculative risk
c. Certain risk and uncertain risk
d. Named risk and un-named risk
Pure risk and speculative risk
A person who does not lock the doors or does not repair leaks shows an indifferent attitude. This person presents whaty type of hazard?
a. Moral
b. Legal
c. Physical
d. Morale
Morale
An individual's tendency to be dishonest would be indicative of a
a. Moral hazard
b. Morale hazard
c. Pure hazard
d. Physical hazard
Moral hazard
Hazard is best defined as
a. The uncertainty of loss
b. Neglect to communicate a material fact
c. A deliberate attempt to deceive
d. Something that increases the risk of loss
Something that increases the risk of loss
In case of a loss, the indemnity provision in insurance policies
a. Pays the insured as much as 95% of the loss
b. Restores an insured person the same financial state as before the loss
c.Allows the insured to collect 20% more than the actual loss
d. Pays
Restores an insured person the same financial state as before the loss
All of the following are examples of risk retention EXPCEPT
a. Premiums
b. Deductibles
c. Copayments
d. Self-insurance
Premiums
The insurer must be able to rely on the statements in the application, and the insured must be able to rely on the insurer to pay valid claims. In the forming of an insurance contract, this is referred to as
a. Reasonable expectations
b. A warranty
c. Imp
Utmost good faith
All of the following must be specified in an insurance policy EXCECPT
a. The financial rating of the insurer
b. The parties between whom the contract is made
c. The risks insured against
d. The period during which the insurance is in force
The financial rating of the insurer
Accorind to the Codem how many separate requirements should an insurance policy have?
a. 4
b. 6
c. 8
d. 10
6
The act of revoking or terminating an insurance policy is called
A. Nonrenewal
b. Lapse
c. Cancellation
d. Forfeiture
Cancellation
An agreement that is enforcable by law is known an a/an
a. Policy
b. Contract
c. Conditional receipt
d. Adhesion
Contract
What is a definition of a unilateral contract?
a. Two or more parties go into contract understanding there may be an unequal exchange of values.
b. One author: the company wrote the contract; the insured must accept it as written.
c. If one party makes a
One-sided: only one party makes an enforceable promise.
What is material misrepresentation
a. Any misstatement made by an applicant for insurance
b. Any misstatement by the producer
c. Concealment
d. A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance comp
A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company
A contract between an insured and an insurance company which agrees to apy the insured for loss caused by specific events is
a. A premium
b. A guarenteed benefit
c. A policy
d. A rider
A policy
In addition to penalties, fines, and possible imprisonment relating to misrepresentation, the Commissioner may suspend the license of such person for a period up to
a. 6 months
b. 1 year
c. 3 years
d. 5 years
3 years
In forming an insurance contract, when does acceptance ususally occur?
a. When an insured submits an application
b. When an insurer's underwriter approves coverage
c. When an insurer delivers the policy
d. When an insurer receives an application
When an ninsurer's underwriter approves coverage
Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. What contract characteristic does this describe?
a. Unilateral
b. Conditional
c. Personal
d. Adhesion
Adhesion
Which of the follwoing is NOT a required element of an insurance contract?
a. Consideration
b. Counteroffer
c. Acceptance
d. Competent parties
Counteroffer
When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is
a. Personal
b. Unilateral
c. Conditional
d. Aleatory
Conditonal
Which of the following would be covered by contract law
a. An insured suing the insurer for failure to provide promised benefits
b. A consumer suing the manufacturer for a defective product
c. Neighbors suing each other for trespassing
d. An employer suin
An insured suing the insurer for failure to provide promised benefits
What is a wrongful act or the violation fo someone's rights that leads to legal liability called?
a. Tort
b. Hazard
c. Peril
d. Loss
Tort
Because of insurance policy is a contract between the insurer and the insured, it must confirm to the state laws governing contracts which require all of the following elements EXCEPT
a. Offer and acceptance
b. Conditions
c. Competent parties
d. Legal pur
Conditions
In insurance, an offer is usually made when
a. An agent explains a polict to a potential applicant
b. An applicant submits an application to the insurer
c. The insurer approves the application and receives the intial premium
d. The agent hands the policy
An applicant submits an application to the insurer
In forming an insurance contract, when does acceptance usually occur?
a. When an insurer receives an application
b. When an insured submits an application
c. When an insurer;s underwriter approves coverage
d. When an insurer delivers the policy
When an insurer's underwriter approves coverage
In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe?
a. Aleatory
b. Conditional
c. U
Unilateral
An insured wants to transfer his personal insurance policy to a friend. Under what conditions would be possible?
a. The insured would have to surrender his policy to the insurer, and his friend could then ask to buy it.
b. The insured can transfer the pol
The insured will need a written consent of the insurer.
The proposed insured makes the premium payment on a new insurance policy. If the insured should die, the insurer will pay the death benefit to the beneficiary if the policy is approved. This is an example of what kind of contract?
a. Unilateral
b. Conditi
Conditional
Which of the following best describes the concept that the insured pays a small amount of premium for a large amount of risk on the part of the insuracne company
a. Aleatory
b. Adhesion
c. Subrogation
d. Warranty
Aleatory
Which of the following best describes the aleatory nature of an insurance contract?
a. Exchange of unequal values
b. Only one of the parties being legally bound by the contract
c. Ambiguities are interpreted in favor of the insured
d. Policies are submitt
Exchange of unequal values
What is a definition of a unilateral contract?
a. One sided: only one party makes an enforceable promise
b. Two or more parties go into a contract understand there may be an unequal exchange of value
c. One author: the company wrote the contract; the insu
One sided: only one party makes an enforceable promise
What other term is used to rfer to unintentional torts?
a. Negligence
b. Hazard
c. Peril
d. Breach of contract
Negliegence
A life insurance policy has a legal purpose if both of which of the following elements exist?
a. Underwriting and reciprocity
b. Offer and counteroffer
c. Policyowners and named beneficiares
d. Insurable interest and consent
Insurable interest and consent
According to the California Insurance Code, any agent violating the regulations realting to misrepresentation will charged with a
a. Felony, a fine not to exceed $2,000, and a possible 2-5 year imprisonment.
b. Felony, a fine not to exceed $5,000, and a p
Misdemeanor, a fine not to exceed $25,000, and/or a possible 1-year imprisonment.
The written instrument, in which a contract is set forth, is known as the
a. Insuring clause
b. Right of agency
c. Policy
d. Binding clause
Policy
All of the following are reasons an insurer or insured would have the right to rescind a policy EXCEPT
a. An intentional omission in determining if a warrantly is false
b. The amount of paid claims exceeds the premiums paid
c. The violation of a material
The amount of paid claims exceeds the premiums paid
Representations are written or oral statements made by the applicant that are
a. Guarentted to be true
b. Found to be false after further investigation.
c Immaterial to the actual acceptability of the insurance contract.
d. Considered true to the best of
Considered true to the best of the applicant's knowledge.
If only one party to an insurance contract has made a legally enforceable prmoise, what kind of contract is it?
a. A legal(but unethical) contract
b. Unilateral
c. Adhesion
d. Conditional
Unilateral
Which of the following is NOT the consideration in a policy?
a. Something of value exchanged between parties
b. The premium amount paid at the time of application
c. The promise to pay covered losses
d. The application given to a prosepctive insured
The application given to a prospective insured
Which of the following best defines an insurance policy?
a. An endorsement or a modifying provision
b. An agreement between an insurer and the Department of Insurance
c. A written request to an insurance company for insurance coverage
d. A contract betwee
A contract between an insured and an insurer that guarantees for loss caused by a specific event.
When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following?
a. Consideration
b. Legal Purpose
c. Contract of adhesion
d. Acceptance
Consideration
If found material for underwriting, a misrepresntation
a. May be withdrawn
b. Does not affect either of the parties
c. Must have been in writing to affect a contract
d. Can void a contract
Can void a contract
During the grace period, the policyowner can
a. Add riders to the existing policy
b. Renew the policy withouit proof of insurability
c. Pay a late premium without penalty
d. Reutrn the policy to the insurer for a full refund
Pay a late premium without penalty
An insured stated on her application for life insurance that she had never had a heart attack, when in fact she had a series of minor heart attacks last year for which she sought medical attention. Which of the following will explain the reason a death be
Matieral Misrepresentation
An insured wants to transfer his personal insurance policy to a friend. Under what conditions would this be possible?
a. The insured will need a written consent of the insurer
b. It is impossible to trasnfer a policy
c. The insured would have to surrender
The insured will need a written consent of the insurer
An intentional or unintentional concealment entitles the affected party to which of the following?
a. Estoppel
b. Waiver of concealed conditions
c. Subrogation of a contract
d. Rescission of a contract
Rescission of a contract
An insured pays a $100 premium every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered loss. What characteristic of an insurance contract does this describe?
a. Aleatory
b. Good Health
c. Adhesion
d. Conditional
Aleatory
All of the following are true regarding representations EXCEPT
a. They may be made before or at the time of policy issue
b. They may be oral or written
c. They may be altered or withdrawn after the issuance of the policy
d. They are statements believed to
They may be altered or withdrawn after the issuance of the policy
Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as
a. Binding Contracts
b. Contracts of adhesion
c. Unilateral contracts
d. Aleatory contracts
Contracts of adhesion
An insurance contract requires that both the insured and the insurer meet certain conditions in order for the contract to be enforceable. What contract characteristic does this describe?
a. Conditional
b. Contingent
c. Aleatory
d. Unilateral
Conditional
A person caught violating provisions regarding mispresentation could be subject to
a. A written warning from the Commissioner.
b. A permanent suspension of license.
c. A fine up to $25,000.
d. Imprisonment in a county jail for up to 3 years.
A fine up to $25,000.
In determining how material a piece of information is to each party of a contract, the value is not determined by the event itself, but solely by which of the following
a. Interpretation that the seller places on such information in the agreement.
b. Amou
Influence this information would have in forming an estimate of the advantages or the disadvantages of the contract.
Concealment as defined by the California Insurance Code is
a. Failure to communicate information that should be known.
b. Statement based on the best knowledge and belief of the person giving the information.
c. Neglect on the part of insured to communica
Neglect on the part of insured to communicate all information known to be material to the insurer.
When would a misrepresentation on the insurance application be considered fraud?
a. When the application is incomplete
b. Any misrepresentation is considered fraud.
c. If it is intentional and material
d. Never: statements by the applicant are only repres
If it is intentional and material
Which of the following would qualify as a competent party in an insurance contract?
a. The applicant is under the influence of a mind-impairing medication at the time of application.
b. The applicant has a prior felony conviction.
c. The applicant is into
The applicant has a prior felony conviction.
The violation of a material warrarnty or other matieral provision of a policy allows
a. Only the insured to rescind.
b. Only the insurer to rescind.
c. Both the insurer and the insured to rescind.
d. Neither the insurer nor the insured to rescind.
Both the insurer and the insured to rescind.
An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated?
a. Consideration
b. Good Faith
c. Represenatation
d. Adhesion
Consideration
Which of the following ebst describes the policy nonrenewal
a. Discontinuance of an insurance policy by the insured on the policy anniversary date.
b. Return of the policy after a 10-day free look.
c. Voiding of a policy due to a misrepresentation on the
Discontinuance of an insurance policy by the insured on the policy anniversary date.
Factual statements about the insured or the risk in an insurance policy are considered
a. Material representations
b. Express warranty
c. Representations
d. Implied warranty
Express warranty
Which of the following best describres a misrepresentation?
a. A failure to disclose known facts
b. An intentional omission of material information on the part of the insured
c. A statement that is not guaranteed to be true
d. A statement intended to dist
A statement intended to distract, mislead, or deceive a party to a contract
When applying for an indiviudal life insurance policy, an applicant states that he wen to the doctor for nausea, but fails to mention that he was also having severe chest pains. This is an example of
a. Misrepresentation
b. Fraud
c. Warranty
d. Concealmen
Concealment
The key factor of representation that allows the injured party to rescind the contract is
a. If the representation is false in a material point
b. That any misrepresentation is considered fraud
c. Representations are statements believed to be true and hol
If the representation is false in a material point
Every expressed warranty made at or before the execution of a policy must be
a. Considered accepted by the insured upon delivery of the policy.
b. Binding and specific for the initial policy period.
c. Contained in and referred to in the policy or other d
Contained in and referred to in the policy or other document and signed by the insured.
What is an injured party entitled to receive if an intentional concealment is discovered?
a. Nothing. Only intentional concealment is punishable.
b. No less than $500 and no more than $5,000 for compensatory damages
c. $1,000 for any compensatory damages
Rescission of the policy
Which of the following would qualify as an implied warranty in an insurance contract>
a. Statements in the policy
b. An oral representation by the applicant
c. The applicant's signature
d. Contract's legal purpose
An oral representation by the applicant
The failure to disclose known facts is
a. Concealment
b. Fraud
c. Warranty
d. Misstatement
Concealment
Insurance policy is
a. A written instrument in which a contract of insurance is set forth.
b. A statement of insurable interest.
c. A verbal or written agreement between two parties to transfer risk.
d. Any method used to transfer or avoid catastrophic ri
A written instrument in which a contract of insurance is set forth.
The importance of a misrepresentation is determined by
a. Whether or not the policy is already issued.
b. The materiality of a given concealment.
c. The amount of money potentially lost.
d. The cost of investigation.
The materiality of a given concealment.
The price of insurance for each exposure unit is known as
a. Consideration
b. Insurbale interest
c. Premium
d. Rate
Rate
What term best describes the act of withholding material infomration that would be crucial to an underwriting decision?
a. Breach of warranty
b. Concealment
c. Withholding
d. Leading
Concealment
When may a representation be withdrawn?
a. At any time
b. After the policy is issued
c. Within the first 2 years of the policy
d. Priot to the issuance of the policy
Prior to the issuance of the policy
Representations in insurance contracts qualify as
a. Facts
b. Implied warranties
c. Express warranties
d. Misrepresentations
Implied Warranties
All of the following information must be communicated in an insurance contract EXCEPT
a. Information the other party already knows.
b. Information that is material to the contract.
c. Information that is material even though it cannot be proven.
d. Inform
Information the other party already knows.
How is the premiumin an insurance policy determined?
a. According to the number of dependents
b. By dividing life expectancy by premium mode
c. By subtracting interest from mortality
d. By multiplying the rate by the number of units of insurance purchased
By multiplying the rate by the number of units of insurance purchased
Which is the appropriate action by the insurer if a prospective insured submitted an incomplete application
...
An applicant is denied insurance because of information found on a consumer report. Which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company?
a. Disclosure rule
b. Fair Cre
Fair Credit Reporting Act
The mode of premium payment
a. Is the factor that determines the amount of dividends in a policy.
b. Is the method used to compute the cash surrender value of the policy.
c. Does not affect the amount of premium paid.
d. Is defined as the frequency and th
Is defined as the frequency and the amount of the premium payment.
Which of the following would NOT fall into the category of costs associated with death?
a. Final medical expenses of the insured
b. Day to day expenses of maintaining the family
c. The expense of a vacation for surviving family members
d. Funeral expenses
The expense of a vacation for surviving family members
Signing and dating a delivery receipt for a life insurance policy helps to establish all of the following timeframes EXCEPT
a. The Free-Look Period.
b. The Right of Rescission.
c. The Grace Period.
d. The Incontestability Period.
The Grace Period.
Harry has just received his life insurance policy. In reviewing the title page, Harry was able to ascertain the following information EXCEPT
a. His total annual premium amount.
b. His spouse had been assigned the primary beneficiary.
c. His children have
His spouse had been assigned the primary beneficiary.
The term "illustration" in a life insurance policy refers to
A A presentation of nonguaranteed elements of a policy.
B A depiction of policy benefits and guarantees.
C Pictures accompanying a policy.
D Charts and graphs.
A presentation of nonguaranteed elements of a policy.
Which of the following is the basic source of information used by the company in the risk selection process?
A Consumer report
B Application
C Agent's report
D Warranty
Application
The title page of the policy provides a summary of the benefits and coverages provided by the policy. All of the following information is included in the title page EXCEPT
A The effective date and the termination date of the policy.
B The insured's benefi
The insured's beneficiaries.
Which of the following CANNOT be included along with illustrations used to sell life insurance?
A Original death benefit
B Vanishing premium information
C Name of the insurer
D Rating information
Vanishing premium information
Which of the following is NOT a type of information that needs to be gathered in order to determine the value of someone's life when using the needs approach?
A Estimated longevity
B Outstanding debt
C Mortgages
D Expenses
Estimated longevity
Which of the following is NOT true regarding the needs approach method of determining the value of an individual's life?
A It must be assumed that the death of the insured will occur immediately.
B Need is predicted using the number of years until the ins
Need is predicted using the number of years until the insured's retirement.
What is the purpose of the buyer's guide?
A To provide the name and address of the agent/producer issuing the policy
B To list all policy riders
C To provide information about the issued policy
D To allow the consumer to compare the costs of different pol
To allow the consumer to compare the costs of different policies
Which of the following would describe a legal document which would dictate who can buy a deceased partner's share of a business and for what amount?
A Profit and loss agreement
B Key person agreement
C Split dollar agreement
D Buy-sell agreement
Buy-sell agreement
Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process?
A Insurance Index
B Policy Summary
C Illustrations
D Buyer's Guide
Buyer's Guide
Stranger-originated life insurance policies are in direct opposition to the principle of
A Insurable interest.
B Law of large numbers.
C Good faith.
D Indemnity.
Insurable interest.
Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy?
A Premiums are tax deductible by the key employee.
B Premiums are tax deductible as a business expense.
C Premiums are taxable to the employee.
D
Premiums are not tax deductible as a business expense.
An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will coverage begin?
A When the agent submits t
When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health
Which is generally true regarding insureds who have been classified as preferred risks?
A They can decide when to pay their monthly premiums.
B They keep a higher percentage of any interest earned on their policies.
C Their premiums are lower.
D They can
Their premiums are lower.
Based on Human Life Value Approach, which of the following is NOT used to calculate an individual's life value?
A Insured's annual expenses.
B Effect of inflation on income over time.
C Predicted needs of the family after the insured's death.
D Insured's
Predicted needs of the family after the insured's death.
An investor buys a life policy on an elderly person in order to sell it for a life settlement. This is an example of
A Third-party ownership.
B A STOLI policy.
C A prearranged funeral plan.
D A viatical settlement.
A STOLI policy.
A small hardware store owner is involved in a car accident that renders him totally disabled for half a year. Which type of insurance would help him pay for expenses of the company during the time of his disability?
A Key person insurance
B Disability buy
Business overhead expense policy
Which of the following is an example of liquidity in a life insurance contract?
A The flexible premium
B The money in a savings account
C The cash value available to the policyowner
D The death benefit paid to the beneficiary
The cash value available to the policyowner
If a business owner becomes totally disabled, a Business Overhead Expense policy will pay all of the following EXCEPT
A Rent.
B Utilities.
C Employee payroll.
D Loss of the owner's income.
Loss of the owner's income.
The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective?
A As of the application date
B As of the policy delivery date
C As of the first
As of the application date
All of the following are requirements for life insurance illustrations EXCEPT
A They may only be used as approved.
B They must identify nonguaranteed values.
C They must differentiate between guaranteed and projected amounts.
D They must be part of the co
They must be part of the contract
Which of the following best details the underwriting process for life insurance?
A Issuance of policies
B Reporting and rejection of risks
C Selection, classification, and rating of risks
D Solicitation, negotiation and sale of policies
Selection, classification, and rating of risks
Concerning AIDS and HIV risks, all of the following acts may subject an insurer to liability claims or fines EXCEPT
A Declining applicant for a positive HIV test result.
B Not providing counseling contacts and educational information about HIV and AIDS.
C
Declining applicant for a positive HIV test result.
All of the following are personal uses of life insurance EXCEPT
A Buy-sell agreement.
B Survivor protection.
C Estate creation.
D Cash accumulation.
Buy-sell agreement.
Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report
A Must be advised that a copy of the report is available to anyone who requests it.
B May sue the reporting agency in order to get in
Must be informed of the source of the report.
All of the following are true of key person insurance EXCEPT
A The plan is funded by permanent insurance only.
B There is no limitation on the number of key employee plans in force at any one time.
C The employer is the owner, payor and beneficiary of the
The plan is funded by permanent insurance only.
Which of the following documents delivered to the policyowner includes information about premium amounts, cash values, surrender values and death benefits for specific policy years?
A A policy summary
B A notice regarding replacement
C A privacy notice
D
A policy summary
The responsibility of making certain that an application for insurance is filled out completely, correctly, and to the best of his or her knowledge is the responsibility of whom?
A The applicant
B The producer
C The beneficiary of the applicant
D The insu
The producer
Which of the following statements regarding Business Overhead Expense policies is NOT true?
A Premiums paid for BOE are tax-deductible.
B Any benefits received are taxable to the business.
C Leased equipment expenses are covered by the plan.
D Benefits ar
Benefits are usually limited to six months.
Which of the following would be least likely to be considered a legitimate need that would be paid by insurance proceeds?
A Vacation travel expenses
B Travel expenses for family to come to the funeral
C Debt cancellation
D Day care
Vacation travel expenses
What is the term used when a person sells his assets as a way to gain money?
A Transfer
B Liquidation
C Buy-Sell
D Commerce
Liquidation
When the partners of a business develop an arrangement whereby should one of them die or become permanently disabled, the other partners would purchase the interest of the deceased or disabled partner at a predetermined price, this is called a/an
A Busine
Business continuation plan.
Upon policy delivery, the producer may be required to obtain any of the following EXCEPT
A Payment of premium.
B Delivery receipt.
C Signed waiver of premium.
D Statement of good health.
Signed waiver of premium.
When Y applied for insurance and paid the initial premium on August 14, he was issued a conditional receipt. During the underwriting process, the insurance company found no reason to reject the risk or classify it other than as standard. Y was killed in a
Issue the policy anyway and pay the face value to the beneficiary.
A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then
A The benefit is subject to the exclusionary rule.
B IRS has no jurisdiction.
C The benefit is received as taxable income.
D The
The benefit is received tax free.
An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date?
A The
The date of medical exam
Which of the following methods of calculating the amount of life insurance needed takes into account the insured's wages, years until retirement, and inflation?
A Blackout approach
B Lump-sum approach
C Human life value approach (HLVA)
D Needs approach
Human life value approach (HLVA)
When an employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy, this is called a(n)
A Executive bonus.
B Key person policy.
C Fraternal association.
D Aleatory contract.
Executive bonus
If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?
A 5 days
B 7 days
C 10 days
D 3 days
5 days
A life insurance policy can be delivered by all of the following means, EXCEPT
A First class mail with a delivery receipt.
B Personal delivery by a trained employee of the insurer, with a delivery receipt.
C Certified mail.
D Priority mail.
Priority mail.
Which of the following statements concerning buy-sell agreements is true?
A Benefits received are considered income taxable.
B Buy-sell agreements pay in the event of a medical emergency.
C Buy-sell agreements are normally funded with a life insurance pol
Buy-sell agreements are normally funded with a life insurance policy.
Kayla's husband died in a plane crash. She needs a new source of funding that will help put her child through daycare. Which of the following would be the best source?
A State Education Waiver
B Viatical settlement
C Estate conservation
D Life insurance p
Life insurance proceeds
The Medical Information Bureau (MIB) was created to protect
A Insureds from unreasonable underwriting requirements by the insurance companies.
B Medical examiners that perform insurance physical examinations.
C Insurance companies from adverse selection b
Insurance companies from adverse selection by high risk persons.
All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT
A The employer pays a bonus to a selected employee to fund the policy.
B It is considered a nonqualified employee benefit.
C The policy is owned
The policy is owned by the company.
If an insurance company wishes to order a consumer report on an applicant to assist in the underwriting process, and if a notice of insurance information practices has been provided, the report may contain all of the following information EXCEPT the appli
Ancestry.
