CALIFORNIA LIFE ONLY LIFE INSURANCE STATE EXAM 126 Questions with Answers
Which of the following pieces of information is NOT gathered during the
... [Show More] personal financial planning process? - CORRECT ANSWER "An individual's civic organization memberships" are NOT gathered. An individual's expenses, assets, and income. All of these pieces of information are normally gathered during the personal financial planning process
A life insurance policy'slimit of liabilitv would be - CORRECT ANSWER "the policy's face amount". The face amournt of the policy is the limit of liability in a life insurance policy.
The California Insurance Code allows an individual how many days to cancel a life policy for a full-refund? - CORRECT ANSWER Between 10 and 30 days.
Every policy of individual life insurance shall have a notice stating that after receipt of the policy by the owner, the policy may be returned by the owner for cancellation by delivering it or mailing it to the insurer or to the agent through whom it was purchased. This period shall not be less than 10 days nor more than 30 days.
Which of the following is NOT characteristic of the conversion privilęge? - CORRECT ANSWER "Employer pays the premium for the converted policy".
Proof of insurance ability is not required, conversion must take place within 31 days of employment termination, ex-employee pays the premium for the converted policy all of these about the conversion privilege are true EXCEPT "Employer pays the premium for the converted policy".
Which of the following is NOT a common life insurance policy rider? - CORRECT ANSWER accidental death
waiver of premium
automatic premium loan
extended term
ANSWER
"Extended term" is not considered a life insurance rider.
Which type of jurisdiction requires an insurer to have its rates accepted by the Insurance Department prior to using them? - CORRECT ANSWER "Prior approval". A prior approval state requires that an insurance company receives approval for a new insurance rate before it is sent to the public.
What is the insurance term the State of California uses for an insurer that is eligible to transact business in this state? - CORRECT ANSWER The insurance term for an insurer which has met the conditions required to transact business in the State of California is "admitted".
sa the systematic liquidation of a sum money is provided by a(n) - CORRECT ANSWER "annuity". An annuity contract provides for the systematic liquidation of a fund. mething
A person who asserts a right of recovery under an insurance policy is called - CORRECT ANSWER Claimant.
As defined by the California Code of Regulations, a person who asserts a right of recovery under an insurance policy is called the claimant.
How are acts of war and aviation treated under a group life insurance policy? - CORRECT ANSWER "Policy exclusions". Under a group life insurance policy, acts of war are considered a policy exclusion.
Mike and Ike are 30 year old identical twins. Both are in excellent health. Each brother purchases a life policy that has a $750 annual premium. Mike buys a 10-year renewable term policy. Ike purchases a whole life policy. All of the following statements are true EXCEPT - CORRECT ANSWER Mike has the option of using his cash value to purchase a reduced amount or paid up whole life insurance.
TRUE STATEMENTS:
-Mike's policy will develop no cash value over the policy's term
-Ike will have a level premium
-Ike may eventually take out a policy loan
Since a term policy provides for no cash value, there are no nonforfeiture
Paul has an existing annuity and is sold a new one, in which the new policy holds no greater financial benefit to him than the existing contract. This is considered a(n) - CORRECT ANSWER unnecessary replacement
This is an example of unnecessary replacement.
Most U.S. life insurance companies belong to the - CORRECT ANSWER "Medical Information Bureau". Nearly every life insurer in the United States belongs to the Medical Information Bureau.
What is the proper order of initial life insurance premiums, from lowest to. highest? - CORRECT ANSWER Modified premium, ordinary life, single premium". The order of initial premiums for life insurance policies, from lowest to highest, is the following: modified premium, ordinary life, single premium.
An applicant has revealed conditions that require more information. Which of the following is needed next? - CORRECT ANSWER "Attending physician's statement". An attending physician's statement (APS) is needed in cases in which the individual application and/or medical reports reveal conditions of which more info is required. The applicant must sign a written release to enable a release of the APS
What does a policyowner NOT have a right to change? - CORRECT ANSWER "Dividend schedule".
Benificiary
Payment mode
Dividend option
are considered rights of a policyowner EXCEPT the right to change the dividend schedule.