Another name for a substandard risk classification is
A Elevated.
B Rated.
C Controlled.
D Declined.
Rated.
A key person insurance policy can pay for which of the following?
A Costs of training a replacement
B Loss of personal income
C Workers compensation
D Hospital bills of the key employee
Costs of training a replacement
A producer agent must do all of the following when delivering a new policy to the insured EXCEPT
A Disclose commissions earned from the sale of the policy.
B Explain the policy provisions, riders, and exclusions.
C Collect any premium due.
D Explain the r
Disclose commissions earned from the sale of the policy.
Which is the appropriate action by the insurer if a prospective insured submitted an incomplete application
a. Fill in the blanks to the best of the insurer's knowledge
b. Return the application to the applicant for completion
c. Issue a policy anway sinc
Return the application to the applicant for completion
Partners in a business enter into a buy-sell agreement to purchase life insurance, which states that should one of them die prematurely, the other would be financially able to buy the interest of the deceased partner. What type of insurance policy may be
Any form of life insurance
What is the purpose of key person insurance?
A To provide health insurance to the families of key employees
B To insure retirement benefits are available to all key employees
C To maintain an account that insures the owner of a company remains solvent
D T
To lessen the risk of financial loss because of the death of a key employee
What is the purpose of a disclosure statement in life insurance policies?
A To explain features and benefits of a proposed policy to the consumer
B To obtain important underwriting information from the applicant
C To help consumers compare policy prices
D
To explain features and benefits of a proposed policy to the consumer
In the Executive Bonus plan, who is the owner of the policy, and who pays the premium?
A Company is the owner, but the executive pays the premium.
B Board of directors is the owner, and the board of directors pays the premium.
C Company is the owner, and
Executive is the owner, and the executive pays the premium
What does "liquidity" refer to in a life insurance policy?
A The death benefit replaces the assets that would have accumulated if the insured had not died.
B The policyowner receives dividend checks each year.
C The insured receives payments each month in
Cash values can be borrowed at any time.
Regarding the taxation of Business Overhead policies,
A Premiums are not deductible, but benefits are deductible.
B Premiums are not deductible, but expenses paid are deductible.
C Premiums are deductible, and benefits are taxed.
D Premiums are not deduct
Premiums are deductible, and benefits are taxed.
If an applicant for a life insurance policy is found to be a substandard risk, the insurance company is most likely to
A Require a yearly medical examination.
B Lower its insurability standards.
C Refuse to issue the policy.
D Charge a higher premium.
Charge a higher premium.
Which of the following statements is correct about a standard risk classification in the same age group and with similar lifestyles?
A Standard risk requires extra rating.
B Standard risk is also known as high exposure risk.
C Standard risk is representat
Standard risk is representative of the majority of people.
Which part of an insurance application would contain information regarding the cause of death of the applicant's deceased relatives?
A Agent's Report
B General Information
C Medical Information
DI nspection Report
Medical Information
An applicant who receives a preferred risk classification qualifies for
A Higher premiums than a person who receives a sub-standard risk.
B Higher premiums than a person who receives a standard risk.
C Lower premiums than a person who receives a standard
Lower premiums than a person who receives a standard risk.
Why should the producer personally deliver the policy when the first premium has already been paid?
A To find out how the family has been doing since the initial presentation
B To make sure the policy is not stolen or lost
C To help the insured understand
To help the insured understand all aspects of the contract
In the event of a loss, business overhead insurance will pay for
A Medical bills of the business owner.
B Rent.
C Loss of profits.
D Salary of the business owner.
Rent
Joe, Larry, and Curly own a small business. They have made a legal arrangement which states that if one of them dies or becomes disabled, the other two will be able to buy the partner's shares. Which term best describes this arrangement?
A Business Partne
Business Continuation
Who is the owner and who is the beneficiary on a Key Person Life Insurance policy?
A The key employee is the owner and beneficiary.
B The key employee is the owner and the employer is the beneficiary.
C The employer is the owner and beneficiary.
D The emp
The employer is the owner and beneficiary.
Written binders provide insurance before the policy is actually issued. The time period between the issuance of the binder and the policy's effective date is called
A Grace period.
B Binding period.
C Interim term.
D Temporary term.
Temporary term.
All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT
A Any type of insurance policy may be used.
B The employer pays a bonus to a selected employee to fund the policy.
C It is considered a nonqualif
The policy is owned by the company.
Which of the following is true regarding written binders?
A Binders prove that the insured has insurance coverage, even though the policy has not been issued yet.
B Binders apply only to Life insurance.
C Both the applicant and insurer can write a binder.
Binders prove that the insured has insurance coverage, even though the policy has not been issued yet.
If an insured changes his payment plan from monthly to annually, what happens to the total premium?
A Stays the same
B Doubles
C Increases
D Decreases
Decreases
Which is the primary source of information used for insurance underwriting?
A Applicant interviews
B Medical records
C Private investigations
D Application
Application
In regards to life insurance contracts, the temporary term is
A An initial policy put in effect until a permanent policy can be put into effect.
B The period of time during which a binding receipt covers a policyholder.
C The policy issued by a producer w
The period of time during which a binding receipt covers a policyholder.
Which of the following would provide an underwriter with information concerning an applicant's health history?
A The Medical Information Bureau
B A medical examination
C The agent's report
D The inspection report
The Medical Information Bureau
Which of the following is the best reason to purchase life insurance rather than annuities?
A To create regular income payments
B To liquidate a sum of money over a lifetime
C To create an estate
D To liquidate a sum of money over a period of years
To create an estate
Part 2 of the application for life insurance provides questions regarding all of the following EXCEPT
A Alcohol and tobacco consumption.
B Recent surgeries.
C Other insurance coverages.
D Family health history.
Other insurance coverages.
Each of the following factors are used in determining insurance rates EXCEPT
A Interest
B Mortality
C Expenses
D Dividends
Dividends
If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant no later than
A With the policy.
B Upon issuance of the policy.
C Within 30 days after the first premium payment was collected.
D Prior to fil
With the policy.
An insurer's liability shall be limited to
A The face amount of an individual insurance policy as written.
B The amount of annual renewable term insurance that could have been purchased by the insured through the insurer with the available premium dollars
The face amount of an individual insurance policy, subject to any exclusions and riders as applicable, minus any outstanding policy loans and interest payments due the insurer.
Which of the following best describes the MIB?
A It is a rating organization for health insurance.
B It is a nonprofit organization that maintains underwriting information on applicants for life and health insurance.
C It is a government agency that colle
It is a nonprofit organization that maintains underwriting information on applicants for life and health insurance.
Who makes up the Medical Information Bureau?
A Insurers
B Hospitals
C Former insured
D Physicians and paramedics
Insurers
Which of the following types of risk will result in the highest premium?
A Substandard risk
B Standard risk
C Preferred risk
D All risks pay equal premiums
Substandard risk
Under the Fair Credit Reporting Act, if the consumer challenges the accuracy of the information contained in his or her report, the reporting agency must
A Defend the report if the agency feels it is accurate.
B Change the report.
C Send an actual certifi
Respond to the consumer's complaint.
Who is protected by a Temporary Insuring Agreement?
A The applicant and the insurer
B The policy beneficiary
C Only the insurer
D Only the applicant
The applicant and the insurer
Which of the following must be disclosed in all advertisements and policies of term life insurance for individuals 55 years of age or older?
A Life insurance policy illustrations
B Insurance monetary value index
C Life insurance surrender cost index
D MIB
Insurance monetary value index
Which of the following is NOT a type of Temporary Insuring Agreement?
A Conditional Receipt
B Acceptance Form of Receipt
C 30-day Interim Term Receipt
D Bridge Coverage Receipt
Bridge Coverage Receipt
Which of the following will be included in a policy summary?
A Comparisons with similar policies
B Primary and secondary beneficiary designations
C Premium amounts and surrender values
D Copies of illustrations and application
Premium amounts and surrender values
If a change needs to be made to the application for insurance, the agent may do all of the following EXCEPT
A Note on the application the reason for the change.
B Destroy the application and complete a new one.
C Erase the incorrect answer and record the
Erase the incorrect answer and record the correct answer.
Which of the following reports will provide the underwriter with the information about an insurance applicant's credit?
A Agent's report
B Any federal report
C Consumer report
D Inspection report
Any federal report
An applicant signs an application for a $25,000 life insurance policy, pays the initial premium, and receives a conditional receipt. If the applicant dies the following day, which of the following is TRUE?
A The beneficiary will receive the full death ben
The beneficiary will receive the full death benefit if it is determined that the applicant qualified for the policy.
Which of the following information about the applicant is NOT included in the General Information section of the application for insurance?
A Marital status
B Medical background
C Gender
D Occupation
Medical background
In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports?
A The customer has no knowledge of this action.
B The customer's associates, friends, and neighbors provide the report's data.
C
The customer's associates, friends, and neighbors provide the report's data.
The Federal Fair Credit Reporting Act
A Regulates consumer reports.
B Protects customer privacy.
C Regulates telemarketing.
D Prevents money laundering.
Regulates consumer reports.
According to the Fair Credit Reporting Act, all of the following would be considered negative information about a consumer EXCEPT
A Late payments.
B Failure to pay off a loan.
C Disputes regarding consumer report information.
D Tax delinquencies.
Disputes regarding consumer report information.
D Tax delinquencies.
During a pre-selection interview, an agent is allowed to do all of the following EXCEPT
A Ask questions that are not on the application but that are important for underwriting.
B Provide the applicants with negative information regarding their risk.
C Inq
Ask questions that are not on the application but that are important for underwriting.
What is the purpose of a conditional receipt?
A It is intended to provide coverage on a date prior to the policy issue.
B It guarantees that a policy will be issued in the amount applied for.
C It serves as proof that the applicant has been determined ins
It is intended to provide coverage on a date prior to the policy issue.
The process of "post-selection" refers to which of the following?
A An agent is conducting a second interview with an applicant.
B An agent is completing and submitting an application.
C An insurer is investigating the client's risk profile.
D An applican
An insurer is investigating the client's risk profile.
What is an advantage of the Temporary Insuring Agreement to the applicant?
A It provides immediate coverage even if no money was paid with the application.
B It guarantees that the insurance company will issue the policy as applied for.
C It gives the app
It gives the applicant immediate coverage.
In classifying a risk, the Home Office underwriting department will look at all of the following EXCEPT
A Applicant's present physical condition.
B Applicant's present occupation.
C Applicant's past income.
D Applicant's past medical history.
Applicant's past income.
Under what circumstances would a life insurance contract qualify as a "standard policy?"
A When it contains ALL of the essential elements of an insurance contract, as described in the Model Policy Article of the California Insurance Code
B Under no circum
Under no circumstances
All of the following are true about variable products EXCEPT
A The cash value is not guaranteed.
B Policyowners bear the investment risk.
C The premiums are invested in the insurer's general account.
D The minimum death benefit is guaranteed.
The premiums are invested in the insurer's general account.
Which of the following types of policies allows for a flexible premium and a variable investment component?
A Guaranteed issue variable life insurance
B Variable whole life insurance
C Whole life insurance
D Variable universal life insurance
Variable universal life insurance
A father purchases a life insurance policy on his teenage daughter and adds the Payor Benefit rider. In which of the following scenarios will the rider waive the payment of premium?
A If the father is disabled for at least a year
B If the daughter is disa
If the father is disabled for more than 6 months
A domestic insurer issuing variable contracts must establish one or more
A Annuity accounts.
B General accounts.
C Separate accounts.
D Liability accounts.
Separate accounts.
Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a de
Joint Life
When the breadwinner that is insured by a Family Policy dies, what rights are provided to other family members that are covered under the policy?
A They can surrender the coverage for its cash value.
B They can convert their coverage to permanent life ins
They can convert their coverage to permanent life insurance without evidence of insurability.
The following are features of the Indexed Universal Life EXCEPT
A Adjustable death benefit.
B Policy's cash value is dependent on the performance of the equity index.
C Sale of this product requires a securities license.
D Flexible premium.
Sale of this product requires a securities license.
All of the following statements are correct regarding credit life insurance EXCEPT
A Benefits are paid to the borrower's beneficiary.
B The amount of insurance permissible is limited per borrower.
C Premiums are usually paid by the borrower.
D Benefits ar
Benefits are paid to the borrower's beneficiary.
The type of insurance sold to a debtor and designed to pay the amount due on a loan if the debtor dies before the loan is repaid is called
A Decreasing whole life.
B Multiple Protection insurance.
C Credit life.
D Credit health.
Credit life.
Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled?
A Jumping Juvenile
B Juvenile Premium Provision
C Waiver of Premium
D Payor Benefit
Payor Benefit
All of the following entities regulate variable life policies EXCEPT
A The Insurance Department.
B The Guaranty Association.
C Federal government.
D The SEC.
The Guaranty Association.
What kind of policy issues certificates of insurance to insureds?
A Nonqualified annuity
B Any insurance
C Group insurance
D Individual insurance
Group insurance
Which of the following is a key distinction between variable whole life and variable universal life products?
A Variable whole life allows policy loans from the cash value.
B Variable universal life has a fixed premium.
C Variable whole life has a guarant
Variable whole life has a guaranteed death benefit.
To sell variable life insurance policies, an agent must receive all of the following EXCEPT
A A securities license.
B A life insurance license.
C SEC registration.
D FINRA registration.
SEC registration.
A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums?
A The insured's premiums will be waived until she is
The insured's premiums will be waived until she is 21.
An insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured, and matures at the insured's age 100 is called
A Single premium whole life.
B Modified Endowment Contract (MEC).
C Lev
Single premium whole life.
Which of the following determines the cash value of a variable life policy?
A The company's general account
B The policy's guarantees.
C The premium mode
D The performance of the policy portfolio
The performance of the policy portfolio
Which of the following would be the beneficiary in credit life insurance?
A Borrower
B Creditor
C Insured
D Company
Creditor
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. Which policy is that?
A Survivorship Life Policy
B Second-to-Die
C Family Income Policy
D Joint Life Policy
Joint Life Policy
When the breadwinner that is insured by a Family Policy dies, what rights are provided to other family members that are covered under the policy?
A They can convert their coverage to permanent life insurance without evidence of insurability.
B They can co
They can convert their coverage to permanent life insurance without evidence of insurability.
A Return of Premium term life policy is written as what type of term coverage?
A Decreasing
B Renewable
C Level
D Increasing
Increasing
An individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation?
A Variable life
B Universal life
C Whole life
D Decreasing term
Decreasing term
Which of the following riders would NOT cause the Death Benefit to increase?
A Accidental Death Rider
B Payor Benefit Rider
C Guaranteed Insurability Rider
D Cost of Living Rider
Payor Benefit Rider
An insured and his spouse own a home. When the insured dies, the insurer pays the remaining balance on his home loan. Which type of life insurance provision/rider does this describe?
A Accidental Death and Dismemberment
B Family Term
C Mortgage Redemption
Mortgage Redemption
An insured purchased a variable life insurance policy with a face amount of $50,000. Over the life of the policy, stock performance declined and the cash value fell to $10,000. If the insured dies, how much will be paid out?
A $10,000
B $40,000
C $50,000
$50,000
Which Universal Life option has a gradually increasing cash value and a level death benefit?
A Juvenile life
B Term insurance
C Option B
D Option A
Option A
If an agent wishes to sell variable life policies, what license must the agent obtain?
A Adjuster
B Surplus Lines
C Personal Lines
D Securities
Securities
For variable products, underlying assets must be kept in
A A revenue account.
B A money market account.
C A general account.
D A separate account.
A separate account.
Which of the following is NOT allowed in credit life insurance?
A Creditor having a collateral assignment on the policy
B Creditor requiring that a debtor has a life insurance
C Creditor becoming a policy beneficiary
D Creditor requiring that a debtor buy
Creditor requiring that a debtor buys insurance from a certain insurer
Which policy component decreases in decreasing term insurance?
A Dividend
B Premium
C Face amount
D Cash value
Face amount
A young father would like a life insurance policy to provide coverage for all five family members at the lowest cost. Which type of policy would he most likely buy?
A Family Protection Policy
B Universal Life Policy
C Family Income Policy
D Level Term Pol
Family Protection Policy
Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit?
A Equity Indexed Universal Life
B Variable Universal Life
C Universal Life - Option A
D Universal Life - Option B
Universal Life - Option A
Which of the following is correct regarding credit life insurance?
A It insures the life of a creditor.
B It has a maximum term of 20 years.
C It insures the life of a debtor.
D It is purchased on an installment basis.
It insures the life of a debtor.
Which of the following life insurance policies allows a policyowner to take out a loan from the policy's cash value?
A Decreasing term life
B Variable universal life
C Increasing term life
D Credit term life
Variable universal life
Which of the following types of insurance policies is most commonly used in credit life insurance?
A Increasing term
B Whole life
C Equity indexed life
D Decreasing term
Decreasing term
Which of the following is TRUE regarding the insurance amount in a credit life policy?
A The amount of coverage can be greater than the amount owed.
B The creditor can only insure the debtor for the amount owed.
C The creditor may insure the debtor for an
The creditor can only insure the debtor for the amount owed.
An insured purchased a 10-year level term life policy that is guaranteed renewable and convertible. What happens at the end of the 10-year term?
A The insured may renew the policy for another 10 years at the same premium rate.
B The insured may renew the
The insured may renew the policy for another 10 years, but at a higher premium rate.
What type of insurance would be used for a Return of Premium rider?
A Annually Renewable Term
B Increasing Term
C Level Term
D Decreasing Term
Increasing Term
Which of the following is called a "second-to-die" policy?
A Survivorship life
B Family income
C Juvenile life
D Joint life
Survivorship life
A Straight Life policy has what type of premium?
A An increasing annual premium for the life of the insured
B A decreasing annual premium for the life of the insured
C A variable annual premium for the life of the insured
D A level annual premium for the
A level annual premium for the life of the insured
The premium of a survivorship life policy compared with that of a joint life policy would be
A As high.
B Half the amount.
C Lower.
D Higher.
Lower.
Concerning Juvenile Life insurance, which of the following statements is INCORRECT?
A Usually a parent or guardian is the applicant for insurance on the life of a minor.
B It can be a limited premium payment policy.
C Juvenile Life is classified as any li
Juvenile Life is classified as any life insurance purchased by a minor.
Which of the following types of insurance covers the whole family in a single contract?
A Family Income Policy
B Survivorship Policy
C Whole Life Policy
D Family Policy
Family Policy
If a life insurance policy increases significantly in face amount (death benefit) when the insured reaches a specified age, what type of policy is this?
A Single premium policy
B Jumping juvenile policy
C Limited pay whole life policy
D Modified life insu
Jumping juvenile policy
Which type of life insurance policy generates immediate cash value?
A Single Premium
B Level Term
C Decreasing Term
D Continuous Premium
Single Premium
The death benefit under the Universal Life Option B
A Decreases by the amount that the cash value increases.
B Increases for the first few years of the policy, and then levels off.
C Remains level.
D Gradually increases each year by the amount that the ca
Gradually increases each year by the amount that the cash value increases.
One of the advantages of a family life insurance policy that provides coverage for children is that it
A Allows any income the children make to be included in coverage.
B May be converted to permanent insurance for the children without requiring evidence
May be converted to permanent insurance for the children without requiring evidence of insurability.
When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy, as well as a refund of all of the premiums paid. Which rider is attached to the policy?
A Decreasing term
B Accidental death
C Return of
Return of premium
A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy
A Decreased death benefit at each renewal.
B Required a premium increase each rene
Required a premium increase each renewal.
The LEAST expensive first-year premium is found in which of the following policies?
A Annually Renewable Term
B Increasing Term
C Decreasing Term
D Level Term
Annually Renewable Term
An employer offers group life insurance to its employees for the amount of $10,000. Which of the following is true?
A The cost of coverage is a deductible expense by the employer.
B The value of insurance will be deducted from the employees' compensation.
The cost of coverage is a deductible expense by the employer.
Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid
A Until the policyowner reaches age 65.
B For at least 20 years.
C Until the policyowner's age 100, when the policy matures.
D F
For 20 years or until death, whichever occurs first.
In an Adjustable Life policy all of the following can be changed by the policy owner EXCEPT
A The amount of insurance.
B The type of investment.
C The length of coverage.
D The premium.
The type of investment.
An individual purchased a $100,000 Joint Life policy on himself and his wife. Eight years later, he died in an automobile accident. How much will his wife receive from the policy?
A Nothing
B $50,000
C $100,000
D $200,000
$100,000
The type of policy that can be changed from one that does not accumulate cash value to the one that does is a
A Decreasing Term Policy.
B Whole Life Policy.
C Convertible Term Policy.
D Renewable Term Policy.
Convertible Term Policy.
Which of the following features of the Indexed Whole Life policy is NOT fixed?
A Policy period
B Cash value growth
C Premium
D Death benefit
Cash value growth
What type of premium do both Universal Life and Variable Universal Life policies have?
A Increasing
B Flexible
C Level fixed
D Decreasing
Flexible
Which of the following best describes annually renewable term insurance?
A It requires proof of insurability at each renewal.
B Neither the premium nor the death benefit is affected by the insured's age.
C It provides an annually increasing death benefit.
It is level term insurance.
B just bought a new car, which he anticipates will be paid for 4 years from now. He also wants to buy a life insurance policy, but is financially limited until the car is paid off. Which of the following types of policies would be best for B?
A Limited Pa
Modified Life
What is the purpose of a suicide provision within a life insurance policy?
A To limit the insurer's liability after the 2 year waiting period
B To deter the policyowner from committing suicide
C To protect the policyowner
D To protect the insurer from per
To protect the insurer from persons who purchase life insurance with the intention of committing suicide
The provision which states that both the policy and a copy of the application form the contract between the policyowner and the insurer is called the
A Complete contract.
B Entire contract.
C Total contract.
D Aleatory contract.
Entire contract.
Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary?
A Joint and survivo
Life income with period certain
What provision in an insurance policy extends coverage beyond the premium due date?
A Waiver of premium
B Grace period
C Free look
D Automatic premium loan
Grace period
All of the following are true regarding a decreasing term policy EXCEPT
A The contract pays only in the event of death during the term and there is no cash value.
B The face amount steadily declines throughout the duration of the contract.
C The payable p
The payable premium amount steadily declines throughout the duration of the contract.
Which of the following life insurance policies does NOT build cash value?
A Universal life
B Variable life
C Whole life
D Guaranteed universal life
Guaranteed universal life
Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured?
A Corridor option
B Variable option
C Option A
D Option B
Option B
Level term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will be
A Determined by the health of the insured.
B Based on the issue age o
Adjusted to the insured's age at the time of renewal.
Which statement is NOT true regarding a Straight Life policy?
A The face value of the policy is paid to the insured at age 100.
B It usually develops cash value by the end of the third policy year.
C It has the lowest annual premium of the three types of
Its premium steadily decreases over time, in response to its growing cash value.
An insured has a life insurance policy that requires him to only pay premiums for a specified number of years until the policy is paid up. What kind of policy is it?
A Limited-pay Life
B Variable Life
C Adjustable Life
D Graded Premium Life
Limited-pay Life
Graded-Premium Whole Life policy premiums are typically lower initially, but gradually increase for a period of 5 to 10 years. After the period of increase the premiums will
A Continue to increase.
B Return to the initial premium amount.
C Decrease again.
Be level thereafter.
Which of the following life insurance policies is designed to cover two people and pay benefits after both insureds have died?
A Indexed Universal Life
B Guaranteed Universal Life
C Variable Universal Life
D Survivorship Universal Life
Survivorship Universal Life
All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT
A Upon conversion, the death benefit of the permanent policy will be reduced by 50%.
B Evidence of insurability is not required.
C Most term polici
Upon conversion, the death benefit of the permanent policy will be reduced by 50%.
Annually renewable term policies provide a level death benefit for a premium that
A Decreases annually.
B Remains level.
C Fluctuates.
D Increases annually.
Increases annually.
Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?
A Life annuity with period certain
B Increasing term
C Limited pay whole life
D In
Limited pay whole life
In a survivorship life policy, when does the insurer pay the death benefit?
A If the insured survives to age 100
B Upon the last death
C Upon the first death
D Half at the first death, and half at the second death
Upon the last death
The initial amount of credit life insurance may NOT exceed
A The borrower's annual income.
B The amount to be repaid under the contract.
C An amount set by statute and adjusted regularly for inflation.
D The borrower's monthly income.
The amount to be repaid under the contract.
What do Modified Life and Straight Life policies have in common?
A Graded premium
B Temporary protection
C Accumulation of cash value
D Same amount of premium
Accumulation of cash value
Which component increases in the increasing term insurance?
A Interest on the proceeds
B Premium
C Death benefit
D Cash value
Death benefit
An insured buys a 5-year level premium term policy with a face amount of $10,000. The policy also contains renewability and convertibility options. When the insured renews the policy in 5 years, what will happen to the premium?
A It will increase each yea
t will increase because the insured will be 5 years older than when the policy was originally purchased.
An insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured, and matures at the insured's age 100 is called
A Modified Endowment Contract (MEC).
B Level term life.
C Graded premiu
Single premium whole life.
Which of the following policies would be classified as a traditional level premium contract?
A Adjustable Life
B Universal Life
C Variable Universal Life
D Straight Life
Straight Life
Variable Whole Life insurance is based on what type of premium?
A Increasing
B Flexible
C Graded
D Level fixed
Level fixed
An insured purchased a Life Insurance policy. The agent told him that depending upon the company's investments and expense factors, the cash values could change from those shown in the policy at issue time. The policy is a/an
A Adjustable Life.
B Interest
Interest-sensitive Whole Life.
Which of the following has the right to convert the existing term coverage to permanent insurance?
A Producer
B Policyowner
C Insurer
D Beneficiary
Policyowner
Which of the following policies is characterized by a provision where the premiums are lower in the early years of the policy and increase over time to a point where they become level for the remainder of the policy?
A Indeterminate premium whole life
B E
Graded premium whole life
Which of the following is TRUE about credit life insurance?
A Debtor is the annuitant.
B Creditor is the insured.
C Debtor is the policy beneficiary.
D Creditor is the policyowner.
Creditor is the policyowner.
When would a 20-pay whole life policy endow?
A At the insured's age 65
B After 20 payments
C In 20 years
D When the insured reaches age 100
When the insured reaches age 100
The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change?
A The death benefit can be increased only by exchanging the existing policy for a new one.
B The death be
The death benefit can be increased by providing evidence of insurability.
Which of the following is an example of a limited-pay life policy?
A Renewable Term to Age 70
B Level Term Life
C Straight Life
D Life Paid-up at Age 65
Life Paid-up at Age 65
An Adjustable Life policyowner can change which of the following policy features?
A The coverage period
B The mortality expense
C The investment account
D The insured
The coverage period
At age 30, an applicant wants to start an insurance program, but realizing that his insurance needs will likely change, he wants a policy that can be modified to accommodate those changes as they occur. Which of the following policies would most likely fi
Adjustable Life
If an agent wishes to sell variable life policies, what license must the agent obtain?
A Securities
B Adjuster
C Surplus Lines
D Personal Lines
Securities
The following are features of the Indexed Universal Life EXCEPT
A Policy's cash value is dependent on the performance of the equity index.
B Sale of this product requires a securities license.
C Flexible premium.
D Adjustable death benefit.
Sale of this product requires a securities license.
Which of the following is TRUE regarding an indeterminate premium whole life policy?
A The premium can be raised up to a guaranteed maximum rate.
B The premium is lower in the first year of the policy; then it is gradually raised every year.
C The premium
The premium can be raised up to a guaranteed maximum rate.
Which of the following riders would NOT cause the Death Benefit to increase?
A Cost of Living Rider
B Accidental Death Rider
C Payor Benefit Rider
D Guaranteed Insurability Rider
Payor Benefit Rider
If a settlement option is not chosen by the policyowner or the beneficiary, which option will be used?
A Fixed amount
B Lump sum
C Life income
D Fixed period
Lump sum
Which nonforfeiture option provides coverage for the longest period of time?
A Extended term
B Paid-up option
C Accumulated at interest
D Reduced paid-up
Reduced paid-up
Which two terms are associated directly with the premium?
A Fixed or variable
B Term or permanent
C Renewable or convertible
D Level or flexible
Level or flexible
When a life insurance policy stipulates that the beneficiary will receive payments in specified installments or for a specified number of years, what provision prevents the beneficiary from changing or borrowing from the planned installments?
A Accelerate
Spendthrift provision
An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries?
A The beneficiary will receive 2/3 of the lump sum up front, and the remaining 1/3 will be paid over time.
B The beneficiary will receive 2/3
The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive.
The dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as the
A Accelerated endowment.
B Paid-up additions.
C One-year term option.
D Paid-up option.
One-year term option.
What limits the amount that a policyowner may borrow from a whole life insurance policy?
A Cash value
B Premiums paid
C Amount stated in the policy
D Face amount
Cash value
Items stipulated in the contract that the insurer will not provide coverage for are found in the
A Benefit Payment clause.
B Consideration clause.
C Exclusions clause.
D Insuring clause.
Exclusions clause.
An absolute assignment is a
A Transfer of some ownership rights in a policy.
B Change of beneficiary.
C Change of insurer.
D Transfer of all ownership rights in a policy.
Transfer of all ownership rights in a policy.
If an insured under a variable life insurance policy dies, how will the insurer respond to outstanding policy loans?
A The loan amounts are deducted from the death benefit.
B The policy is withheld until payments are met.
C The loan amount is charged to t
The loan amounts are deducted from the death benefit.
An individual purchased a life insurance policy on his life naming his wife as primary beneficiary, and their daughter as contingent beneficiary. Under what circumstances could the daughter collect the death benefit?
A The primary and contingent beneficia
If the primary beneficiary predeceases the insured
Which of the following is TRUE about a class designation?
A It is not allowed.
B It determines the succession of beneficiaries.
C Beneficiaries are not identified by name.
D Beneficiaries must be part of the insured's immediate family.
Beneficiaries are not identified by name.
An insured receives an annual life insurance dividend check. What term best describes this arrangement?
A Cash option
B Reduction of Premium
C Annual Dividend Provision
D Accumulation at Interest
Cash option
If a policy has an automatic premium loan provision, what happens if the insured dies before the loan is paid back?
A The policy beneficiary takes over the loan payments.
B The policy is rendered null and void.
C The balance of the loan will be taken out
The balance of the loan will be taken out of the death benefit.
Which is NOT true about beneficiary designations?
A Trusts can be valid beneficiaries.
B The beneficiary must have insurable interest in the insured.
C The beneficiary may be a natural person.
D The policy does not have to have a beneficiary named in orde
The beneficiary must have insurable interest in the insured.
When the policyowner specifies a dollar amount in which installments are to be paid, he/she has chosen which settlement option?
A Life income period certain
B Extended term
C Fixed amount
D Fixed period
Fixed amount
All of the following are TRUE statements regarding the accumulation at interest option EXCEPT
A The interest is credited at a rate specified by the policy.
B The policyholder has the right to withdraw the accumulations at any time.
C The interest is not t
The interest is not taxable since it remains inside the insurance policy.
Which of the following named beneficiaries would NOT be able to receive the death benefit directly from the insurer in the event of the insureds' death?
A The wife of the deceased insured
B The former wife of the deceased insured
C A minor son of the insu
A minor son of the insured
The paid-up addition option uses the dividend
A To reduce the next year's premium.
B To accumulate additional savings for retirement.
C To purchase a smaller amount of the same type of insurance as the original policy.
D To purchase a one-year term insura
To purchase a smaller amount of the same type of insurance as the original policy.
Which of the following is true regarding a single life settlement option?
A Payments continue until the entire principal is exhausted.
B Proceeds are paid out in a lump sum.
C It provides income for a specified period of time.
D It provides income the ben
It provides income the beneficiary cannot outlive.
An insured purchased a life policy in 2010 and died in 2017. The insurance company discovers at that time that the insured had misstated information during the application process. What can they do?
A Pay a decreased death benefit
B Sue for the right to n
Pay the death benefit
Under an extended term nonforfeiture option, the policy cash value is converted to
A A higher face amount than the whole life policy.
B The same face amount as in the whole life policy.
C The face amount equal to the cash value.
D A lower face amount than
The face amount equal to the cash value.
Which of the following is TRUE about the 10-day free-look period in a Life Insurance policy?
A It is optional on all life insurance policies.
B It begins when the policy is delivered.
C It begins when the application is signed.
D It applies only to term l
It begins when the policy is delivered.
When a life insurance policy was issued, the policyowner designated a primary and a contingent beneficiary. Several years later, both the insured and the primary beneficiary died in the same car accident, and it was impossible to determine who died first.
The insured's contingent beneficiary
All of the following are beneficiary designations EXCEPT
A Specified.
B Tertiary.
C Contingent.
D Primary.
Specified.
Which of the following information will be stated in the consideration clause of a life insurance policy?
A The time period allowed for the payment of premium
B The conditions for insurability
C The amount of premium payment
D The parties to the contract
The amount of premium payment
When calculating the amount a policyowner may borrow from a variable life policy, what must be subtracted from the policy's cash value?
A Outstanding loans and interest
B The face amount
C Mortality costs
D The cash surrender amount
Outstanding loans and interest
Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary?
A Fixed-amount
B Li
Life income with period certain
California law requires an insurance company's dividends be credited
A To all reduced paid-up policies on the anniversary date of the policy provided all premiums are current.
B To policyholders of policies issued by stock companies.
C To participating po
To participating policies on the anniversary date of the policy provided all premiums are current.
Which of the following statements is TRUE concerning irrevocable beneficiaries?
A They may be changed at any time.
B They can never be changed.
C They may be changed only on the anniversary date of the policy.
D They can be changed only with the written c
They can be changed only with the written consent of that beneficiary.
Which of the following is TRUE about nonforfeiture values?
A They are required by state law to be included in the policy.
B They are optional provisions.
C A table showing nonforfeiture values for the next 10 years must be included in the policy.
D Policy
They are required by state law to be included in the policy.
The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the poli
Interest only option
When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy?
A It is increased when extra premiums are paid.
B It decreases over the term of the policy.
C It remains the same as the original policy, regardless of a
It is reduced to the amount of what the cash value would buy as a single premium.
When a policyowner designates a group of individuals as the beneficiary of a life insurance death benefit without specifically naming the individuals, this is called
A Irrevocable designation.
B Stirpes designation.
C Class designation.
D Revocable design
Class designation.
A fee charged to the insured when a policy or annuity is exchanged for its cash value is
A Surrender charge.
B Policy cancellation fee.
C Premature distribution penalty.
D Maturation fee.
Surrender charge.
All of the following are true regarding insurance policy loans EXCEPT
A The amount of the outstanding loan and interest will be deducted from the policy proceeds when the insured dies.
B The policy will terminate if the loan plus interest equals or exceed
Policy loans can be made on policies that do not accumulate cash value.
An insured has a life insurance policy from a participating company and receives quarterly dividends. He has instructed the company to apply the policy dividends to increase the death benefit. The dividend option that the insured has chosen is called
A On
Paid-up additions.
A policyowner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision?
A Waiver of premium
B Incontestability period
C Assignment
D Automatic premium loan
Automatic premium loan
The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for life after the insured's death, he chose the life income settlement option. The amount of payments will be determined by taking into acc
The insured's age at death.
What type of account will most likely be established for a minor?
A Annuity
B Credit life
C Estate planning
D Trust
Trust
If an insured continually uses the automatic premium loan option to pay the policy premium,
A The insurer will increase the premium amount.
B The policy will terminate when the cash value is reduced to nothing.
C The face amount of the policy will be redu
The policy will terminate when the cash value is reduced to nothing.
Which of the following is NOT typically excluded from life policies?
A Self-inflicted death
B Death that occurs while a person is committing a felony
C Death due to war or military service
D Death due to plane crash for a fare-paying passenger
Death due to plane crash for a fare-paying passenger
Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean?
A The beneficiary will receive the lump sum, plus interest.
B The primary beneficiary will receive the death
The beneficiary will only receive payments of the interest earned on the death benefit.
Which of the following is true regarding the spendthrift clause in life insurance policies?
A It is only used when the beneficiary is a minor.
B It is the same as irrevocable settlement clause.
C It can protect the policy proceeds from creditors of the be
It can protect the policy proceeds from creditors of the beneficiary.
An insured had a $10,000 term life policy. The annual premium of $200 was due on February 1; however, the insured failed to pay the premium. He died on February 28. How much would the beneficiary receive from the policy?
A $0
B $200
C $9,800
D $10,000
$9,800
An insured pays $1,200 annually for her life insurance premium. The insured applies this year's $300 worth of accumulated dividends to the next year's premium, thus reducing it to $900. What option does this describe?
A Reduction of Premium
B Accumulation
Reduction of Premium
The validity of coverage under a life insurance policy may not be contested, except for nonpayment of premium, after the policy has been in force for at least how many years?
A 1 year
B 2 years
C 5 years
D 7 years
2 years
Which of the following statements is TRUE about a policy assignment?
A It is the same as a beneficiary designation.
B t permits the beneficiary to designate the person to receive the benefits.
C It authorizes an agent to modify the policy.
D It transfers
It transfers rights of ownership from the owner to another person.
When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount?
A The same as the original policy minus the cash value
B Equal to the original policy for as long as the cash va
Equal to the original policy for as long as the cash values will purchase.
Which is TRUE about the cash surrender nonforfeiture option?
A After the cash surrender, the insured is covered for a grace period of one month.
B The policy remains active for some time after the policyholder opts for cash surrender.
C The policyholder r
Funds exceeding the premium paid are taxable as ordinary income.
An insured wants to change from an annual premium mode to a monthly premium mode. Which of the following is true?
A The insurer will need to terminate the current policy and issue a new one.
B The insured can make this change at any time, without any pena
This change can only be made on the policy's anniversary.
The sole beneficiary of a life insurance policy dies before the insured. If the policyowner fails to change the beneficiary before the insured's death, the proceeds of the policy will go to
A The insured's estate.
B Probate.
C The state.
D The beneficiary
The insured's estate.
When a life insurance policy was issued, the policyowner designated a primary and a contingent beneficiary. Several years later, both the insured and the primary beneficiary died in the same car accident, and it was impossible to determine who died first.
The insured's contingent beneficiary
If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select?
A Interest only
B Fixed period
C Life with period certai
Fixed period
What would be an advantage to naming a contingent (or secondary) beneficiary in a life insurance policy?
A It ensures the policy proceeds will be split between the primary and contingent beneficiaries.
B It requires that someone who is not the primary ben
It determines who receives policy benefits if the primary beneficiary is deceased.
All of the following are dividend options EXCEPT
A Reduction of premium.
B Paid-up additions.
C Fixed-period installments.
D Accumulated at interest
Fixed-period installments.
What is the clause that describes the method of paying the death benefit in the event that the insured and beneficiary are both killed in the same accident?
A Spendthrift Clause
B Settlement Clause
C Nonforfeiture Clause
D Common Disaster Clause
Common Disaster Clause
Which of the following settlement options in life insurance is known as straight life?
A Fixed amount
B Life income
C Single life
D Life with period certain
Life income
The policyowner pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this?
A C
Reduction of premium
Using a class designation for beneficiaries means
A Not naming beneficiaries.
B Naming an estate as the beneficiary.
C Naming each beneficiary by his or her name.
D Naming beneficiaries as a group.
Naming beneficiaries as a group.
When the policyowner specifies a dollar amount in which installments are to be paid, he/she has chosen which settlement option?
A Fixed period
B Life income period certain
C Extended term
D Fixed amount
Fixed amount
What is the purpose of a fixed-period settlement option?
A To provide a guaranteed income for life
B To provide a guaranteed amount of money each month
C To provide a guaranteed income for a certain amount of time
D To settle the insurance company's liabi
To provide a guaranteed income for a certain amount of time
What is the advantage of reinstating a policy instead of applying for a new one?
A The cash values have gained interest while the policy was lapsed.
B The original age is used for premium determination.
C Proof of insurability is not required.
D The face
The original age is used for premium determination.
An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the compan
Pay a reduced death benefit
A policyowner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. The policyowner should have her husband named as the
A Revocable beneficiary.
B Secondary bene
Revocable beneficiary.
Which settlement option provides a single beneficiary with income for the rest of his/her life?
A Single Life
B Fixed Amount
C Lump Sum
D Retained Assets
Single Life
An insured misstates her age at the time the life insurance application is taken. This misstatement may result in
A Automatic lapse.
B Recession of the policy.
C Adjustment in the amount of death benefit.
D No change whatsoever.
Adjustment in the amount of death benefit.
According to the entire contract provision, what document must be made part of the insurance policy?
A Buyer's Guide
B Agent's report
C Outline of coverage
D Copy of the original application
Copy of the original application
The owner of a life insurance policy wishes to name two beneficiaries for the policy proceeds. What will the soliciting insurance producer say?
A The proceeds will be split evenly between the two beneficiaries.
B The policyowner can specify the way procee
The policyowner can specify the way proceeds are split in the policy.
Which of the following best describes fixed-period settlement option?
A The death benefit must be paid out in a lump sum within a certain time period.
B Income is guaranteed for the life of the beneficiary.
C Both the principal and interest will be liquid
Both the principal and interest will be liquidated over a selected period of time.
An insured and his wife are both involved in a head-on collision. The husband dies instantly, and the wife dies 15 days later. The company pays the death benefit to the estate of the insured. This indicates that the life insurance policy had what provisio
Common Disaster
How long will the beneficiary receive payments under the single life settlement option?
A For a specified period of time
B Until the insured's age 100
C Until the beneficiary's death
D Until the insured's death
Until the beneficiary's death
How does an insured typically decide which settlement option to choose for his/her beneficiary?
A He/she usually decides based on how many beneficiaries he/she has chosen to receive benefits.
B He/she typically decides based on the advice of the insurer.
He/she typically decides by determining if the beneficiary will need one payment or a "steady stream" of income.
Which type of beneficiary is changeable at any point?
A Primary
B Irrevocable
C Revocable
D Contingent
Revocable
Life income joint and survivor settlement option guarantees
A Income for 2 or more recipients until they die.
B Payment of interest on death proceeds.
C Payout of the entire death benefit.
D Equal payments to all recipients.
Income for 2 or more recipients until they die.
What happens when a policy is surrendered for its cash value?
A The policy can be reinstated by paying back all policy loans and premiums.
B The policy can be converted to term coverage.
C Coverage ends and the policy cannot be reinstated.
D Coverage ends
Coverage ends and the policy cannot be reinstated.
Which of the following is true if the policyowner exercises his/her right to surrender his/her life insurance policy for its current cash value? Assume that the policyowner and insured are the same person.
A The insured is no longer covered under the surr
The insured is no longer covered under the surrendered policy.
When a policyowner designates a group of individuals as the beneficiary of a life insurance death benefit without specifically naming the individuals, this is called
A Revocable designation.
B Irrevocable designation.
C Stirpes designation.
D Class design
Class designation.
The life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as the
A Incontestability clause.
B Reinstatement clause.
C Insuring clause.
D Misstatement of Age clause.
Incontestability clause.
The Ownership provision entitles the policyowner to do all of the following EXCEPT
A Set premium rates.
B Receive a policy loan.
C Assign the policy.
D Designate a beneficiary.
Set premium rates.
In a case where the primary beneficiary predeceases the insured, in the event of the insured's death, the death benefit proceeds will be paid to
A The insurance company.
B The contingent beneficiary.
C The insured's spouse.
D The policyowner.
The contingent beneficiary.
What is the name of a clause that is included in a policy that limits or eliminates the death benefit if the insured dies as a result of war or while serving in the military?
A Hazardous occupation
B War or military service
C Limited benefit
D Aviation
War or military service
The termination of marital property rights may be reversed for all of the following reasons EXCEPT
A The spouse was named as beneficiary by class.
B The divorce or annulment decree or judgment is not recognized as valid.
C The spouse named as beneficiary
The spouse named as beneficiary has obtained or consented to a final decree or judgment of an annulment, divorce or separation.
J applied for a life insurance policy on January 10. The policy was issued on January 31. J's agent was vacationing at the time the policy was issued, so J did not receive the policy until February 18. J decides that he does not want the policy. When woul
February 28th, or 10 days after the time the policy is delivered.
Which of the following explains the policyowner's right to change beneficiaries, choose options, and receive proceeds of a policy?
A The Consideration Clause
B Assignment Rights
C Owner's Rights
D The Entire Contract Provision
Owner's Rights
A business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of additional assets to secure the loan. The business owner then decided to use her $250,000 life insurance policy to secure the
Collateral assignment
Which of the following riders added to a life insurance policy can pay part of the death benefit to the insured to cover expenses incurred in a nursing or convalescent home?
A Long-term care
B Accidental death
C Guaranteed insurability
D Payor benefit
Long-term care
What is the waiting period on a Waiver of Premium rider in life insurance policies?
A 30 days
B 3 months
C 5 months
D 6 months
6 months
All of the following topics may be included in the continuing education requirement for long-term care insurance EXCEPT
A Alternatives to the purchase of private long-term care insurance.
B The effect of inflation in eroding the value of benefits and the
Sales techniques and overcoming client objectives in the purchase of long-term care insurance.
The insured under a $100,000 life insurance policy with a triple indemnity rider for accidental death was killed in a car accident. It was determined that the accident was his fault. The triple indemnity rider in the policy specifies that the death must n
$100,000
Which of the following statements best describes the effect the Accelerated Benefit provision would have on the benefits paid to the beneficiary?
A It will decrease the benefits paid to the beneficiary.
B It will not affect the benefits paid to the benefi
It will decrease the benefits paid to the beneficiary.
Which of the following statements is TRUE concerning the Accidental Death Rider?
A It is also known as a triple indemnity rider.
B This rider is only available to insureds over the age of 65.
C It is only available in group insurance.
D It will pay double
It will pay double or triple the face amount.
All of the following are the responsibilities of every long-term care insurer in California EXCEPT
A Provide enough business to solicit long-term care insurance.
B Establish marketing procedures to assure that any comparison of policies will be fair and a
Provide enough business to solicit long-term care insurance.
A long stretch of national economic hardship causes a 7% rate of inflation. A policyowner notices that the face value of her life insurance policy has been raised 7% as a result. Which policy rider caused this change?
A Value Adjustment Rider
B Return of
Cost of Living Rider
The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called
A Waiver of premium.
B Guaranteed insurability.
C Waiver of cost of insurance.
D Payor benefit.
Waiver of premium.
Which of the following annuity riders ensures investors will receive a set amount of income annually?
A Guaranteed Lifetime Earnings
B Guaranteed Lifetime Withdrawal
C Guaranteed Minimum Income Benefit
D Guaranteed Minimum Accumulation Benefit
Guaranteed Minimum Income Benefit
As part of the continuing education requirement, what is the minimum number of hours of continuing education specific to long-term care insurance to be completed prior to each license renewal?
A 4
B 6
C 8
D 12
8
At the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability. This rider is called
A Accelerated benefits.
B Cost of living.
C Guaran
Guaranteed insurability.
Every long-term care insurer in California must submit to the Commissioner a list of all agents or other insurer representatives authorized to solicit individual consumers for the sale of long-term care insurance. These submitted agent lists must be updat
Semiannually
Which of the following annuity riders ensures that the owner will receive from an annuity at least the amount paid for the annuity?
A Guaranteed Minimum Income
B Guaranteed Minimum Accumulation
C Guaranteed Lifetime Earning
D Guaranteed Lifetime Withdrawa
Guaranteed Lifetime Withdrawal
Which of the following annuity riders ensures investors will receive a set amount of income annually?
A Guaranteed Minimum Income Benefit
B Guaranteed Minimum Accumulation Benefit
C Guaranteed Lifetime Earnings
D Guaranteed Lifetime Withdrawal
Guaranteed Minimum Income Benefit
What is the purpose of annuity riders?
A To allow an annuity to build cash value
B To increase the cost of an annuity
C To allow investors to obtain additional benefit
D To provide more annuity products to consumers
To allow investors to obtain additional benefit
All of the following are true regarding the guaranteed insurability rider EXCEPT
A The insured may purchase additional insurance up to the amount specified in the base policy.
B It allows the insured to purchase additional amounts of insurance without pro
This rider is available to all insureds with no additional premium.
A rider that may be attached to a life insurance policy that will adjust the face amount based upon a specific index, such as the Consumer Price Index, is called
A Payor rider.
B Cost of living rider.
C Accelerated benefit rider.
D Living need rider.
Cost of living rider.
If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a
A Guaranteed insurability rider.
B Paid-up additions option.
C Cost of living provision.
D Nonforf
Guaranteed insurability rider.
All of the following are features and requirements of the Living Needs Rider EXCEPT
A The remainder of the policy proceeds is payable to the beneficiary at the insured's death.
B It provides funds for medical and nursing home expenses to a terminally ill
Diagnosis must indicate that death is expected within 3 years.
A provision in a life insurance policy that provides for the early payment of some portion of the policy face amount should the insured suffer from a terminal illness or injury is called
A Waiver of maturity provision.
B Accelerated Benefit provision.
C V
Accelerated Benefit provision.
An insured purchased a 15-year level term life insurance policy with a face amount of $100,000. The policy contained an accidental death rider, offering a double indemnity benefit. The insured was severely injured in an auto accident, and after 10 weeks o
$200,000
The Waiver of Cost of Insurance rider is found in what type of insurance?
A Whole Life
B Joint and Survivor
C Juvenile Life
D Universal Life
Universal Life
After a back injury, an insured is disabled for a year. His insurance policy carries a Disability Income Benefit rider. Which of the following benefits will he receive?
A Percentage of medical costs paid by the insurer
B Payments for life
C Yearly premium
Monthly premium waiver and monthly income
A married couple's retirement annuity pays them $250 per month. The husband dies and his wife continues to receive $125.50 per month for as long as she lives. When the wife dies, payments stop. What settlement option did they select?
A Joint and survivor
Joint and survivor
If the annuitant dies during the accumulation period, who will receive the annuity benefits?
A The annuitant's estate
B The beneficiary
C The annuity owner
D The insurance company
The beneficiary
What is the penalty for excessive contributions to an IRA?
A 4%
B 6%
C 10%
D 15%
6%
A man purchased a $90,000 annuity with a single premium, and began receiving payments 2 months after that. What type of annuity is it?
A Variable
B Immediate
C Flexible
D Deferred
Immediate
Which of the following is NOT a legitimate use of annuities by businesses?
A Providing deferred compensation for employees
B Providing an investment vehicle
C Creating a tax shelter
D Funding employee retirement plans
Creating a tax shelter
All of the following are true regarding a qualified annuity EXCEPT
A Employer contributions are tax deductible as ordinary business expense.
B Funds accumulate on a tax-deferred basis.
C Employer contributions are not counted as income to the employee whi
At distribution, all amounts received by the employee are tax free.
Which of the following is another term for the accumulation period of an annuity?
A Pay-in period
B Premium period
C Liquidation period
D Annuity period
Pay-in period
Which of the following types of annuities will generally provide the highest monthly income?
A Straight life
B Joint and survivor
C Installment refund
D Life with a 10-year period certain
Straight life
In general terms, IRA contributions are
A Never tax deductible.
B Partially tax deductible depending on the income level.
C Tax deductible.
D Deducted based on the income level.
Tax deductible.
An insurance company forwards fixed annuity premiums to their general account, where the money is invested. The guaranteed minimum interest is set at 2.5%. During an economic downswing, the investments only drew 2%. What interest rate will the insurer pay
2.5%
Which of the following is NOT true regarding the accumulation period of an annuity?
A It would not occur in a deferred annuity.
B It is the period during which the annuity payments earn interest.
C It is the period over which the owner makes payments into
It would not occur in a deferred annuity.
If an annuitant dies before annuitization occurs, what will the beneficiary receive?
A Cash value of the plan
B Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount
C Either the amount paid into the plan or t
Either the amount paid into the plan or the cash value of the plan, whichever is the lesser amount
Which of the following is NOT fundable by annuities?
A A person's retirement
B Estate liquidation
C Death benefits
D Cash accumulation for any reason
Death benefits
An agent selling variable annuities must be registered with
A Department of Insurance.
B The Guaranty Association.
C SEC.
D FINRA.
FINRA.
If a beneficiary is NOT named for annuity benefits, to which entity will the benefit be paid?
A The insurance company
B The annuitant's estate
C The next of kin
D The state government
The annuitant's estate
What form of the annuity settlement options provides payments to an annuitant for the rest of the annuitant's life and ceases at the annuitant's death?
A Installment refund
B Joint and survivor
C Pure life
D Life with guaranteed minimum
Pure life
Which of the following best describes what the annuity period is?
A The period of time during which accumulated money is converted into income payments
B The period of time from the accumulation period to the annuitization period
C The period of time duri
The period of time during which accumulated money is converted into income payments
Which of the following will NOT be an appropriate use of a deferred annuity?
A Accumulating funds in an IRA
B Funding a child's college education
C Creating an estate
D Accumulating retirement funds
Creating an estate
The main difference between immediate and deferred annuities is
A How the annuity is purchased.
B The number of insureds.
C The amount of each payment.
D When the income payments begin.
When the income payments begin.
A 403(b) plan, commonly referred to as a TSA, is available to be used by
A Government workers.
B Postal employees.
C Self-employed persons.
D Teachers and not-for-profit organizations.
Teachers and not-for-profit organizations.
All of the following statements are true regarding installments for a fixed amount EXCEPT
A This option pays a specific amount until the funds are exhausted.
B The annuitant may select how big the payments will be.
C The payments will stop when the annuit
The payments will stop when the annuitant dies.
What qualifies an individual to contribute to an IRA?
A Investment income
B Retirement income
C Earned income
D Any income
Earned income
A tax-sheltered annuity is a special tax-favored retirement plan available to
A Certain groups depending on factors such as race, gender, and age.
B Certain groups of employees only.
C Anyone.
D Certain age groups only.
Certain groups of employees only.
How are contributions to a tax-sheltered annuity treated with regards to taxation?
A They are never taxed.
B They are taxed as income for the employee.
C They are taxed as income for the employee, but are tax free upon withdrawal.
D They are not included
They are not included as income for the employee, but are taxable upon distribution.
Which of the following is NOT true regarding the annuitant?
A The annuitant receives the annuity benefits.
B The annuitant must be a natural person.
C The annuitant cannot be the same person as the annuity owner.
D The annuitant's life expectancy is taken
The annuitant cannot be the same person as the annuity owner.
Who can make a fully deductible contribution to a traditional IRA?
A Anybody: all IRA contributions are fully deductible regardless of income level
B Someone making contributions to an educational IRA
C A person whose contributions are funded by a return
An individual who has earned income
Which of the following is TRUE regarding variable annuities?
A A person selling variable annuities is required to have only a life agent's license.
B The annuitant assumes the risks on investment.
C The funds are invested in the company's general account.
The annuitant assumes the risks on investment.
All of the following are true of an annuity owner EXCEPT
A The owner has the right to name the beneficiary.
B The owner is the party who may surrender the annuity.
C The owner must be the party to receive benefits.
D The owner pays the premiums on the ann
The owner must be the party to receive benefits.
Under a pure life annuity, an income is payable by the company
A Only for the life of the annuitant.
B Until the principal and interest are exhausted.
C For a guaranteed period of time, whether or not the annuitant survives to the end of that period.
D Fo
Only for the life of the annuitant.
An Internal Revenue Code provision that specifically provides for an individual retirement plan for public school teachers is a(n)
A 403(b) Plan (TSA).
B Keogh Plan.
C Roth IRA.
D SEP.
403(b) Plan (TSA).
The annuity owner dies during the accumulation period without naming a beneficiary. Annuity's cash value exceeds premiums paid. Which of the following is TRUE?
A The cash value will be paid to the annuitant's estate.
B The premium value will be paid to th
The cash value will be paid to the annuitant's estate.
If a deferred annuity is surrendered prematurely, a surrender charge is imposed. How is the surrender charge determined?
A It is a percentage of the cash value and decreases over time.
B It is always 7% of the cash value.
C It is a flat fee determined by
It is a percentage of the cash value and decreases over time.
All of the following statements about equity index annuities are correct EXCEPT
A The interest rate is tied to an index such as the Standard & Poor's 500.
B They invest on a more aggressive basis aiming for higher returns.
C The annuitant receives a fixed
The annuitant receives a fixed amount of return.
Under a straight life annuity, if the annuitant dies before the principal amount is paid out, the beneficiary will receive
A The remainder of the principal.
B Nothing; the payments will cease.
C Guaranteed minimum benefit.
D The amount paid into the annui
Nothing; the payments will cease.
According to the nonforfeiture law, if the owner decides to surrender a deferred annuity prior to annuitization, the owner is entitled to which of the following?
A Full premium refund without any charges
B Guaranteed surrender value
C No payments
D Annuit
Guaranteed surrender value
An individual has been making periodic premium payments on an annuity. The annuity income payments are scheduled to begin after 1 year since the annuity was purchased. What type of annuity is it?
A Fixed
B Flexible premium
C Immediate
D Deferred
Deferred
Under which of the following annuity options does the annuitant select the time period for the benefits, and the insurer determines how much each payment will be?
A Installments for a fixed amount
B Installment refund
C Cash refund
D Installments for a fi
Installments for a fixed period
Which of the following is NOT true regarding the accumulation period of an annuity?
A It is also known as the pay-in period.
B It would not occur in a deferred annuity.
C It is the period during which the annuity payments earn interest.
D It is the period
It would not occur in a deferred annuity.
Under which installments option does the annuitant select the amount of each payment, and the insurer determines how long they will pay benefits?
A Fixed amount
B Variable period
C Variable amount
D Fixed period
Fixed amount
A lucky individual won the state lottery, so the state will be sending him a check each month for the next 25 years. What type of annuity products are they likely to use to provide these benefits?
A Variable annuity
B Flexible payment annuity
C Deferred i
Immediate annuity
In a fixed annuity, which of the following is true regarding the guaranteed interest rate on the investment?
A The annuitant will receive the higher of either the guaranteed minimum rate or current rate.
B The annuitant will always receive the current int
The annuitant will receive the higher of either the guaranteed minimum rate or current rate.
The annuity owner dies while the annuity is still in the accumulation stage. Which of the following is TRUE?
A The money will continue to grow tax-deferred until the liquidation period, and then will be paid to the beneficiary.
B The beneficiary will rece
The beneficiary will receive the greater of the money paid into the annuity or the cash value.
Which of the following is true regarding a market value adjusted annuity?
A The insurer bears all the market risk of changing interest rates.
B There are no penalties for a premature surrender of the annuity.
C It provides a level benefit payment.
D The o
The owner is guaranteed a fixed interest rate for a specific period of time.
The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true?
A A corporation can be an annuitant as long as the beneficiary is a natural person.
B The contract can be
The annuitant must be a natural person.
Which of the following is TRUE regarding the annuity period?
A During this period of time the annuity payments grow interest tax deferred.
B It is also referred to as the accumulation period.
C It is the period of time during which the annuitant makes pre
It may last for the lifetime of the annuitant.
Before he died, an annuitant had received $12,500 in monthly benefits from his $25,000 straight life annuity. He was also the insured under a $50,000 paid-up whole life policy that named his wife as primary beneficiary. Considering both contracts, how muc
$50,000
Which of the following statements is INCORRECT regarding IRAs?
A A nonworking spouse is eligible to contribute to a separate IRA account.
B Anyone with earned income may open a traditional IRA.
C Accumulated contributions grow tax deferred.
D Married coup
Married couples are required to purchase a jointly owned IRA.
All of the following employees may use a 403(b) plan for their retirement EXCEPT
A A part-time classroom aide.
B The vice president of a charitable organization.
C The CEO of a private corporation.
D A school bus driver.
The CEO of a private corporation.
All of the following are true of an annuity owner EXCEPT
A The owner is the party who may surrender the annuity.
B The owner must be the party to receive benefits.
C The owner pays the premiums on the annuity.
D The owner has the right to name the benefic
The owner must be the party to receive benefits.
The minimum interest rate on an equity indexed annuity is often based on
A An index like Standard & Poor's 500.
B The returns from the insurance company's separate account.
C The annuitant's individual stock portfolio.
D The insurance company's general ac
An index like Standard & Poor's 500.
When a fixed annuity owner pays pays a monthly annuity premium to the insurance company, where is this money placed?
A Forwarded to an investor
B Each contract's separate account
C The annuity owner's account
D The insurance company's general account
The insurance company's general account
The advantage of qualified plans to employers is
A Tax free earnings.
B Do not have to provide lump sum payments.
C Taxable contributions.
D Tax deductible contributions.
Tax deductible contributions.
What license or licenses are required to sell variable annuities?
A Only a securities license
B No license is required
C Both a life insurance license and a securities license
D Only a life insurance license
Both a life insurance license and a securities license
Which of the following is TRUE for both equity indexed annuities and fixed annuities?
A Both are considered to be more risky than variable annuities.
B They invest on a conservative basis.
C They have a guaranteed minimum interest rate.
D They are both ti
They have a guaranteed minimum interest rate.
Equity indexed annuities
A Are more risky than variable annuities.
B Are security instruments.
C Invest conservatively.
D Seek higher returns.
Seek higher returns.
If a contract provides a set amount of income for two or more persons with the income stopping upon the first death of the insured, it is called a
A Deferred annuity.
B Pure annuity.
C Joint life annuity.
D Joint and survivor annuity.
Joint life annuity.
If an annuitant selects the straight life annuity settlement option, in order to receive all of the money out of the contract, it would be necessary to
A Live at least to his life expectancy.
B Die before his life expectancy.
C Name a beneficiary.
D Name
Live at least to his life expectancy.
All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT
A The insurer determines the amount for each payment.
B It is a life contingency option.
C It will pay the benefit only for a designated pe
It is a life contingency option.
A couple receives a set amount of income from their annuity. When the wife dies, the husband no longer receives annuity payments. What type of annuity did the couple buy?
A Joint limited annuity
B Joint life
C Joint and survivor
D Life with period certain
Joint life
Which of the following is NOT true about a joint and survivor annuity benefit option?
A Payments stop after the first death among the annuitants.
B A period certain option may be included.
C This option guarantees income for two or more recipients.
D The
Payments stop after the first death among the annuitants.
Which of the following products requires a securities license?
A Fixed annuity
B Equity Indexed annuity
C Deferred annuity
D Variable annuity
Variable annuity
Which of the following is a feature of a variable annuity?
A Interest rate is guaranteed.
B Securities license is not required.
C Benefit payment amounts are not guaranteed.
D Payments into the annuity are kept in the company's general account.
Benefit payment amounts are not guaranteed.
An individual buys a flexible premium deferred life annuity with 20 year period certain. What would his beneficiary receive if he died 5 years after beginning the annuity phase?
A Payments for 15 years
B Payments for 20 years
C Payments for life
D Nothing
Payments for 15 years
What determines the penalty for surrendering a market value adjusted annuity prematurely?
A The flat fee determined by an index of interest gains and the amount of time the annuity would take to mature
B There are no penalties imposed for surrendering ann
The current interest rate at the time of surrender
Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option?
A It does not guarantee that the entire principal amount will be paid out.
B It is a life contingency option.
C The beneficiary receives the remainder
It does not guarantee that the entire principal amount will be paid out.
According to the nonforfeiture law, if the owner decides to surrender a deferred annuity prior to annuitization, the owner is entitled to which of the following?
A No payments
B Annuity dividends
C Full premium refund without any charges
D Guaranteed surr
Guaranteed surrender value
A couple near retirement is planning for their golden years. They want to make sure that their retirement annuity provides monthly benefits for the rest of their lives. Should one of them die, the other would still like to continue receiving benefits. Whi
Joint and Survivor
Why is an equity indexed annuity considered to be a fixed annuity?
A It has a fixed rate of return.
B It is not tied to an index like the S&P 500.
C It has a guaranteed minimum interest rate.
D It has modest investment potential.
It has a guaranteed minimum interest rate.
Fixed annuities provide all of the following EXCEPT
A Future income payments.
B Hedge against inflation.
C Equal monthly payments for life.
D Minimum guaranteed rate of interest.
Hedge against inflation.
Which of the following is a short-term annuity that limits the amounts paid to a certain fixed period or until a certain fixed amount is liquidated?
A Variable annuity
B Annuity certain
C Fixed annuity
D Refund life
Annuity certain
Which of the following is NOT true regarding an annuity certain?
A It will pay until a fixed amount is liquidated.
B There are no life contingencies.
C It is a short-term annuity.
D Benefits stop at the annuitant's death.
Benefits stop at the annuitant's death.
Who bears all of the investment risk in a fixed annuity?
A The insurance company
B The owner
C The beneficiary
D The annuitant
The insurance company
All of the following information about a customer must be used in determining annuity suitability EXCEPT
A Beneficiary's age.
B Tax status.
C Financial experience.
D Annual income.
Beneficiary's age.
A tax-sheltered annuity is a special tax-favored retirement plan available to
A Anyone.
B Certain age groups only.
C Certain groups depending on factors such as race, gender, and age.
D Certain groups of employees only.
Certain groups of employees only.
In an annuity, the accumulated money is converted into a stream of income during which time period?
A Conversion period
B Annuitization period
C Payment period
D Amortization period
Annuitization period
Which of the following is NOT a legitimate use of annuities by businesses?
A Providing an investment vehicle
B Creating a tax shelter
C Funding employee retirement plans
D Providing deferred compensation for employees
Creating a tax shelter
Which of the following is TRUE regarding the accumulation period of an annuity?
A It is a period of time during which the beneficiary receives income
B It is limited to 10 years.
C It is a period during which the payments into the annuity grow tax deferre
It is a period during which the payments into the annuity grow tax deferred.
How are contributions to a tax-sheltered annuity treated with regards to taxation?
A They are taxed as income for the employee.
B They are taxed as income for the employee, but are tax free upon withdrawal.
C They are not included as income for the employ
They are not included as income for the employee, but are taxable upon distribution.
Which of the following is NOT a term for the period of time during which the annuitant or the beneficiary receives income?
A Liquidation period
B Depreciation period
C Annuitization period
D Pay-out period
Depreciation period
In general terms, IRA contributions are
A Partially tax deductible depending on the income level.
B Tax deductible.
C Deducted based on the income level.
D Never tax deductible.
Tax deductible.
When an annuity is written, whose life expectancy is taken into account?
A Annuitant
B Beneficiary
C Life expectancy is not a factor when writing an annuity.
D Owner
Annuitant
All of the following statements are true of a nonqualified retirement plan EXCEPT
A Increases of funds are not taxed until received.
B Contributions grow tax deferred.
C They do not qualify for special tax treatment by the IRS.
D Contributions are tax exe
Contributions are tax exempt.
After three years of making payments into a flexible premium deferred annuity, the owner decides to surrender the annuity. The insurer returns all the premium payments to the owner, except for a predetermined percentage. What is this percentage called?
A
Surrender charge
Which of the following is NOT true regarding Equity Indexed Annuities?
A They have guaranteed minimum interest rates.
B They are less risky than variable annuities.
C They earn lower interest rates than fixed annuities.
D The insurance company keeps a per
They earn lower interest rates than fixed annuities.
Which two terms are associated directly with the way an annuity is funded?
A Immediate or deferred
B Renewable or convertible
C Single payment or periodic payments
D Increasing or decreasing
Single payment or periodic payments
Which of the following is NOT true regarding the accumulation period of an annuity?
A It is the period during which the annuity payments earn interest.
B It is the period over which the owner makes payments into an annuity.
C It is also known as the pay-i
It would not occur in a deferred annuity.
Which of the following documents must be provided to the policyowner or applicant during policy replacement?
A Buyer's Guide and Policy Summary
B Policy illustrations
C Notice Regarding Replacement
D Disclosure Authorization Form
Notice Regarding Replacement
Any insurer who engages in the insurance business and violates the Code with respect to insurance replacement shall on the first violation
A Be fined a sum of $10,000.
B Be fined a sum no less than $30,000 and no more than $300,000.
C Have his/her license
Be fined a sum of $10,000.
The right of the applicant to rescind the policy for a full refund of all premiums
A Is not a valid right.
B Must be clearly stated in the policy's text.
C Is implied during the application process.
D Must be exercised within 3 days of the policy issue.
Must be clearly stated in the policy's text.
Which of the following is true regarding a policy with a face value less than $10,000?
A An insured cannot return the policy.
B If it's returned during the free look period, the contract will be cancelled, but the insurer will retain the premium paid.
C T
If it's returned during the free look period, the agreement will be void.
Every policy of individual life insurance must include a notice of right to cancel the policy, stating the specific time frame for the free-look period. Once the insured has cancelled the policy, within how many days must the insurer refund all premiums a
30 days
During the free-look period, the premium for a variable annuity may be invested in all of the following EXCEPT
A Value funds.
B Fixed-income investments.
C Money-market funds.
D Mutual funds (only upon the investor's request).
Value funds.
Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance?
A Reinstatement rule
B Conversion rule
C Disclosure rule
D Replacement rule
Replacement rule
All insurance policies and annuity contracts delivered to senior citizens in the State of California are subject to a cancellation period of at least
A 20 days.
B 30 days.
C 45 days.
D 60 days.
30 days.
Every individual life insurance policy must provide for a free-look provision that lasts for at least
A 90 days.
B 10 days.
C 30 days.
D 60 days.
10 days.
How must a replacing producer respond to an applicant wishing to replace existing life insurance?
A The producer must provide the applicant with a Notice Regarding Replacement.
B The producer must collect the existing policies and turn them over to the re
The producer must provide the applicant with a Notice Regarding Replacement.
During replacement of life insurance, a replacing insurer must do which of the following?
A Designate a new producer for a replaced policy
B Send a copy of the Notice Regarding Replacement to the Department of Insurance
C Obtain a list of all life insuran
Obtain a list of all life insurance policies that will be replaced
The notice to senior consumers regarding their right to cancel a policy must be printed on the cover or policy jacket in at least what type of print?
A 12-point standard print
B 12-point bold print
C 14-point standard print
D 14-point bold print
12-point bold print
Any insurance agent who commits a repeated violation of the Insurance Code with respect to insurance replacement will be liable for
A An administrative penalty of no less than $30,000 and have his/her license revoked.
B A criminal penalty of up to $10,000
An administrative penalty of no less than $5,000 and no more than $50,000 per violation.
Any insurance agent who engages in the insurance business and violates the Code with respect to insurance replacement shall on the first violation
A Be fined a sum of $1,000.
B Be fined a sum of $10,000.
C Be administratively suspended from licensing for
Be fined a sum of $1,000.
A legally acceptable attempt by an existing insurer to dissuade a current policyowner from the replacement of existing life insurance is called
A Rebating.
B Retention.
C Conservation.
D Solicitation.
Conservation.
An insurer has been found guilty of a Code violation regarding replacement. The insurer then repeats the violation. What will be the minimum penalty?
A $10,000
B $25,000
C $30,000
D $100,000
$30,000
An insured has the right to return the new insurance policy for a full refund during the
A Grace period.
B Free-look period.
C Settlement period.
D Probationary period.
Free-look period.
Which of the following insureds have a right to cancel an individual life policy for a full refund within 30 days of policy delivery?
A All insureds
B Only insureds who have dependents
C Only preferred insureds
D Insureds who are 60 years of age or older
Insureds who are 60 years of age or older
To which of the following products does the Replacement Regulation apply?
A Group annuities
B Credit life insurance
C Converting an existing policy with the same insurer
D Whole life insurance
Whole life insurance
An insured has the right to cancel a policy by written notification to the insurer. This notification may be mailed to the insurer or returned to the original agent who made the sale. Upon receipt of the cancellation request, the insurer will
A Have the w
Refund any premiums and policy fees within 30 days of notice if the policy is within the cancellation period specified by the insurer.
During the cancellation period, an insurer must refund any premiums and policy fees within how many days of written cancellation notice by the insured?
A 30
B 60
C 10
D 20
30
Which of the following is NOT a factor in determining qualifications for Social Security disability benefits?
A Worker's PIA
B Worker's age
C Number of work credits earned
D Worker's occupation
Worker's occupation
What is the limiting age for dependent children of the insured employee in a group life plan (other than disabled children)?
A 26
B 30
C 19
D 24
26
Which of the following is INCORRECT concerning a noncontributory group plan?
A The employees receive individual policies.
B They help to reduce adverse selection against the insurer.
C They require 100% employee participation.
D The employer pays 100% of
The employees receive individual policies.
After being hired to deliver newspapers to his neighbors, a man is provided with $10,000 of life insurance by the newspaper. He would be covered under which kind of life insurance?
A Universal life
B Blanket life
C Group life
D Ordinary life
Blanket life
In order to qualify for conversion from a group life policy that has been terminated to an individual policy of the same coverage, a person must have been insured under the group plan for how many years?
A 1
B 3
C 5
D 10
5
The minimum number of credits required for partially insured status for Social Security disability benefits is
A 4 credits.
B 6 credits.
C 10 credits.
D 40 credits.
6 credits.
A group of 15 skydivers met at a seminar and began talking about life insurance during a break. Because it was expensive to get individual life insurance, they decided to band together to form a small group so that they could qualify for group life insura
The purpose of the group was to purchase life insurance.
Selection of coverage in employee benefits plans refers to
A Employee choosing benefits.
B Employer choosing providers.
C Employer choosing the benefits for employees.
D None of the above.
Employee choosing benefits.
If an insured worker has earned 40 quarters of coverage, the worker's status under Social Security disability is
A Correctly insured.
B Permanently insured.
C Fully insured.
D Partially insured.
Fully insured.
All of the following are requirements of eligibility for Social Security disability income benefits EXCEPT
A Fully insured status.
B Waiting period of 5 months.
C Being age 65.
D Inability to perform any gainful work.
Being age 65.
All of the following are general requirements of a qualified plan EXCEPT
A The plan must provide an offset for social security benefits.
B The plan must be communicated to all employees.
C The plan must be for the exclusive benefits of the employees and t
The plan must provide an offset for social security benefits.
In terms of Social Security, what is the interval spanning between the day when the youngest child of a family turns 16 and before the surviving spouse turns age 60 called?
A Blackout Period
B Nonpayment Interval
C Latent Interval
D Accumulation Period
Blackout Period
According to California law, all of the following may be covered as dependents under group life insurance EXCEPT
A The insured's unmarried child, age 25.
B Disabled children of the insured over age 26.
C The insured's elderly parents living with the insur
The insured's elderly parents living with the insured.
Which of the following insurance arrangements will be appropriate for a parent buying a life insurance policy on a child where the parent is the policyowner?
A Third-party ownership
B An irrevocable beneficiary
C A buy-sell agreement
D Family term rider
Third-party ownership
In a group life insurance policy, the employer may select all of the following EXCEPT
A The type of insurance.
B The amount of insurance.
C The premium payor.
D The beneficiary.
The beneficiary.
An employee quits his job and converts his group policy to an individual policy; the premium for the individual policy will be based on his
A Experience Rating.
B Group rate.
C Insurer's scheduled rate.
D Attained age.
Attained age.
What is the official name for the Social Security program?
A Old Age Survivors Disability Insurance
B Social Insurance Program
C Defined Benefit Retirement Insurance
D Qualified Pension Plan
Old Age Survivors Disability Insurance
For a retirement plan to be qualified, it must be designed for the benefit of
A Employer.
B IRS.
C Employees.
D Key employee.
Employees.
An employee quits his job on May 15 and doesn't convert his Group Life policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen?
A The insurer will pay a reduced d
The insurer will pay the full death benefit from the group policy to the beneficiary.
All of the following benefits are available under Social Security EXCEPT
A Welfare benefits.
B Old-age and retirement benefits.
C Disability benefits.
D Death benefits.
Welfare benefits.
What is the number of credits required for fully insured status for Social Security disability benefits?
A 4
B 10
C 30
D 40
40
When employees are covered by group insurance, they receive
A A certificate of insurance.
B The original policy.
C A copy of the policy.
D The dividends, if any, in cash.
A certificate of insurance.
Who is a third-party owner?
A An insurer who issues a policy for two people
B An employee in a group policy
C An irrevocable beneficiary
D A policyowner who is not the insured
A policyowner who is not the insured
All of the following statements are TRUE concerning Debtor Groups EXCEPT
A The amount of insurance on the life of any debtor may exceed the greater of the scheduled or actual amount of unpaid indebtedness to the creditor.
B The debtors eligible for insura
The amount of insurance on the life of any debtor may exceed the greater of the scheduled or actual amount of unpaid indebtedness to the creditor.
What percentage of a company's employees must take part in a noncontributory group life plan?
A 0%
B 25%
C 75%
D 100%
100%
All of the following are true regarding the issuance of group life insurance to labor unions EXCEPT
A Premiums may be paid through individual member funds.
B Members cannot be excluded from coverage on the basis of insurability.
C Premiums may be paid thr
Members cannot be excluded from coverage on the basis of insurability.
Which of the following is an eligibility requirement for all Social Security Disability Income benefits?
A Have permanent kidney failure
B Be at least age 50
C Have attained fully insured status
D Be disabled for at least 1 year
Have attained fully insured status
If a person is disabled at age 27 and meets Social Security's definition of total disability, how many work credits must he/she have earned to receive benefits?
A 40 credits
B 12 credits
C 20 credits
D 6 credits
12 credits
Which of the following are generally NOT considered when underwriting group insurance?
A The group's past claim experience
B The size of the group
C The insureds' medical history
D The nature of the group
The insureds' medical history
An association could buy group insurance for its members if it meets all of the following requirements EXCEPT
A Holds annual meetings.
B Is contributory.
C Has at least 50 members.
D Has a constitution and by-laws.
Has at least 50 members.
Vision, Inc. employs 500 people. The company offers group life insurance to its employees after 90 days of service. Who is considered the policyholder of the life insurance policies Vision, Inc. offers?
A Each individual employee
B The beneficiaries of th
Vision, Inc.
Which of the following employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated?
A Those who have no history of claims
B Those who have been insured under the plan for a
Those who have been insured under the plan for at least 5 years
An employee has group life insurance through her employer. After 5 years, she decides to leave the company and work independently. How can she obtain an individual policy?
A She can convert her group policy to an individual policy without proof of insurab
She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan.
Social Security was created to provide all of the following benefits EXCEPT
A Disability income.
B Retirement income.
C Unemployment income.
D Survivor's benefits.
Unemployment income.
All of the following are characteristics of group life insurance EXCEPT
A Amount of coverage is determined according to nondiscriminatory rules.
B Individuals covered under the policy receive a certificate of insurance.
C Certificate holders may convert c
Premiums are determined by the age, sex and occupation of each individual certificate holder.
Within how many days of termination of employment must an employer give notice of the employee's right to convert the group policy to an individual policy?
A 25 days
B 5 days
C 31 days
D 15 days
15 days
All of the following could own group life insurance EXCEPT
A A debtor group.
B A group needing low-cost life insurance.
C A group sponsored by an employer.
D An alumni group.
A group needing low-cost life insurance.
Employer contributions made to a qualified plan
A Are taxed annually as salary.
B Are subject to vesting requirements.
C May discriminate in favor of highly paid employees.
D Are after-tax contributions.
Are subject to vesting requirements.
Which of the following is INCORRECT concerning a noncontributory group plan?
A The employer pays 100% of the premiums.
B The employees receive individual policies.
C They help to reduce adverse selection against the insurer.
D They require 100% employee p
The employees receive individual policies.
An insured becomes disabled at age 22 and can no longer work. She meets the definition of total disability under Social Security. What other requirement must the insured have met to receive Social Security disability benefits?
A Have accumulated 40 work c
Have accumulated 6 work credits in the past 3 years
When an employee terminates coverage under a group insurance policy, coverage continues in force
A Until the employee can obtain coverage under a new group plan.
B Until the employee notifies the group insurance provider that coverage conversion policy is
For 31 days.
Which of the following is the required number of participants in a contributory group plan?
A 100%
B 25%
C 50%
D 75%
75%
After an employee was laid off, he was informed of the right to convert the group coverage to an individual policy within 31 days. Twenty days into the conversion period, the employee suffered a heart attack and died before he could obtain individual cove
The insurer must pay the death benefit under the former group coverage.
Which of the following best describes the insurer's liability for losses arising from military service?
AT he insurer is liable for all losses.
B The insurer's liability is always excluded.
C The insurer's liability is always reduced.
D The insurer's liab
The insurer's liability may be reduced or excluded.
How is Social Security funded?
A Sales tax
B Federal grant money
C Taxes imposed on a worker's earned income
D State payroll taxes
Taxes imposed on a worker's earned income
An employee is insured under her employer's group life plan. If she terminates her group coverage, which of the following statements is INCORRECT?
A The insured would not need to prove insurability for a conversion policy.
B The insured may convert covera
The insured may choose to convert to term or permanent individual coverage.
Which of the following is TRUE of a qualified plan?
A It may discriminate in favor of highly paid employees.
B It may allow unlimited contributions.
C It has a tax benefit for both employer and employee.
D It does not need to have a vesting schedule.
It has a tax benefit for both employer and employee.
Group life insurance is a single policy written to provide coverage to members of a group. Which of the following statements concerning group life is CORRECT?
A Coverage cannot be converted when an individual leaves the group.
B Premiums are determined by
100% participation of members is required in noncontributory plans.
If a retirement plan or annuity is "qualified," this means
A It has a penalty for early withdrawal.
B It accepts after-tax contributions.
C It is noncancellable.
D It is approved by the IRS.
It is approved by the IRS.
An association could buy group insurance for its members if it meets all of the following requirements EXCEPT
A Has a constitution and by-laws.
B Holds annual meetings.
C Is contributory.
D Has at least 50 members.
Has at least 50 members.
When employees are covered by group insurance, they receive
A The dividends, if any, in cash.
B A certificate of insurance.
C The original policy.
D A copy of the policy.
A certificate of insurance.
If an insured worker has earned 40 quarters of coverage, the worker's status under Social Security disability is
A Permanently insured.
B Fully insured.
C Partially insured.
D Correctly insured.
Fully insured.
All of the following are examples of third-party ownership of a life insurance policy EXCEPT
A A company purchases a life insurance policy on their manager, who is an important part of the operation.
B When an insured purchased a new home, the insured mad
An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan.
If a life insurance policy develops cash value faster than a seven-pay whole life contract, it becomes a/an
A Modified endowment contract.
B Accelerated benefit policy.
C Endowment.
D Nonqualified annuity.
Modified endowment contract.
If an insured surrenders his life insurance policy, which statement is true regarding the cash value of the policy?
AI t is taxable only if it exceeds the amounts paid for premiums by 50%.
B It is automatically taxable.
C It is only taxable if the cash va
It is only taxable if the cash value exceeds the amount paid for premiums.
What method is used to determine the taxable portion of each annuity payment?
A The annuity to age ratio
B The marginal tax formula
C The exclusion ratio
D The excise ratio
The exclusion ratio
An IRA uses immediate annuities to pay out benefits; the IRA owner is nearly 75 years old when he decides to collect distributions. What kind of penalty would the IRA owner pay?
A No penalties, since the owner is older than 59 �
B 10% for early withdrawal
50% tax on the amount not distributed as required
Which of the following statements is TRUE concerning whole life insurance?
A Dividend interest is not taxable.
B Premiums are tax deductible.
C Policy loans are tax deductible.
D Lump-sum death benefits are not taxable.
Lump-sum death benefits are not taxable.
Which of the following statements regarding deferred compensation funds is INCORRECT?
A They can be made with cash deposits to an annuity.
B They generally provide additional retirement benefits.
C They are usually qualified plans.
D They can be establish
They are usually qualified plans.
What type of annuity activity will cause immediate taxation of the interest earned?
A Surrendering the annuity for cash
B Using the contract as collateral for a loan
C Changing a settlement option
D Failing to make a planned contribution
Surrendering the annuity for cash
When contributions to an immediate annuity are made with before-tax dollars, which of the following is true of the distributions?
A Distributions cannot begin prior to age 72.
B There are no distributions.
C Distributions are taxable.
D Distributions are
Distributions are taxable.
If an annuitant dies during the accumulation period, what benefit (if any) will be included in the annuitant's estate?
A No benefits
BPolicy loans
C Accumulated cash value
D Full annuity benefit
Accumulated cash value
What is the main purpose of the Seven-pay Test?
A It guarantees the minimum interest.
B It determines if the insurance policy is a MEC.
C It requires level premium payments for 7 years.
D It ensures that the policy benefits are paid out in 7 years.
It determines if the insurance policy is a MEC.
Life insurance death proceeds are
A Generally not taxed as income.
B Taxable to the extent that they exceed 7.5% of the beneficiary's adjusted gross income.
C Taxed as a capital gain.
D Taxed as ordinary income.
Generally not taxed as income.
If $100,000 of life insurance proceeds were used in a settlement option, which paid $13,000 per year for ten years, which of the following would be taxable annually?
A $7,000
B $3,000
C $13,000
D $10,000
$3,000
Which of the following is NOT true regarding policy loans?
A A policy loan may be repaid after the policy is surrendered.
B Money borrowed from the cash value is taxable.
C Policy loans can be repaid at death.
D An insurer can charge interest on outstandi
Money borrowed from the cash value is taxable.
An annuitant dies before the effective date of a purchased annuity. Assuming that the annuitant's wife is the beneficiary, what will occur?
A The interest will become immediately taxable.
B The premiums will increase.
C The premiums will decrease.
D The i
The interest will continue to accumulate tax deferred.
If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a
A Nonforfeiture option.
B Rollover.
C Settlement option.
D Nontaxable exchange.
Settlement option.
Which of the following is true regarding taxation of accelerated benefits under a life insurance policy?
A There is a 10% penalty for early distribution of the death benefit.
B They are tax free to terminally ill insured.
C They are always taxable to chro
They are tax free to terminally ill insured.
Which of the following describes the tax advantage of a qualified retirement plan?
A Employer contributions are not taxed when paid out to the employee.
B The earnings in the plan accumulate tax deferred.
C Distributions prior to age 59� are tax deductibl
The earnings in the plan accumulate tax deferred.
During the accumulation period in a nonqualified annuity, what are the tax consequences of a withdrawal?
A Neither interest nor principal is taxed, but penalties may be imposed.
B Taxable interest will be withdrawn first and the 10% penalty will be impose
Taxable interest will be withdrawn first and the 10% penalty will be imposed if under age 59 �.
What part of the Internal Revenue Code allows an owner of a life insurance policy or annuity to exchange or replace their current contract with another contract without creating adverse tax consequences?
A 401(k) Plan
B Section 457 Deferred Compensation P
Section 1035 Policy Exchange
What is the penalty for IRA distributions that are below the required minimum for the year?
A 10%
B 25%
C 50%
D 60%
50%
Which of the following is NOT an allowable 1035 exchange?
A A whole life insurance policy is exchanged for a Universal life insurance policy.
B An annuity is exchanged for another annuity.
C A life insurance policy is exchanged for an annuity.
D A whole l
A whole life insurance policy is exchanged for a term insurance policy.
An individual has been diagnosed with Alzheimer's disease. He is insured under a life insurance policy with the accelerated benefits rider. Which of the following is true regarding taxation of the accelerated benefits?
A The entire living benefit is consi
A portion of the benefit up to a limit is tax free; the rest is taxable income.
In which of the following instances would the premium be tax deductible?
A Premiums paid by a mother on her son's policy
B Premiums paid by an employer on the life of a key person
C Premiums paid by an employer on a $30,000 group term life insurance plan
Premiums paid by an employer on a $30,000 group term life insurance plan for employees
A policyowner cancels his life policy but instructs the insurance company to transfer the cash value of his policy to an annuity. This nontaxable transaction is called
A 1035 exchange.
B Qualified distribution.
C Premature distribution.
D Rollover.
1035 exchange.
Which of the following statements regarding the taxation of Modified Endowment Contracts is FALSE?
A Withdrawals are not taxable.
B Distributions before age 59 1/2 incur a 10% penalty on policy gains.
C Policy loans are taxable distributions.
D Accumulati
Withdrawals are not taxable.
In life insurance policies, cash value increases
A Grow tax deferred.
B Are income taxable immediately.
C Are taxed annually.
D Are only taxed when the owner reaches age 65.
Grow tax deferred.
Which of the following is true regarding taxation of dividends in participating policies?
A Dividends are taxable only after a certain amount is accumulated annually.
B Dividends are taxable in some life insurance policies and nontaxable in others.
C Divi
Dividends are not taxable.
The premiums paid by the employer in a business life insurance policy are
A Never taxable to the employee.
B Tax deductible by the employer.
C Tax deductible by the employee.
D Always taxable to the employee.
Tax deductible by the employer.
The advantage of qualified plans to employers is
A Tax-free earnings.
B No lump-sum payments.
C Taxable contributions.
D Tax-deductible contributions.
Tax-deductible contributions.
Which of the following is NOT true of Section 1035 Policy Exchanges?
A It is an IRS Code which permits like kind exchanges of property.
B It is typically used when exchanging or replacing a less competitive life policy with a more competitive life policy.
Any exchange made under Section 1035 of the Internal Revenue Code must be completed within 30 days.
An insured decides to surrender his $100,000 Whole Life policy. The premiums paid into the policy added up to $15,000. At policy surrender, the cash surrender value was $18,000. What part of the surrender value would be income taxable?
A $50,000
B $18,000
$3,000
An insured has a Modified Endowment Contract. He wants to withdraw some money in order to pay medical bills. Which of the following is true?
A He will have to pay a penalty regardless of his age.
B He will not have to pay a penalty, regardless of his age.
He will have to pay a penalty if he is younger than 59�.
Which of the following describes the taxation of an annuity when money is withdrawn during the accumulation phase?
A Taxes are deferred on withdrawn amounts, but a flat penalty is charged.
B Taxes are deferred on withdrawn amounts.
C Withdrawn amounts are
Withdrawn amounts are taxed on a last in, first out basis.
Which concept is associated with "exclusion ratio"?
A How exclusion riders affect an insurance premium
B Policy provisions
C Annuity payments
D Dividend distribution
Annuity payments
An applicant buys a nonqualified annuity, but dies before the starting date. For which of the following beneficiaries would the interest accumulated in the annuity NOT be taxable?
A Annuitant
B Spouse
C Charitable organization
D Dependents
Spouse
Death benefits payable to a beneficiary under a life insurance policy are generally
A Exempt from income taxation if under $10,000.
B Exempt from income taxation if over $10,000.
C Not subject to income taxation by the Federal Government.
D Subject to inc
Not subject to income taxation by the Federal Government.
Which of the following statements regarding deferred compensation funds is INCORRECT?
A They can be established by employers.
B They can be made with cash deposits to an annuity.
C They generally provide additional retirement benefits.
D They are usually
They are usually qualified plans.
Which of the following best describes taxation during the accumulation period of an annuity?
A The growth is subject to immediate taxation.
B Taxes are deferred.
C The annuity is subject to state taxes only.
D The annuity is subject to both state and fede
Taxes are deferred.
When a beneficiary receives payments consisting of both principal and interest portions, which parts are taxable as income?
A Both principal and interest
B Neither principal nor interest
C Principal only
D Interest only
Interest only
When replacement of existing coverage is involved, extra requirements apply. The agent must
A Present to the applicant a "Notice Regarding Replacement of Life Insurance" as described by the Code.
B Have the applicant sign a copy of the "Notice Regarding R
Do all of these.
Which of the following is NOT a true statement regarding the disclosure included for variable annuity or variable life insurance contracts?
A Surrender charge notice may be omitted.
B It must be included in all policies, with no exceptions.
C It must prov
It must be included in all policies, with no exceptions.
In 2010, a law firm purchased a buy-sell agreement policy on each of its partners. In 2015, one partner left to start a new practice; however, the firm continued to pay the premiums on the policy. In 2017, the former partner died. The partners of the firm
Will pay the death claim to the beneficiary for this policy as written since insurable interest existed at the time of application.
Life agents must tell applicants when their coverage will start or the conditions required for their coverage to start either at the time of application or
A When the Policy Summary is issued.
B When an underwriting decision is rendered.
C When the first
When the first premium is received.
What is the maximum amount of coverage that may be extended to the insured's dependents under a group life insurance policy?
A 100% of the insurance on the life of the insured employee
B 75% of the insurance on the life of the insured employee
C 50% of th
100% of the insurance on the life of the insured employee
Tom purchased a variable life insurance contract and instructed the insurance company to invest the premium into stocks right away. Twenty five days later he decided to return the policy. What will Tom receive as a refund from the insurance company?
A The
The policy's account value at the time the policy is returned
According to the CIC, when an insured has functionally identical coverages that overlap or duplicate benefits to the extent that the coverage is not cost-effective, this represents
A Overloading.
B Overlap.
C Excess of coverage.
D Twisting.
Overloading.
Advertisements for term life insurance must adhere to strict criteria of extensive disclosures if directed to persons
A 65 years old.
B Under the age of 21.
C 55 years of age or older.
D Of any age.
55 years of age or older.
In compliance with the California Insurance Code, individual life insurance policies that are delivered in this state must include a disclosure notice on the cover page. This notice should provide all of the following information EXCEPT
A Policy limitatio
Agent's commissions.
A life agent's records must include which of the following?
A All correspondence between the agent and the policy holder
B A copy of the outline of coverage
C All policies sold by the agent
D All of these
All of these
According to the Insurance Code provisions regarding investments of variable annuities, what is the minimum age that a person must be to qualify as a "senior citizen"?
A 50
B 60
C 62
D 70
60
All life and disability policies issued to individuals who are age 65 or older must offer a right-to-return period of at least how long?
A 20 days
B 30 days
C 90 days
D 10 days
30 days
Replacement of life insurance and annuities policies requires for the replacing and existing insurers to retain evidence of all signed applications and disclosures for no less than
A 5 years.
B 3 years.
C 1 year.
D 2 years.
3 years.
The attempt to "save" an original policy from replacement or lapse is called
A A misdemeanor.
B Misrepresentation.
C Fraud.
D Conservation.
Conservation.
For how long must agents keep records of insurance transactions?
A 20 years
B 5 years
C 10 years
D 15 years
5 years
Where must agents keep records associated with insurance transactions?
A There is no specified location, provided that agents can give the Commissioner easy access to records.
B In any of their offices, as long as the office is located in this state.
C Al
At their principal place of business
The youngest possible age for an "elder" is
A 55.
B 60.
C 65.
D 70.
65.
Jenn purchased an annuity contract on March 1st, but after carefully reviewing its limitations, she returned it to the insurer on March 15th. The insurer didn't have any specific instructions from the policyowner on how to invest the premium. What should
A refund of premium and policy fees
The Commissioner may inspect an agent's records
A With 30 days written notice.
B At any time.
C Once every 5 years.
D Once a year.
At any time.
Where replacement of existing coverage is involved, in addition to providing the proper notices to the applicant, the agent must
A Notify the Department of Insurance that a replacement of existing coverage is being made and that all replacement guidelines
List any existing life insurance or annuities to be replaced on the application.
For an insurance contract to be valid in the State of California, when must insurable interest exist?
A At the time at which a claim for indemnification is made
B At the time at which the first premium is paid
C At the time of application for a policy on
At the time of application for a policy on the insured
Concerning AIDS and HIV risks, all of the following acts may subject an insurer to liability claims or fines EXCEPT
A Declining applicant for a positive HIV test result.
B Not providing counseling contacts and educational information about HIV and AIDS.
C
Declining applicant for a positive HIV test result.
When employees are covered by group insurance, they receive
A A copy of the policy.
B The dividends, if any, in cash.
C A certificate of insurance.
D The original policy.
A certificate of insurance.
Signing and dating a delivery receipt for a life insurance policy helps to establish all of the following timeframes EXCEPT
A The Free-Look Period.
B The Right of Rescission.
C The Grace Period.
D The Incontestability Period.
The Grace Period.
Within how many days of termination of employment must an employer give notice of the employee's right to convert the group policy to an individual policy?
A 31 days
B 15 days
C 25 days
D 5 days
15 days
Which of the following must be disclosed in all advertisements and policies of term life insurance for individuals 55 years of age or older?
A Life insurance surrender cost index
B MIB report
C Life insurance policy illustrations
D Insurance monetary valu
Insurance monetary value index
Which of the following would be among the prohibited provisions for long-term care insurance policies delivered to the insured in California?
A Canceling or failing to renew the policy due to changes in a person's health.
B Having the premium increased in
All of these
Which of the following insurance policies is always part of a "24 Hour Coverage" insurance plan?
A A group nonoccupational health care services plan contract
B A life insurance policy
C A Workers Compensation Policy
D A group nonoccupational disability in
A Workers Compensation Policy
How many pints of blood are covered by Medicare Supplement core benefits?
A 5
B 10
C 1
D 3
3
In reference to the standard Medicare Supplement benefits plans, what does the term standard mean?
A Coverage options and conditions are developed for average individuals.
B All providers will have the same coverage options and conditions for each plan.
C
All providers will have the same coverage options and conditions for each plan.
Which of the following choices would define 24-hour coverage?
A Workers compensation coverage that is provided by the employer to the employee outside of work
B Coverage for the first 24 hours after the policy is issued.
C An employee is provided with wor
An employee is provided with workers compensation coverage and medical insurance coverage.
All applicants for long term care insurance receive an outline of coverage which
A Describes in detail all of the terms and conditions of long-term care insurance.
B Must be presented at the time the policy is delivered.
C Is an advertisement about long-t
Must be presented at the time or initial solicitation for long-term care insurance.
If an agent wants to handle workers compensation cases, what type of license must the agent obtain?
A Commercial Lines
B Casualty Insurance
C Accident and Health Insurance
D Workers Compensation Insurance
Accident and Health Insurance
All of the following are true in regards to 24 Hour Coverage EXCEPT
A It can be distributed through a life insurance policy.
B Employees are covered around the clock.
C It reduces litigation concerning cause of injury or disease.
D Gaps in coverage are re
It can be distributed through a life insurance policy.
What is the education requirement for accident and health agents who want to sell 24-hour care coverage?
A There are no specific education requirements that authorize the life agent to sell workers compensation coverage.
B 40 hours of prelicensing classro
The same number of hours of training in workers compensation as required for a property or casualty broker-agent on the same subject.
How many long-term care policies can be sold to an insured within a 12-month period before the number of policies is considered to be unnecessary?
A 1
B 2
C 3
D 4
2
California law permits an insured to return a long term care policy for a full refund of premiums paid for any reason
A Within 30 days of receiving the policy
B Within 30 days of having a claim denied.
C Within 10 days of receiving the policy.
D Within on
Within 30 days of receiving the policy
Which of the following must be present in all Medicare supplement plans?
A Outpatient drugs
B Plan C coinsurance
C Plan A
D Foreign travel provisions
Plan A
Which of the following would be exempt from the jurisdiction of the California Department of Insurance?
A Admitted insurer subject to jurisdiction in Nevada.
B Insurer that provides coverage for chiropractic services.
C Agent transacting insurance in the
Admitted insurer subject to jurisdiction in Nevada.
Which of the following are considered standard levels of care?
A Skilled nursing care
B Intermediate nursing care
C Home health care
D All of these
All of these
Which of the following is NOT covered under Plan A in Medigap insurance?
A The first three pints of blood each year
B The Medicare Part A deductible
C Approved hospital costs for 365 additional days after Medicare benefits end
D The 20% Part B coinsurance
The Medicare Part A deductible
When a long term care policy is replaced after it has been in effect for at least six months, the new policy may
A Not exclude pre-existing conditions that would have been covered by the original contract.
B Exclude pre-existing conditions disclosed on th
Not exclude pre-existing conditions that would have been covered by the original contract.
Which of the following is NOT a standard level of care?
A Intermediate nursing care
B Hospice care
C Home care and community-based care
D Custodial care
Hospice care
In which Medicare supplemental policies are the core benefits found?
A All plans
B Plans A and B only
C Plan A only
D Plans A-D only
All plans
A long term care policy sold in California includes insurance designed to provide which of the following?
A Medicare supplement coverage
B Major medical expense coverage
C Institutional care and home care
D Care given in an acute care center of a hospital
Institutional care and home care
Qualified long-term care policies covering home care must provide benefits if the insured is impaired in at least two of the six activities of daily living (ADL). The term "impaired" means
A Has Parkinson's disease.
B Needs occasional help with the ADLs.
Needs substantial hands on or standby assistance with ADLs.
Paula has a history of severe asthma which caused her to be hospitalized in the past six months. If she discloses this on her application and is approved for her long-term care policy, Paula's policy could
A Cancel her policy within two years if she suffe
Exclude asthma-related claims for up to six months.
If a new long-term care policy is replacing existing coverage, the agent should make sure that the new policy's benefits
A Have no relation to the existing policy.
B Match or exceed the existing policy.
C Are less than or equal to the existing policy.
D A
Match or exceed the existing policy.
Which of the following categories of benefits are not covered by an LTC policy?
A Respite care
B Home care
C Care given in a community setting
D Care given in an acute care unit of a hospital
Care given in an acute care unit of a hospital
An applicant is discussing his options for Medicare supplement coverage with his agent. The applicant is 65 years old and has just enrolled in Medicare Part A and Part B. What is the insurance company obligated to do?
A Exclude pre-existing conditions fro
Offer the supplement policy on a guaranteed issue basis
Making use directly or indirectly of any methods of marketing which fail to disclose in a conspicuous manner that a purpose of the method of marketing is solicitation of insurance and that contract will be made by an insurance agent or insurance company i
Cold lead advertising.
Which of the following is true regarding the regulation of providers?
A Only the Department of Insurance can be the regulator for insurance providers.
B There are no specifications on regulation of providers.
C Only health care service plan providers fall
Providers must be under the jurisdiction of either the Department of Insurance or other governmental agencies.
Basic elements of the outline of coverage include all of the following EXCEPT
A A statement that long-term care is not Medicare supplement insurance.
B Renewal and termination provisions.
C A statement concerning Alzheimer's disease coverage.
D That an "i
That an "inflation guard" is required.
Which of the following is a characteristic of a purchasing group?
A It purchases liability insurance covering all members on a group basis.
B It is considered a self-insured group.
C A purchasing group must be domiciled in California.
D It assumes and spr
It purchases liability insurance covering all members on a group basis.
When an insurer cancels an automobile insurance policy for a reason other than nonpayment of premium, the insurer must meet all of the following requirements EXCEPT
A Inform the policyowner about the automobile liability assigned risk plan.
B Explain the
Offer the insured to renew the policy at a different rate.
A type of policy that is used to provide a specific amount of replacement cost for a given risk after an insured property has been destroyed is called a(n)
A Specific risk policy.
B Valued policy.
C Pro-forma appraisal policy.
D Equitable sum policy.
Valued policy.
California prohibits a risk retention group from engaging in which of the following?
A Contributing to the California Guarantee Association
B Soliciting insurance to a person who is not eligible for membership
C California Joint Underwriters Association
D
All of these
Which of the following information would NOT be included in property insurance policies?
A The insured's address
B A list of policy provisions
C A list of coverages
D The insured's name
The insured's address
Risk retention groups are prohibited from engaging in all of the following types of insurance, EXCEPT
A Health.
B Life.
C Auto.
D Liability.
Liability.
All of the following are examples of insurable interest in property insurance EXCEPT
A Joe who is a partner in a thriving business.
B Harry who is waiting for his distant cousin's beach-front property as part of his inheritance.
C Fred and Ethel's persona
Harry who is waiting for his distant cousin's beach-front property as part of his inheritance.
Which type of policy specifies the value of the insured object in the policy itself?
A Specified
B Limited
C Open
D Valued
Valued
Which of the following was designed to regulate the operation of risk retention groups and purchasing groups in California?
A The California Guarantee Association
B The Federal Risk Retention Association
C Risk Retention Regulation Act
D Federal Liability
Federal Liability Risk Retention Act
In property and casualty insurance, insurable interest is defined as the right of a person or entity to property in that such a loss to that property would cause a direct monetary loss to the person or entity. Which of the following statements is TRUE reg
If the insured has no insurable interest, the contract is void.
Any risk retention group must submit to an examination upon the request of the Commissioner within
A 10 days.
B 30 days.
C 60 days.
D 180 days.
60 days.
If an object's value is not specified until a loss occurs, it is insured under a(n)
A Appraised policy.
B Valued policy.
C Open policy.
D Flexible policy.
Open policy.
A policy that expresses an agreement that the thing insured will be valued at a specified sum is what kind of policy?
A Valued
B Closed
C Open
D Defined
Valued
Bob surrenders his policy. What return of premium will he receive?
A Prorated premium for the insured days in the future that he has already paid for, minus other deductions related to losses
B Nothing
C His last premium payment
D All premiums that he has
Prorated premium for the insured days in the future that he has already paid for, minus other deductions related to losses
What type of policy only establishes the value of an insured object when a loss occurs?
A Valued
B Open
C Flexible
D Latent
Open
When an auto insurance policy is cancelled for nonpayment of premium, how many days' notice must the insurer provide to the policyowner?
A 10 days
B 15 days
C 20 days
D 30 days
10 days
An insurer cancels an insurance policy. Within what period of time must a premium refund be issued?
A Within 10 days
B Within 15 days
C Within 20 days
D Within 25 days
Within 25 days
An unincorporated, nonprofit association representing all insurance companies in the State of California licensed to transact workers compensation insurance is known as
A Rating Bureau of California.
B California Workers Comp Inspection Rating Bureau (WCI
California Workers Comp Inspection Rating Bureau (WCIRB).
A risk retention group must include which of the following words in its name?
A Authorized association
B Underwriters
C Risk retention group
D Limited association
Risk retention group
Removal coverage under a standard fire policy remains in effect for
A 5 days.
B 10 days.
C 15 days.
D 30 days.
5 days.
The rate charged for a Good Driver Discount policy should be at least what percent below the rate the insured would otherwise have been charged for the same coverage?
A 10%
B 15%
C 20%
D 30%
20%
California's Compulsory Financial Responsibility Law requires every driver and every owner of a motor vehicle to maintain financial responsibility (liability coverage) at all times. All of the following are acceptable forms of financial responsibility EXC
A surety bond for $50,000 obtained from a company licensed to do business in California.
Which of the following is NOT true about earthquake coverage?
A Coverage is commonly provided through a federally-funded program.
B Coverage is excluded by most property forms.
C Coverage may be added to property policies by endorsements.
D Coverage may b
Coverage is commonly provided through a federally-funded program.
A state-established program that requires insurers who write property insurance to accept risks in economically depressed areas in the same proportion as their other business bears to the total property insurance market is called the
A Shared and Spread R
Fair Access to Insurance Requirements plan.
California's Compulsory Financial Responsibility Law requires every driver and every owner of a motor vehicle to maintain financial responsibility (liability coverage) at all times. If you don't have acceptable financial responsibility and have an acciden
Four years.
Which amount is figured by subtracting depreciation from the replacement cost of a covered item?
A Actual cash value
B Interest of the insured
C Repair cost
D Pro rata percentage
Actual cash value
All of the following are TRUE statements regarding the requirements of an insurer to offer earth movement coverage in California EXCEPT
A Only authorized agents which hold an "earth movement certificate" through the department of insurance are able to mar
Only authorized agents which hold an "earth movement certificate" through the department of insurance are able to market residential property insurance which provides coverage for earth movement.
Jack and Jill each own a 50% interest in a dwelling that is insured under a standard fire policy issued to Jill to cover her interest in the structure. The amount of insurance is $40,000. Following a $10,000 fire loss to the structure, Jill will receive
A
$5,000.
All of the following are eligibility requirements for the FAIR plan EXCEPT
A The property must be located in a riot-prone area.
B It must be an insurable risk.
C The insured must have been unable to secure coverage in the normal market.
D The property mus
The property must be located in a riot-prone area.
Which of the following is NOT a requirement for purchasing a Good Driver Discount policy?
A A person has no more than one dismissal of charges in the last 3 years that would have resulted in the imposition of more than one violation point count.
B A perso
A person must have been licensed to drive a motor vehicle for the previous 5 years.
The Standard Fire Policy would provide coverage in which of these cases?
A Fire
B Acts of war
C Theft
D Insured's neglect
Fire
The standard fire policy specifically excludes losses which occur when a building is vacant or unoccupied for
A 30 days or more.
B 60 days or more.
C 90 days or more.
D 180 days or more.
60 days or more.
Even though the Standard Fire Policy is a named peril contract, under which of the following circumstances would the policy provide "all risk of loss" coverage on insured property?
A Never
B Always
C When the loss is classified as an "act of God"
D When t
When the loss is to insured property that has to be removed because of endangerment by a peril insured against under the policy
Which of the following would be considered the most important factor in determining the rates and premiums for an applicant for an auto policy?
A The number of miles driven annually
B The number of years of driving experience
C The applicant's zipcode
D T
The applicant's driving record
The Standard Fire Policy is a named perils contract, which means
A It covers losses for any peril.
B It covers the peril in its name under any circumstances.
C All perils covered must be added through endorsements.
D Only perils listed in the policy are c
Only perils listed in the policy are covered.
Which of the following is NOT one of the 3 factors set by state law for determining rates and premiums on automobile insurance policies?
A The type and model of vehicle.
B The insured's driving safety record.
C The number of miles he or she drives annuall
The type and model of vehicle.
The purpose of the California residential property disclosure statement includes all of the following EXCEPT
A Becomes a part of your residential property insurance policy.
B Describes the principal forms of insurance coverage in California for residentia
Becomes a part of your residential property insurance policy.
Which of the following terms best describes a trembling or shaking of the earth that is volcanic or seismic in origin?
A Earthquake
B Tectonic shifting
C Tsunami
D Geotectonic inversion
Earthquake
All of the following are excluded from coverage under a standard fire policy EXCEPT
A Manuscripts and bullion.
B Deeds and bills.
C Stocks and bonds.
D Money.
Manuscripts and bullion.
The standard fire policy only covers those perils specified in the policy for that reason it is known as a(n):
A Open peril policy.
B Broad peril policy.
C All-inclusive policy.
D Named peril policy.
Named peril policy.
Joe lit a fire in his fireplace and left it unattended. He had failed to check to see if the flue was open, so the smoke entered the house and discolored the walls, ceiling, and drapes. Joe also had to hire a company to remove the smoke odor. The total ex
Nothing
An insurer has the right of cancellation/nonrenewal of an existing insurance policy for all of the following EXCEPT
A Arbitrary exclusion from coverage due to age of driver and type of vehicle to be insured.
B Failure to make premium payments.
C Fraudulen
Arbitrary exclusion from coverage due to age of driver and type of vehicle to be insured.
Any person who claims that he or she meets the criteria based on a driver's license and driving experience acquired anywhere other than in the United States or Canada is presumed to be qualified to purchase a Good Driver Discount policy if that person has
18 months.
All of the following statements are TRUE regarding the California Earthquake Authority (CEA) EXCEPT
AThe CEA's policies can be marketed by the participating insurers that write the underlying policy of residential property insurance.
B The CEA must be adm
The CEA is authorized to transact insurance to sell residential earthquake and any other insurance coverage as necessary.
During a house fire, an insured moves an antique chair listed on the policy to a storage unit. In the Standard Fire Policy, how many days will the antique chair be covered at the new location?
A 3 days
B 5 days
C 15 days
D 30 days
5 days
Bob works as a forklift driver in a manufacturing plant. When he is at work, he is covered by workers compensation insurance. His employer has also included a major medical plan as part of his benefit package, so Bob is also covered by insurance outside o
24-hour coverage
What is the purpose of California's State Compensation Insurance Fund (SCIF)?
A To make workers compensation insurance available, especially to smaller companies with more limited payrolls
B To provide income replacement for California residents who are t
To make workers compensation insurance available, especially to smaller companies with more limited payrolls
All of the following may be covered under the Employers Liability policy EXCEPT
A Employees eligible for 24-hour coverage.
B Exempt employees.
C Consequential bodily injuries to a spouse of an employee.
D Losses that occur as a result of dual capacity rel
Employees eligible for 24-hour coverage.
An employer is on the verge of bankruptcy. To save money, the employer decides to cancel its workers compensation plan. Which of the following is true?
A The business is not required to maintain workers compensation insurance, provided that the employees
This business may be closed under a cease and desist order issued by the Department of Industrial Relations.
Which of the following selections correctly describes the California State Compensation Insurance Fund?
A A state entity that exists to pay compensation if an employee is injured while working for an employer who is uninsured, and the employer fails to pa
A state entity that exists solely to transact Workers Compensation Insurance on a nonprofit basis
Which of the following is not a factor in determining rates charged by the California State Compensation Insurance Fund for insurance issued by it?
A The manner in which work is conducted.
B A reasonable regard for the accident experience and history of e
The extent to which the employees in a particular establishment have or have not persons dependent on them for support.
Which of the following best describes the term "24-hour coverage" in relation to workers compensation insurance?
A This represents the idea that workers compensation coverage is not limited to certain hours.
B This is a special type of workers compensatio
This represents a two-pronged coverage: workers compensation during work hours and regular medical coverage outside of work.
24-hour coverage" includes health insurance and
A Whole life insurance.
B Term life insurance.
C Workers compensation insurance.
D Long-term care insurance.
Workers compensation insurance.
Obtaining information under false pretenses is a violation. What would be the maximum fine for any agent found guilty?
A $10,000
B $5,000
C $30,000
D $20,000
$10,000
If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered to be
A Qualified.
B Approved.
C Authorized.
D Certified.
Authorized.
Which type of life insurance is usually written for small amounts and requires frequent premiums that are collected by the agent?
A Credit life insurance
B Group life insurance
C Key executive life insurance
D Industrial life insurance
Industrial life insurance
What is reinsurance?
A An agreement between a ceding insurer an assuming insurer
B An agreement between an originating insurer and a ceding insurer
C An agreement between a domestic insurer and a foreign insurer
D An agreement between an insurer and an in
An agreement between a ceding insurer an assuming insurer
An insurance agent may NOT transact
A Auto insurance.
B Workers compensation insurance.
C Property and casualty insurance.
D Life insurance.
Life insurance.
According to the California Law, if an insurer includes a fraudulent claim clause in the contract regarding the legal ramifications of a false claim, the clause must be preceded by which of the following statements?
A "For your protection, California Law
For your protection, California Law requires the following to appear on this form.
Which of the following insurers are owned by stockholders?
A Stock
B Mutual
C Reciprocal
D Fraternal
Stock
The type of insurance that guarantees the behavior of persons and the performance of contracts other than insurance policies is known as
A Behavioral Contract insurance.
B Surety insurance.
C Contract insurance.
D Performance Guaranteed insurance.
Surety insurance.
In order for Wild Life of Havana to do business in this state, it must apply for and obtain
A Four corporate character references.
B A certificate of authority.
C A state proclamation.
D A local waiver.
A certificate of authority.
Which type of insurance includes the assumption of a contractual obligation to reimburse the insured against all or a portion of his fees, costs, and expenses related to or arising out of services performed by or under the supervision of an attorney who i
Legal insurance
The agent's authority to transact insurance business for an insurer is effective
A After the mandatory 60-day waiting period for all new agency contracts has expired.
B Once the Commissioner has given approval and the agency receives notice of such approv
As of the date that the notice of appointment is signed.
An individual wants to transact business as a life agent in this state. In addition to obtaining a life agent license, what else must the applicant have?
A Insurable interest
B A letter of recommendation from the Commissioner
C Appointment
D Certificate o
Appointment
Which of the following best describes an insurance company that has been formed under the laws of this state?
A Sovereign
B Alien
C Foreign
D Domestic
Domestic
Which type of insurance guarantees or indemnifies owners of real or personal property or the holders of liens or other interested parties against loss or damage suffered to said property?
A Commercial Property insurance
B Surety insurance
C Contract insur
Title insurance
If an insured intentionally failed to communicate information related to an implied warranty, which of the following may occur?
A The insurer will cancel the policy and retain the premiums paid.
B The insurer may rescind the contract.
C The insured will b
The insurer may rescind the contract.
An agent is a legal person who acts on behalf of
A The applicant.
B The beneficiary.
C Himself/herself.
D The principal.
The principal.
What does the Commissioner use to decide if a rate for an insurance policy is adequate and fair?
A If the rate charged would be able to pay off a claim on the policy within at least 2 years
B The rate and how it compares to an insurance company's investme
The rate and how it compares to an insurance company's investment income
Which of the following actions would NOT be considered a form of "adverse underwriting decisions" for a policy involving individually underwritten coverage?
A An insurer giving an insured a "preferred" rating due to health and lifestyle conditions
B A dec
An insurer giving an insured a "preferred" rating due to health and lifestyle conditions
Fraudulent activities in health care are estimated in billions of dollars annually. This results in
A More people going to jail.
B Fewer insurance policies being written.
C Stricter underwriting requirements.
D Increase in health care costs for everyone.
Increase in health care costs for everyone.
An insured noticed that his policy stated that he "shall" keep all flammable liquids at least ten feet from an ignition source and "may" consider storing flammable liquids in another location. Based on the policy language, where must the insured keep flam
At least 10 feet away
An insurer that holds a Certificate of Authority in the state in which it transacts business is considered a/an
A Certified insurer.
B Self-insurer.
C Authorized insurer.
D Local insurer.
Authorized insurer.
For the purpose of a contract, which of the following could be considered a "person"?
A An association
B A business trust
C A limited liability corporation
D Any of these would qualify as a person
Any of these would qualify as a person
An insurance agent is planning to give out his business cards to prospective clients to solicit some insurance business. On the business card, the agent's name appears in font size 16, the phone number is in font size 14, and the business address is in fo
10
A France-based insurer would like to do business in California. What document must it first receive?
A International Certificate of Incorporation
B Certificate of Authority
C Transcontinental Commerce Clearance
D Alien Insurer License
Certificate of Authority
Home Service insurance is a variation of which type of life policies?
A Homeowners insurance
B Industrial Life insurance
C Credit insurance
D Whole Life insurance
Industrial Life insurance
The Commissioner has the right and responsibility to investigate all applications for licensure to assure that
A Applicants have a valid driver's license in the state.
B Applicants have attended a formal course of sales skills instruction.
C Applicants me
Applicants meet all prerequisites for their selected license.
What document must an insurer receive in order to transact insurance in this state?
A Admitted insurer license
B Guarantee Association clearance
C Certificate of authority
D Commissioner's certificate
Certificate of authority
If a licensee would like to terminate his license and has it in his possession, what would he have to do?
A Send the license to the Commissioner for termination
B Write the Commissioner and request a hearing for license termination
C Request that his empl
Send the license to the Commissioner for termination
What certification must an insurer receive before it can transact insurance in California?
A Solvency Clearance
B Guarantee Association Clearance
C NAIC Charter Certificate
D Certificate of Authority
Certificate of Authority
The California Insurance Code is
A Statutes established by the State Legislature.
B Rules established by the Department of Insurance.
C A code of ethics.
D Regulations established by the Insurance Commissioner.
Statutes established by the State Legislature.
After a cease and desist order is final, if the Commissioner finds that the person has continued to willfully violate the insurance code, what penalty may be applicable in addition to initial penalties?
A Minimum $25,000
B Maximum $55,000
C Minimum $10,00
Maximum $55,000
ABC Insurance Company wishes to begin transacting business in Louisiana. Before it can do so, it must do which of the following?
A Receive a letter of clearance from ABC's home state
B Obtain approval of each of its corporate officers and executives
C Obt
Obtain a certificate of authority
Within how many days after the application was submitted must an insurer file a notice of agent appointment with the Commissioner if the insurer issues a policy written by the agent who is not specifically appointed by that insurer?
A 10 days
B 14 days
C
14 days
Which of the following is NOT a typical characteristic of an ERRORS & OMISSIONS policy?
A Coverage can be written on a "limit per claim" basis or a "limit for all claims during the policy period" basis.
B Policies have numerous exclusions to limit or avoi
Policies have numerous exclusions to limit or avoid fraudulent claims.
An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the
Mutual
The insurance solicitor is only found in which field of insurance?
A Disability
B Fire and Casualty
C Mortgage Guaranty
D Life & Health
Fire and Casualty
In a life settlement contract, whom does the life settlement broker represent?
A The insurer
B The beneficiary
C The life settlement intermediary
D The owner
The owner
All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT
A An offer of employment.
B Stocks, securities, or bonds.
C An offer to share in commissions generated by the sale.
D Dividends from a mutual insurer
Dividends from a mutual insurer.
All of the following statements are true regarding an application by an insurer for a rate change EXCEPT
A The application will be deemed approved 60 days after public notice unless the proposed adjustment exceeds 10% for personal lines or 25% for commerc
The application will be deemed approved 60 days after public notice unless the proposed adjustment exceeds 10% for personal lines or 25% for commercial lines.
An insured who signs a fraudulent claim form may be guilty of
A Misrepresentation.
B Rebating.
C Perjury.
D Misdemeanor.
Perjury.
Which of the following statements is the most accurate concerning the Commissioner's term of office?
A Serves one year terms, with no limits
B Serves 4 year terms, limited to not more than two
C Serves 4 year terms with no limits
D Serves until removed by
Serves 4 year terms, limited to not more than two
For senior agents, the requirement for continuing education for California Partnership for long-term care policies is
A 4 hours each year.
B 8 hours each reporting period.
C 8 hours each year.
D 4 hours each reporting period.
8 hours each reporting period.
When would the insurer be allowed to use the information obtained through a pretext interview?
A In the investigation of a claim suspected as fraudulent
B Any time the policy is being replaced
C Under no circumstances
D If it was obtained during underwrit
In the investigation of a claim suspected as fraudulent
An insurance partnership can continue with new partners as long as
A The new partner has applied with the Department.
B The new partner was named by any departing partner.
C All partners making up the new partnership petition the Commissioner.
D The partn
The partnership files notice with the Department within 30 days and the change is approved.
Intentionally misrepresenting or concealing a material fact to induce an insurance company to make a contract is known as
A Concealment.
B Fraud.
C Avoidance.
D Misrepresentation.
Concealment.
Under the file-and-use law, an insurer
A Begins marketing a plan before submitting the rate plan to the Commissioner.
B Markets a plan without submitting a rate plan.
C Submits a rate plan to the Commissioner and immediately begins marketing the plan.
D W
Submits a rate plan to the Commissioner and immediately begins marketing the plan.
An agent has completed 30 hours of continuing education by the end of a license period instead of the required 24 hours. What will happen to the 6 hours in excess?
A They will be carried over into the next licensing period.
B They will be credited toward
They will be carried over into the next licensing period.
When an agent does not hold any active appointments with insurers, what happens to the agent's license?
A It becomes inactive.
B It must be returned to the Department of Insurance.
C It must be renewed with a new appointment.
D It expires.
It becomes inactive.
The rating method which allows insurers to compete with one another by quickly changing rates without review by the state regulators is known as
A Prior Approval.
B Open Competition.
C Use and File.
D File and Use.
Open Competition.
Which of the following terms means a result of calculation based on the average number of months the insured is projected to live due to medical history and mortality factors?
A Morbidity
B Life expectancy
C Mortality rate
D Risk exposure
Life expectancy
Which of the following entities is not an insurer but an organization formed to provide insurance benefits for members of an affiliated lodge or religious organization?
A Stock company
B Reciprocal association
C Fraternal benefit society
D Mutual company
Fraternal benefit society
Which of the following is NOT a license in the state of California?
A Insurance agent
B Life broker
C Life-only agent
D Solicitor
Life broker
The Commissioner has the authority to issue a cease and desist order against any person acting as an insurance agent or broker without being licensed. The Commissioner may also impose a penalty for each day the order is violated in what amount?
A $5,000
B
$5,000
What is the purpose of errors and omissions insurance?
A Protect insureds against misrepresentation in declarations
B Protect insureds against a claim loss
C Protect agents against charges that they didn't properly serve a client
D Protect agents against
Protect agents against charges that they didn't properly serve a client
Which of the following is NOT true of life settlements?
A The seller must be terminally ill.
B They could be used for a key person coverage.
C They could be sold for an amount greater than the current cash value.
D They involve insurance policies with lar
The seller must be terminally ill.
Under California law, an insurance solicitor is a natural person employed to aid a(n):
A Insurance adjuster.
B Life agent.
C Insurance administrator.
D Insurance agent or broker.
Insurance agent or broker.
De-mutualization happens when
A A mutual insurer becomes a stock company.
B A reinsurer ends a contract with a primary insurer.
C A stock insurer becomes a mutual company.
D A primary insurer ends a contract with a reinsurer.
A mutual insurer becomes a stock company.
An agent whose license is due to expire may submit an application for renewal and pay applicable fees and continue operating under the expired license for a period of
A 10 days.
B 60 days.
C 14 days.
D 30 days.
60 days.
All of the following may recommend life insurance contracts for their prospects, clients, and proposed insureds EXCEPT
A Brokers.
B Life solicitors.
C Life and Disability Analyst.
D Life agents.
Life solicitors.
On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are
A Guaranteed.
B Not taxable since the IRS treats them as a return of a portion of the premium paid.
C Paid at a fixed rate every year.
D Taxable
Not taxable since the IRS treats them as a return of a portion of the premium paid.
Which of the following statements is NOT true regarding an insurance solicitor in California?
A A solicitor aids in transacting insurance other than life.
B A solicitor must be a natural person.
C A solicitor may act as an insurance agent at the same time
A solicitor may act as an insurance agent at the same time.
Who might receive dividends from a mutual insurer?
A Stockholders
B Agents
C Policyholders
D Subscribers
Policyholders
What is the major difference between a stock company and a mutual company?
A Amount of death benefit
B Number of producers
C Types of whole life policies
D Ownership
Ownership
Within 30 business days from the date of receipt of a written request from an individual to correct, amend or delete any recorded personal information, the agent or company must meet all of the following requirements EXCEPT
A Provide the corrected informa
Provide the corrected information to any person who in the last 5 years received such information
According to Insurance Code, it is an unfair or deceptive act in the business of insurance for an insurer to advertise insurance that it does not market. Such action is a violation of the code and will result in a fine up to
A $15,000.
B $5,000.
C $7,000
$10,000.
According to the California Insurance Code, every applicant must notify the Commissioner in writing of any change of address
A Immediately.
B Within 60 days.
C Within 10 days.
D Within 30 days.
Immediately.
Which of the following provisions requires an insurer to document all correspondence with an insured?
A Entire contract
B Errors and omissions
C Unfair trade practices
D Claims settlement
Errors and omissions
Anyone convicted of committing an insurance fraud may be fined up to the greater amount of double the value of the fraud or
A $50,000.
B $75,000.
C $100,000.
D $150,000.
$150,000.
In California, a person applying for an insurance license is considered to have been convicted of a misdemeanor or felony if the person entered all of the following pleas EXCEPT
A Guilty.
B Nolo contendere.
C No contest.
D Innocent.
Innocent.
Which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance?
A Undercutting
B Twisting
C Slandering
D Defamation
Defamation
The Commissioner of Insurance supervises and regulates the insurance affairs in the State of California, and is chosen by
A The State Senate.
B The people.
C Admitted insurers.
D The Governor.
The people.
The Commissioner MAY deny an application for license for any applicant who
A Has been convicted of a felony.
B Is not qualified to accomplish the duties to be performed.
C Does not have a good business reputation.
D Any of these
Any of these
Acting as an agent for a nonadmitted insurer (unless a surplus line broker) is considered a/an
A Unfair trade practice.
B Misdemeanor.
C Felony.
D Class A violation.
Misdemeanor.
According to California Insurance Code, the duties and requirements of solicitor, agent and broker are all distinct from one another. Which of the following is TRUE?
A A person acting as a solicitor in the same transaction can act as both the solicitor an
One or more fire and casualty broker-agents can employ a solicitor simultaneously.
Which of the following terms is associated with a mutual insurer becoming a stock insurer?
A Reinsurance
B Interpolation
C Retrocession
D De-mutualization
De-mutualization
Who is responsible for notifying the Commissioner of a licensee's change of address?
A The licensee's managing general agent
B The appointing insurer
C The licensee
D The agency for which the licensee works
The licensee
Which of the following is an example of a producer being involved in an unfair trade practice of rebating?
A Telling a client that his first premium will be waived if he purchases the insurance policy today
B Inducing the insured to drop a policy in favor
Telling a client that his first premium will be waived if he purchases the insurance policy today
ABC Insurance has determined that the premiums that it currently charges for its Safe Driver II plan need to be increased. ABC's underwriters have reevaluated the rate plan and sent the new rate schedule to each managing general agent for distribution to
Use and file rate laws.
An insurance agent who diverts premiums held in a trust capacity for his or her own use
A Must report the premium as additional income to the insurer.
B Will be fined $250 and required to attend a 3-hour ethics review course.
C Must enter the transaction
Will be considered guilty of theft and be punished to the extent of the law.
A participating insurance policy may do which of the following?
A Require 80% participation
B Pay dividends to the policyowner
C Provide group coverage
D Pay dividends to the stockholder
Pay dividends to the policyowner
A life agent may use the name of corporation or association on any stationery or advertisement to identify the relationship in all of the following ways EXCEPT
A "A stockholder of ____________"
B "Placing business through _________"
C "Representing ______
Contracted by _______________
Which of the following is NOT correct regarding false statements by a person engaged in the business of insurance?
A Oral statements cannot be considered fraud.
B Omissions of material fact on insurance application are fraud.
C False statements about fina
Oral statements cannot be considered fraud.
Which of the following best defines the owner in a life settlement contract?
A The insured under the contract
B A qualified institutional buyer
C An insurance provider
D The owner of the life insurance policy
The owner of the life insurance policy
A person applying for an insurance license in California was previously found guilty in a trial in which he entered a plea of "nolo contedere." What does "nolo contendere" mean?
A Without reason
B No contest
C Guilty, but with justification
D Not guilty b
No contest
An insurance policy that protects an insurance agent from financial losses that might be incurred if an insured files a lawsuit as a result of that agent either giving incorrect advice or not informing the client of important information is called
A Fiduc
Errors & Omissions Coverage.
It would be considered unfair discrimination to ask an insurance applicant about which of the following and then use that information as a rating factor to determine insurability?
A Age
B Gender
C Address
D Sexual orientation
Sexual orientation
An insurance agent, who has been in a sales slump for the last 6 months, has decided that she will offer complimentary health insurance for the first year on every life insurance policy she sells for the next 12 months. This practice is an example of
A Fr
A violation of the Code.
The Commissioner may suspend an applicant's license without a hearing if the applicant has had another professional license suspended or revoked within what time period?
A 6 months
B 12 months
C 5 years
D 7 years
5 years
What is the main role of a solicitor of insurance?
A To serve as the agency administrator
B To aid insurance agents in transacting insurance
C To legally represent the insurance company
D To manage general agents
To aid insurance agents in transacting insurance
According to the California Insurance Code, all of the following are general powers and duties of the Commissioner of insurance EXCEPT
A To establish a program to investigate consumer complaints against insurers.
B To make public service announcements to
To delegate the power to approve a settlement.
Which of the following is NOT considered personally identifiable information?
A Government records
B Loan history
C Financial information collected through web servers
D Consumer reports
Government records
How many names (real or fictitious) may insurers have?
A 1
B 2
C 3
D Unlimited number
2
Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?
A False advertising
B Rebating
C Twisting
D Switching
Twisting
All of the following would be considered insolvent insurers EXCEPT
A A company with an impairment of minimum paid-in capital.
B A company that reinsurers outstanding risks.
C A company that paid out all of its liabilities but doesn't have additional asset
A company that reinsurers outstanding risks.
How many hours of continuing education in ethics must agents complete each licensing term?
A 3
B 5
C 10
D 12
3
An insurance company that is NOT authorized to do business in the State of California is known as a(n)
A Nonadmitted company.
B Surplus company.
C Foreign company.
D Alien company.
Nonadmitted company.
Any person who knowingly and willfully obtains information about an individual from an insurance company, agent or organization supporting insurance under false pretenses shall be fined
A Not more than $20,000, imprisonment not to exceed one year or both.
Not more than $10,000, imprisonment not to exceed one year or both.
Records required to be maintained or to be made available by an insurer include all of the following EXCEPT
A A copy of a written comparison of benefits, limitation, exclusions and costs.
B A copy of the outline of coverage or disclosure statement as requ
Any printed materials generally used by the insurer, either directly or indirectly by its agents.
Any person or governmental entity that provides information about an individual to an agent, insurance company, or insurance-support organization is known as a(n)
A Affiliate.
B Underwriting source.
C Investigative source.
D Institutional source.
Institutional source.
Which of the following would be considered a managing general agent?
A An attorney-in-fact acting on behalf of the subscribers of a reciprocal insurer
B A corporation that negotiates ceding reinsurance contracts on behalf of an insurer
C A manager of the
A corporation that negotiates ceding reinsurance contracts on behalf of an insurer
Al tells a client that she is guaranteed to be approved for LTC insurance if she pays the full year's premium at the time of application. The client applies for LTC insurance and writes a check for the annual premium to Al's agency. Al issues a Binder of
Fraud.
The Commissioner may, without hearing, suspend an agent's license for all of the following reasons EXCEPT
A Denial of a previous application for another professional license.
B Revocation of another professional license.
C Failure to properly identify the
Failure to properly identify the insured true risk.
An insurer publishes intimidating brochures that portray the insurer's competition as financially and professionally unstable. Which of the following best describes this act?
A Legal, provided that the information can be verified
B Illegal until endorsed
Illegal under any circumstances
Of the following, which is NOT considered a general duty or power of State Insurance Commissioners?
A Conduct investigations and examinations of companies and individuals who conduct the business of insurance.
B Issue, suspend, and revoke insurance licens
Develop and implement laws to regulate the business of insurance.
An insured files a fraudulent claim for $100,000. The maximum fine that the insured could be ordered to pay if convicted of insurance fraud is
A $50,000.
B $100,000.
C $150,000.
D $200,000.
$200,000.
The Code defines the term "transact" as all of the following EXCEPT
A Solicitation of insurance.
B Negotiations prior to a contract of insurance.
C Executing a contract of insurance.
D Analyzing a contract of insurance.
Analyzing a contract of insurance.
In California, which system is used to approve or disapprove rate filings?
A Prior
B Open
C Mandatory
D File and Use
Prior
What is the purpose of the California laws regulating production agencies?
A They are mainly concerned with standardizing policies.
B To provide protection for the clients by requiring producers to maintain professional standards of conduct
C Avoid unnece
To provide protection for the clients by requiring producers to maintain professional standards of conduct
To make sure that an agent's license stays active, the agent of an insurer must see that all of the following are done EXCEPT
A File a surety bond with the Commissioner.
B Be legally appointed with the insurer.
C An appointment notice has been executed by
File a surety bond with the Commissioner.
In a conservation or liquidation effort, what powers does the Commissioner have?
A The Commissioner has the power to sue the company's officers.
B The Commissioner has the power to sell the company's assets until all of its creditors are paid.
C The Commi
The Commissioner has all of these powers.
If a licensee wants to terminate her agent's license but it is in the possession of her employer, which of the following is true?
A She must request her employer to send her license to the Commissioner.
B She will not be able to terminate the license unti
She can terminate the license by sending the Commissioner a written notice.
Which of the following is true regarding free insurance issued in this state?
A It is allowed as a rider.
B It is illegal.
C It is illegal with the exception of health insurance.
D It is allowed if issued by a government insurer.
It is illegal.
Under the prior approval plan, insurers file proposed policy rate information with
A The Department of Insurance.
B Their clients.
C The Governor.
D Their underwriters.
The Department of Insurance.
What is the minimum fine for acting as an agent for a nonadmitted insurer in the transaction of insurance business?
A $100
B $500
C $1,000
D $5,000
$500
Forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as
A Defamation.
B Coercion.
C Rebating.
D Misleading advertising.
Coercion.
An insurer devises an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes this practice?
A Defamation
B Illegal
C A legal advertising strategy
D Unfair Discrimination
Illegal
If an insurer violates the California Financial Information Privacy Act by releasing an insured's financial records without consent, the insurer may be penalized with a fine up to
A $600.
B $1,600.
C $2,500.
D $4,800.
$2,500.
Records required to be maintained or to be made available by an insurer include all of the following EXCEPT
A Any printed materials generally used by the insurer, either directly or indirectly by its agents.
B The original application for each policy sold
Any printed materials generally used by the insurer, either directly or indirectly by its agents.
Which of the following is NOT required to be present on a licensed insurance broker's website?
A The broker's principal place of business.
B The broker's residential address.
C The broker's name.
D The broker's license number.
The broker's residential address.
An applicant has submitted an application for a Life agent license in the state of California. Five years ago, the applicant was charged with, but not convicted of, a felony in another state. The California Commissioner could deny the license on the groun
There are no grounds for which license could be denied based on the information provided.
The Commissioner performs all of the duties dictated by the CIC and
A May be appointed with only ONE insurer during his/her term to avoid conflicts of interest.
B Makes any changes to the Code that he/she deems necessary from time to time.
C Acts as the e
Enforces the execution of all provisions and laws.
An organization ceases to exist as an entity eligible to hold a license for all of the following reasons EXCEPT
A Upon the termination of an association.
B Upon dissolution of a corporation.
C Upon continuance of only one person from the previous co-partn
Upon continuance of only one person from the previous co-partnership to the new co-partnership.
An agent's role to act in the insured's best interest, based on the good faith and trust placed on the agent by the public is known as
A The fiduciary duty.
B The prudent man rule.
C The agency agreement.
D The insurer agreement.
The fiduciary duty.
An agent decides that he no longer wishes to be licensed in this state. What should the agent do with his license?
A Discard it
B Return it to the Commissioner
C Return it to the insurer when the agent's appointment is terminated
D Keep the license in cas
Return it to the Commissioner
What happens to a corporation's license if the corporation is dissolved?
A It expires after 2 years.
B It terminates.
C It remains in force for 60 days.
D It becomes inactive.
It terminates.
Circulating deceptive sales material to the public is what type of Unfair Trade Practice?
A False advertising
B Defamation
C Coercion
D Misrepresentation
False advertising
The set of regulations issued by the California Insurance Commissioner that identifies the standards for the insurance code and how it is to be administered is
A California Advisory Administrative Code.
B California Advisory Code.
C California Administrat
California Administrative Code of Regulations.
An insurer submits a rate plan to the Commissioner's office on the first of the month and immediately implements this new rate plan the next day prior to receiving the Commissioner's approval. This type of rate plan is known as
A Prior Approval.
B Use and
File and Use.
Which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices?
A Exaggerating the benefits provided in the policy
B Stating that the competitors will arbitrarily increase their premiums each year
C Making comparison
Making comparisons between different policies
Which of the following will NOT be considered unfair discrimination by insurers?
A Discriminating in benefits and coverages based on the insured's habits and lifestyle
B Charging applicants with similar health histories different premiums based on their e
Discriminating in benefits and coverages based on the insured's habits and lifestyle
An agent may continue operating under an expired license for a period of 60 days provided that the agent has
A Notified the insurer of his plans to renew the license.
B Filed an application for renewal and paid the renewal fee on or before the expiration
Filed an application for renewal and paid the renewal fee on or before the expiration date.
When a producer was reviewing a potential customer's coverage written by another company, the producer made several remarks that were maliciously critical of that other insurer. The producer could be found guilty of
A Discrimination.
B Nothing, unless the
Defamation.
All records relating to insurance application and delivery must be maintained by the insurer for a period of
A 5 years after policy delivery or initial application if no policy was issued.
B 3 years after policy delivery or 3 years after initial applicati
5 years after policy delivery or initial application if no policy was issued.
On all printed documents placed before the public, what size print should be used for the agent's license number?
A There are no size specifications on printing license number on documents
B The same size print as the name of the company the agent is empl
The same size print as the agent's address or telephone number
The Gramm-Leach-Bliley Act was passed to
A Allow insurance companies access to medical information for underwriting purposes.
B Protect private customer information filed with a financial institution.
C Define insurance as interstate commerce.
D Allow con
Protect private customer information filed with a financial institution.
When the California Insurance Code needs to be changed, the legislature must design and pass a bill. Once the bill is passed, it is presented to the Governor and becomes law if not returned to the legislature within what time frame?
A A period of 30 days
A specified period of 12-30 days
All of the following are true regarding rebates EXCEPT
A Rebates are allowed if it's in the best interest of the client.
B Rebates are only allowed if specifically stated in the policy.
C Rebating can be anything of economic value, given as an inducement
Rebates are allowed if it's in the best interest of the client.
According to the Agency Name/Use of Name provision of the California Insurance Code, which of the following names for an insurance producer may be approved for use?
A ABC Insurance Services
B ABC Insurance Company
C ABC Insurer
D ABC Underwriter
ABC Insurance Services
What are the consequences of a failure to comply with the Commissioner's office while it is executing a seizure order?
A It is a misdemeanor punishable by a fine of $1,000, one-year imprisonment, or both.
B It may become grounds for license revocation and
It is a misdemeanor punishable by a fine of $1,000, one-year imprisonment, or both.
Which of the following is NOT true regarding fiduciary capacity of managing general agents (MGAs)?
A They can have an appointment with only one admitted insurer in this state.
B They can appoint and supervise local agents.
C They can accept and decline ri
They can have an appointment with only one admitted insurer in this state.
On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. The company is guilty of
A Rebating.
B Misrepresentation.
C Concealment.
D Unfair claim practice.
Misrepresentation.
An agent offers his client free tickets to a sporting event in exchange for the purchase of an insurance policy. The agent is guilty of
A Rebating.
B Coercion.
C Twisting.
D Controlled business.
Rebating.
An insurance agent collected policy premiums from his clients and before remitting the funds to the insurer, borrowed some for personal use. This act would be legally considered
A Fraud.
B Rebating.
C Misappropriation of funds.
D Theft.
Theft.
According to California Insurance Code, all licensees must prominently display their individual license numbers on all of the following EXCEPT
A Printed advertisements.
B Business cards.
C Motor club advertisements.
D Marketing materials.
Motor club advertisements.
Martha claims to have injured her back at work. She tells the doctor that she cannot bend, lift, or even sit comfortably without great pain. Based on Martha's statements, the doctor certifies her disability and she begins to receive disability benefits fr
Insurance fraud.
When is an insurance license considered inactive?
A When it's a temporary license
B When no company appointment is in effect for the license
C When the agent is not conducting business with the general public
D When renewal fees are not paid
When no company appointment is in effect for the license
Any person who transacts insurance without a license
A May be guilty of a misdemeanor.
B May do so as long as he/she does not get a commission.
C Is called a Life Solicitor.
D Is guilty of twisting, a misrepresentation.
May be guilty of a misdemeanor.
An organization ceases to exist as an entity eligible to hold a license for all of the following reasons EXCEPT
A Upon continuance of only one person from the previous co-partnership to the new co-partnership.
B Upon dissolution of a co-partnership or upo
Upon continuance of only one person from the previous co-partnership to the new co-partnership.
Which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices?
A Making comparisons between different policies
B Stating that the insurance policy is a share of stock
C Exaggerating the benefits provided in the poli
Making comparisons between different policies
If any individual submits a written request to an insurance company requesting access to his/her own recorded personal information, all of the following requirements are true EXCEPT
A The company will provide the individual with a summary of the procedure
The company will forward all necessary correspondence within 60 business days from the date a request is received.
In which of the following situations is it legal to limit coverage based on marital status?
A Legal separation during the application process
B Divorce within the last six months of applying for insurance
C It is never legal to limit coverage based on mar
It is never legal to limit coverage based on marital status.
Which of the following best describes the unfair trade practice of defamation?
A Refusing to deal with other insurers
B Making derogatory oral statements about another insurer's financial condition
C Assuming the name and identity of another person
D Issu
Making derogatory oral statements about another insurer's financial condition
An insurance agent explains to his client the difference between two disability income insurance policies and then offers to fill out an application with the client's personal information and history. Upon completion of the application, the agent informs
An insurance broker
Two individuals are in the same risk and age class; yet, they are charged different rates for their insurance policies due to an insignificant factor. What is this called?
A Adverse selection
B Discrimination
C Law of large numbers
D Misrepresentation
Discrimination
All of the following would be considered rebating EXCEPT
A An agent offers the use of his lake house to a client as an inducement to buy an insurance policy from him.
B An agent offers to share his commission with a policyholder.
C An agent offers tickets
An agent misrepresents policy benefits to convince a policyowner to replace policies.
The continuing education requirement for the California Partnership for Long-Term Care policies
A Does not apply to agents who hold a life license.
B Only needs to be completed if an actual sale occurs during that licensing period.
C Must be completed in
Is part of an agent's regular continuing education requirements.
All of the following actions can be described as twisting EXCEPT
A Misrepresenting the terms and conditions of the existing policy to make the new one more attractive
B Embellishing the terms of the proposed policy in order to convince the insured to swit
Explaining to client the advantages of permanent insurance over term and suggesting changing policies
Which of the following best describes a misrepresentation?
A Making a deceptive or untrue statement about a person engaged in the insurance business
B Making a maliciously critical statement that is intended to injure another person
C Discriminating among
Issuing sales material with exaggerated statements about policy benefits
A man has HIV and was hospitalized for several weeks. His insurance company has delayed paying his claim for 120 days, saying that he is not covered due to a pre-existing condition exclusion in his policy. The insurance company is guilty of which of the f
Unfair claims settlement practice
All of the following are considered unfair trade practices in the business of insurance EXCEPT
A Defamation.
B Sharing commissions.
C Boycott.
D Rebating.
Sharing commissions.
How many days do insurers have to accept or deny an insurance claim?
A 15 days
B 30 days
C 40 days
D 90 days
40 days
An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of?
A Unfair claims
B Twisting
C Defamation
D False advertising
False advertising
Forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as
A Rebating.
B Misleading advertising.
C Defamation.
D Coercion.
Coercion.
What method do insurers use to protect themselves against catastrophic losses?
A Reinsurance
B Indemnity
C Pro rata liability
D Risk management
Reinsurance
What is the term for a sales campaign conducted through the mail?
A Direct-response
B Direct-mail
C Mass marketing
D Advertising
Direct-response
In which distribution system must the potential client take the initiative and respond to an advertisement through a telephone or mail contact with the insurer?
A Managing general agent system
B Home service system
C Direct agency system
D Direct response
Direct response system
According to California Insurance Code, the term "shall" describes what kind of actions?
A Implied
B Directive
C Mandatory
D Permissive
Mandatory
Which of the following would NOT be considered a form of direct response marketing?
A An ad in a newspaper
B A circular mailed to a city's residents
C An insurance company's TV commercial
D A sign in an insurer's office
A sign in an insurer's office
What will happen if an agent submits an application to an insurance company to which he is not appointed?
A The application will not have to be approved by an underwriter.
B The insurer will not accept the policy.
C The agent will be found guilty of a mis
If the insurer accepts the policy, it must appoint the agent.
Which of the following was designed to provide more extensive privacy protection than the federal Gramm-Leach-Bliley Act?
A California Financial Information Privacy Act
B NAIC Privacy Protection Model Act
C California Consumer Protection Act
D Privacy Act
California Financial Information Privacy Act
Under the Privacy Rule for HIPAA, protected information includes all individually identifiable health information
A Held in a computer format.
B Held or transmitted in paper form.
C Held or transmitted in any form.
D Transmitted electronically only.
Held or transmitted in any form.
An exclusive agent
A Offers insurance from a variety of sources.
B Must be an insured's sole source for coverage.
C Has a contract with one company.
D Must limit the number of clients.
Has a contract with one company.
An example of "adverse underwriting decisions" in a policy involving individually underwritten coverage would be
A Declination of coverage solely because coverage is not available on a class or statewide basis.
B Termination of an individual policy form o
Placing coverage with a residual marketing mechanism such as an unauthorized insurer that offers other than preferred and standard rates.
Which of the following best describes what policy dividends are?
A Profit
B Guaranteed
C Distribution of excess funds
D Income
Distribution of excess funds
Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?
A Rebating
B Twisting
C Switching
D False advertising
Twisting
An example of "adverse underwriting decisions" in a policy involving individually underwritten coverage would be
A Declination of coverage solely because coverage is not available on a class or statewide basis.
B Termination of an individual policy form o
Placing coverage with a residual marketing mechanism such as an unauthorized insurer that offers other than preferred and standard rates.
Under the Privacy Rule for HIPAA, protected information includes all individually identifiable health information
A Held or transmitted in paper form.
B Held or transmitted in any form.
C Transmitted electronically only.
D Held in a computer format.
Held or transmitted in any form.
Your client wants to buy a par policy to supplement his retirement savings program. Which of the following does your client need to understand about insurance policy dividends?
A Dividends are considered a refund of unused premiums.
B Dividends are writte
Dividends are considered a refund of unused premiums.
In order to determine whether to test an insurance applicant for HIV or AIDS, the insurer may do which of the following?
A Establish minimum uniform standards for testing all applicants for insurance.
B Base its decision to test on the proposed insured's
Establish minimum uniform standards for testing all applicants for insurance.
Arnie worked for Evermore Life Insurance for many years and became their top-selling agent. However, while Arnie was out of the country enjoying his earnings, he forgot to send in his renewal for his life license and his license expired. In addition to Ar
His appointment will expire.
In order to become an admitted, authorized insurer, what is the primary body of law about which an applicant company must be concerned?
A California Insurance Code
B California Business Code
C California Penal Code
D California Constitution
California Insurance Code
Discontinuance" is a term used to describe the termination of what type of insurance?
A Government
B Group
C Business continuation
D Index-linked
Group
The term "administrator" under California Insurance Codes refers to any person who
A Settles the claims on nonregulated policy coverages in the state.
B The third-party agency responsible for applications processing by an insurer.
C Collects any charge or
Collects any charge or premium from, or who adjusts or settles claims on, life and health insurance policies or annuities.
Which of the following entities may NOT be an insurer?
A A natural person
B The Commissioner
C A business trust
D A limited liability company
The Commissioner
An insured falsely reports the theft of a valuable item in order to collect payment from the insurance policy. This is an example of
A Misrepresentation.
B Fraud.
C Concealment.
D Twisting.
Fraud.
Which of the following persons represents several insurance companies but owns the records of the policies sold?
A Exclusive agent
B General agent
C Direct writing agent
D Independent agent
Independent agent
Which of the following statements regarding policy dividends is true?
A They are available in any life insurance policy.
B They are guaranteed.
C They are a refund of unearned premiums.
D They are automatically paid out to policyholders.
They are a refund of unearned premiums.
An insurer may discriminate against a person through underwriting if that person has
A A physical handicap that could result in an actuarially predictable loss.
B Been a fare-paying passenger on a regularly scheduled airline flight.
C No previous history
A physical handicap that could result in an actuarially predictable loss.
Which of the following was designed to provide more extensive privacy protection than the federal Gramm-Leach-Bliley Act?
A Privacy Act of 1974
B California Financial Information Privacy Act
C NAIC Privacy Protection Model Act
D California Consumer Protec
California Financial Information Privacy Act
An independent agent may have contracts with which of the following?
A The Department of Insurance
B The Commissioner
C Brokers
D More than one insurer
More than one insurer
Every insurer is required to provide all records requested by the Commissioner within
A A period of 60 days following a written request.
B 5 business days of notification by the Commissioner's office.
C 10 business days of notification by the Commissioner
A period of 30 days following a written request.
An insurer received a claim on May 1st. On May 31th, the claim was approved in its entirety. By what date can the claimant expect the payment?
A June 10th
B June 30th
C July 10th
D June 3rd
June 30th
A property and casualty agent has been licensed for 7 years. How many continuing education hours must the agent complete this licensing period?
A 30
B 24
C 15
D 0
24
What will happen if an agent submits an application to an insurance company to which he is not appointed?
A If the insurer accepts the policy, it must appoint the agent.
B The application will not have to be approved by an underwriter.
C The insurer will
If the insurer accepts the policy, it must appoint the agent.
An insurance company is domiciled in Montana and transacts insurance in Wyoming. Which term best describes the insurer's classification in Wyoming?
A Domestic
B Unauthorized
C Foreign
D Alien
Foreign
When doing business in this state, an insurance company that is formed under the laws of another state is known as which type of insurer?
A Domestic
B Alien
C Nonadmitted
D Foreign
Foreign
Which of the following is an example of a producer's fiduciary duty?
A A duty to base all transactions upon the principle of Utmost Good Faith.
B The obligation to tell the truth to the best of one's knowledge
C The trust that a client places in the produ
The trust that a client places in the producer in regard to handling premiums.
Which of the following is NOT true regarding a Certificate of Authority?
A It may be necessary for transacting business in a specific state.
B It is equivalent to an insurance license.
C It is issued by the state department of insurance.
D It is issued to
It is issued to group insurance participants.
When transacting business in this state an insurer formed under the laws of another country is known as a/an
A Alien insurer.
B Domestic insurer.
C Foreign insurer.
D Admitted insurer.
Alien insurer.
For the purpose of a contract, which of the following could be considered a "person"?
A An association
B A business trust
C A limited liability corporation
D Any of these would qualify as a person
Any of these would qualify as a person
If a policyholder contacts an insurance company about a claim and expects a response to the inquiry, within what span of time must the agent respond?
A 15 days
B 21 days
C 31 days
D 90 days
15 days
Which authority is NOT stated in an agent's contract but is required for the agent to conduct business?
A Apparent
B Assumed
C Express
D Implied
Implied
Pertaining to insurance, what is the definition of a fiduciary responsibility?
A Offering additional coverage to clients
B Promptly forwarding premiums to the insurance company
C Helping insureds to file claims
D Performing reviews of insured's coverage
Promptly forwarding premiums to the insurance company
The continuing education requirement for the California Partnership for Long-Term Care policies
A Is part of an agent's regular continuing education requirements.
B Does not apply to agents who hold a life license.
C Only needs to be completed if an actua
Is part of an agent's regular continuing education requirements.
What are the continuing education requirements for life-only agents in California?
A 20 hours annually for the first 4 years
B 30 hours every 4 years
C 24 hours every 2 years
D 25 hours every year
24 hours every 2 years
Which entity pursues liquidation of an insolvent insurer?
A The local government of the city in which the insurer is located
B The attorneys of the insolvent insurer
C The federal government
D The state government
The state government
A licensed insurance agent overhears a conversation that leads him to believe a person is committing fraud. If the agent makes a written report to a law enforcement agency and the person is investigated, but it turns out that it was an erroneous accusatio
No charges; the Insurance Code gives the agent legal immunity.
A person that DOES NOT work on the behalf of the company for which he or she does business, but rather represents the prospect, insured, or client is called
A An insurance broker.
B An insurance solicitor.
C An insurer's agent.
D A fiduciary trustee.
An insurance broker.
What are the consequences of a failure to comply with the Commissioner's office while it is executing a seizure order?
A It is a felony and is punishable by a 5-year imprisonment and restitution to victims commensurate with damages claimed.
B It would be
It is a misdemeanor punishable by a fine of $1,000, one-year imprisonment, or both.
All of the following are fraud prevention systems and agencies EXCEPT
A The Insurance Claims Analysis Bureau.
B The Medical Information Bureau.
C The Fraud Division of the Department of Insurance.
D The Arson Information Reporting System.
The Medical Information Bureau.
If an insurer's legal reserve funds are found to be less than the minimum required by law, the insurer is
A Solvent.
B Unauthorized.
C Fraudulent.
D Insolvent.
Insolvent.
Without obtaining dual licensing, life-only agents may transact all of the following types of insurance EXCEPT
A Endowments.
B 24-hour care coverage.
C Disability income.
D Accidental death.
24-hour care coverage.
What happens to a corporation's license if the corporation is dissolved?
A It remains in force for 60 days.
B It becomes inactive.
C It expires after 2 years.
D It terminates.
It terminates.
The public official in charge of the Insurance Department is the
A Insurance Commissioner.
B Insurance Executive.
C Insurance Regulator.
D Insurance Administrator.
Insurance Commissioner.
Which of the following must an insurer obtain in order to transact insurance within a given state?
A Producer's certificate
B Business entity license
C Insurer's license
D Certificate of authority
Certificate of authority
The Department of Insurance contacts an agent about a claim that was settled two months ago. Within what timeframe must the agent issue a complete response?
A 10 days
B 15 days
C 21 days
D 31 days
21 days
Which of the following is the closest term to an authorized insurer?
A Certified
B Licensed
C Legal
D Admitted
Admitted
An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the
Mutual
Which of the following would be considered refund of unearned premium?
A Nonforfeiture values
B Cash value
C Dividends
D Commissions
Dividends
An insurer, by filing a notice of appointment on behalf of an applicant, shall be deemed to have declared that the applicant has had experience or instruction in insurance or that the necessary instruction will be given within
A 20 days after issuance of
30 days after issuance of license.
In a life settlement contract, whom does the life settlement broker represent?
A The owner
B The insurer
C The beneficiary
D The life settlement intermediary
The owner
Every holder of an insurance license must notify the Commissioner, in writing, of any change of residence address, principal business address, or mailing address within which time parameter?
A 30 days
B Immediately
C 10 days
D 10 working days
Immediately
An insurance company and its agents must notify all applicants and policyholders of information-gathering processes utilized for written application transactions
A At the time of delivery of the policy when personal information is only collected from the
Both of these answers are correct.
All insurers doing business in California must maintain a department to investigate possible
A Ethics violations by agents.
B Arson.
C Fraudulent claims by insureds.
D Fraud by insurers.
Fraudulent claims by insureds.
An insurance company assures its new policyholders that their premium costs will not increase for a period of at least five years. However, due to increasing financial strain, they plan to raise premium costs for all insureds by 10% over the next two year
Fraud
If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered to be
A Certified.
B Qualified.
C Approved.
D Authorized.
Authorized.
If an agent unwittingly gives a client incorrect information, what professional insurance would pay for losses or defend the agent against any resulting lawsuits?
A Nonmedical insurance
B Errors and Omissions
C Nonadmitted agent insurance
D Professional l
Errors and Omissions
In any case where there is a controversy or dispute between the insurance company and the insured, the soliciting agent is the agent of the
A Applicant.
B Insured.
C Company.
D Beneficiary.
Company.
What is the purpose of the California Life and Health Guarantee Association?
A To "bail out" any insurance company based in California
B To protect residents against false claims in insurance advertising
C To protect life and health policyholders and/or i
To protect life and health policyholders and/or insureds should a member insurer become insolvent
To be licensed as a Life and Disability Analyst in the State of California, an applicant must meet all of the following requirements EXCEPT
A The applicant must apply for and pass the California insurance examination.
B The applicant must be at least 21 y
The applicant must be at least 21 years of age.
Which of the following terms is defined by the California Insurance Code as unassigned funds that must be reported on a stock insurer's annual statement?
A Earned income
B Premiums
C Earned surplus
D Dividends
Earned surplus
Company A enters into a reinsurance agreement with Company B, where Company B reinsures Company A's policies. Which of the following is true?
A Company A is the primary insurer, and Company B is the facultative insurer.
B Company A is the facultative insu
Company A is the primary insurer, and Company B is the reinsurer.
When a replacement carrier has a question regarding the prior carrier's coverage, from which of the following can they demand a clarification?
A The servicing agent
B The Department of Insurance
C The prior carrier
D The employer
The prior carrier
A new insurance must be treated as a replacement if a new insurer sells a policy to a group which discontinued its group medical insurance within how many days?
A 60
B 15
C 30
D 90
60
Which of the following best defines earned surplus?
A Dividends paid to policyholders.
B Insurer's unassigned funds.
C Insurer's expenses and liabilities.
D None of the above.
Insurer's unassigned funds.
Applications for insurance may contain information about a person's race, religion, ancestry, or color
A Never
B Always
C Only when the applicant is seeking life insurance.
D Only when applicant was born in a foreign country.
Never
Which of the following is NOT a required licensing qualification for a Life and Disability Insurance Analyst in this state?
A Employment with an insurance company
B Residence in the state of California
C The ability to maintain a fiduciary relationship
D
Employment with an insurance company
When can earned surplus be returned to the policyholder?
A Whenever requested by the policyholder
B Whenever it occurs
C Whenever it exists and is not needed for other expenses
D Whenever the funds are unassigned
Whenever it exists and is not needed for other expenses
Which of the following entities or individuals evaluates requests for payment by insureds after a loss has occurred?
A Marketing department
B Underwriter
C Insured
D Claims department
Claims department
What is described as the termination of a plan of insurance between the insurer and the entire group of employees?
A Nonrenewal
B Discontinuance
C Termination
D Cancellation
Discontinuance
An agent has been hired by a local businessowner to determine what type of personal and professional coverage he needs. The agent has determined the businessowner's needs and recommended policies from 3 possible companies. The agent does NOT have an agenc
An insurance broker.
When a discontinued policy contained a death benefit, what term is used in the CIC to describe the length of the applicable extension of benefits?
A Insurer's discretion
B Until death or cancellation
C Reasonable
D Client's discretion
Reasonable
Which of the following persons would not lose all of their coverage due to a discontinuance of their employer's group medical policy?
A A disabled employee or dependent
B A probationary employee
C The CEO
D A union member
A disabled employee or dependent
The authority granted to an agent through the agent's contract is referred to as
A Absolute authority.
B Express authority.
C Apparent authority.
D Implied authority.
Express authority.
When a group coverage replacement sale has occurred, which normal provision of the new policy cannot be applied as usual?
A Renewability
B Beneficiary
C Pre-existing condition
D Premium
Pre-existing condition
Which of the following is NOT permitted to charge a fee for any services provided unless he/she has a signed, written agreement with the party being charged, including a statement of the charge or basis on which charges will be made?
A Solicitor
B Life ag
Life and disability analyst
The types of policies that are covered under the terms of the Association include
A Contracts involving reinsurance.
B An annuity issued by a charitable organization.
C Direct, nongroup life, health, annuity and supplemental policies.
D Employer self-fund
Direct, nongroup life, health, annuity and supplemental policies.
Which operating division of an insurer is responsible for advertising, promoting, and distributing the insurer's products to the public?
A Marketing and Sales
B Claims
C Actuarial
D Underwriting
Marketing and Sales
If the information is used only for identification and not for underwriting purposes, which of the following information about the applicant may be listed on a life insurance application?
A Hair and eye color
B Mother's maiden name
C Name, age, height, an
Birthplace
Who is responsible for equitably evaluating insurable risks and selecting and distributing to the insurer those that are profitable to the insurer?
A Governor
B Underwriter
C Insured
D Insurance Commissioner
Underwriter
An agent is acting ethically in all of the following situations EXCEPT
A Always representing the insured.
B Working within the conditions of his/her contract.
C Representing the insurer, not the insured.
D Keeping customers' best interests in mind.
Always representing the insured.
Which of the following types of agent authority is also called "perceived authority"?
A Fiduciary
B Apparent
C Express
D Implied
Apparent
When agents are acting within the scope of their contract, their actions will be assumed to be the acts of the
A Department of Insurance.
B Insured.
C Insurer.
D Policyowner.
Insurer.
In insurance transactions, fiduciary responsibility means
A Being liable with respect to payment of claims.
B Commingling premiums with agent's personal funds.
C Handling insurer funds in a trust capacity.
D Maintaining a good credit record.
Handling insurer funds in a trust capacity.
According to the Law of Agency, a principal is represented by a/an
A Agent.
B Insurer.
C Broker.
D Insured.
Agent.
When an employee or dependent who is currently receiving benefits qualifies for an extension of benefits due to a discontinuance which was followed by a replacement, which of the following is responsible for that disabled person's continuance of benefits?
The old insurer
A dependent who is covered under a group medical policy files multiple claims for a single loss, thereby committing fraud. To what extent can the insurer deny benefits?
A For all insureds under that group policy
B For all persons in the same employee clas
Only for that person who committed the fraud
A licensee is NOT required to comply with continuing education requirements in the state of California if which conditions are met?
A The licensee has been in good standing for 20 continuous years, and is at least 70 years old.
B The licensee has been in
The licensee has been in good standing for 30 continuous years, and is at least 70 years old.
Which of the following is an example of a producer's fiduciary duty?
A An obligation to state every known fact about the policy the producer is selling.
B A duty to base all transactions upon the principle of Utmost Good Faith.
C The obligation to tell th
The trust that a client places in the producer in regard to handling premiums.
Applicants for insurance who are blind may be rated substandard for life insurance
A Always, because they cannot avoid the risk of injury or death.
B Only on the basis of information unrelated to their blindness.
C Only if they have been blind from birth.
Only on the basis of information unrelated to their blindness.
Which of the following is NOT a responsibility of an insurance agent?
A Delivering the contract
B Explaining policy provisions
C Submitting the application to the insurer
D Underwriting the contract
Underwriting the contract
Which of the following is authorized to transact insurance on human lives?
A Solicitor
B Insurance agent
C Broker
D Life-only agent
Life-only agent
What is the main difference between a life agent and a life analyst?
A Licensing requirements
B Eligible age
C Type of insurance transactions
D The way each is compensated
The way each is compensated
Which of the following are the authorities that an agent can hold?
A Apparent and allowed
B Authorized and admitted
C Primary and secondary
D Express and implied
Express and implied