What area of group health insurance is regulated under the Employee Retirement Security Act of 1974 (ERISA)? - CORRECT ANSWER "Disclosure and reporting". The Employee Retirement Security Act of 1974 (ERISA) regulates group health insurance in the area of disclosure and reporting.
Life insurance creates an immediate estate. This phrase means: - CORRECT ANSWER "when the insured dies, a death benefit is paid". Life insurance creates an immediate estate by paying a death benefit whenever the insured dies.
According to the California Insurance Code, what is the maximum penalty per violation for anyone who unwillfully commits an unfair method of competition? - CORRECT ANSWER $5,000
Any person who unwillfully engages in an unfair method of competition is liable to the state for a fine of up to $5,000 per violation. If the act is determined to be willful, the fine will not exceed $10,000 per act.
What distinguishes a deferred annuity from an immediate annuity? - CORRECT ANSWER "The time at which benefit payments start". The difference between deferred and immediate annuities is when annuity benefit payments begin.
A terminated employee that has exercised the conversion privilege is able to convert - CORRECT ANSWER term insurance into permanent insurance.
The conversion privilege allows a terminated employee to convert term insurance into permanent insurance.
What is NOT a requirement for a terminated employee that has exercised the conversion privilege? - CORRECT ANSWER "Provide proof of insurability".
A terminating employee who wants to exercise the conversion privilege must meet all of these requirements:
-premium must be paid
-covert within 30 days
-convert up to the previous amount of group coverage
At what age is a surviving spouse without dependents eligible for Social Security survivor benefits? - CORRECT ANSWER "60"
Reduced widow or widower benefits can be received as early as age 60.
The Medical Information Bureau consists of - CORRECT ANSWER Life and health insurers are members of the Medical Information Bureau.
What is NOT a feature of equity-indexed annuities? - CORRECT ANSWER Offers a maximum interest rate that increases annually
Equity indexed annuities offer:
-a minimum guaranteed rate
-protection during a decline
-long term inflation protection
An annuitant would like to determine the current value of her annuity. To do this, she multiplies the number of "accumulation units" she owns times the unit value of the "separate account". What kind of annuity BEST matches this description? - CORRECT ANSWER variable annuity
It holds its investments in an insurer's separate account, as opposed to the insurer's general account. These separate accounts usually hold non-guaranteed equity investments such as stocks and mutual funds. Variable annuities shift the investment risk from the insurer to the annuity owner.
Which of the following types of life insurance combines a savings element along with a flexible premium option? - CORRECT ANSWER "Uníversal life". Universal life combines a savings element along with a flexible premium option.
Key person insurance is intended to - CORRECT ANSWER cover business losses due to the death of a key employee
A life insurance policy that pays the face amount if the insured survives to a specified period of time is called - CORRECT ANSWER "Endowment insurance". An endowment policy pays the face amount if the insured survives to a specified period of time.
Who does a life settlement broker represent? - CORRECT ANSWER "Individual wanting to sell their life policy to a third party".
A life settlement broker represents the individual wanting to sell their life policy to a third party.
When an applicant applies for insurance, the process by which the insurer determines whether to issue a policy is called - CORRECT ANSWER "underwriting".
When an applicant applies for insurance, the process by which the insurer determines whether to issue a policy is called underwriting.
When calculating life insurance premium rates, which component is affected by an insured's age and gender? - CORRECT ANSWER "Mortality",
Mortality is the component of a life insurance premium that age and gender affects.
Which of the following is NOT an insurer policy expense? - CORRECT ANSWER "Premiums".
Insurance companies are like any other business. They have operating expenses which need to be factored into the premiums. This includes expenses such as salaries, agent compensation, rent, legal fees, postage etc.
What prevents a life insurance policy from being rescinded by the insurer after being in force for two years? - CORRECT ANSWER "Incontestability clause".
Insurers are prohibited from denying claims or rescinding a policy based on misstatements in a life, accident, or disability policy application after the policy has been in force for two years. The is called the incontestability clause.
Which statement is true regarding policy dividends? - CORRECT ANSWER O Dividends are always taxable
O Dividends are always guaranteed
O A dividend option is selected by the insured at the time of policy purchase
O Nonparticipating policies issue dividends
The correct answer is:
"A dividend option is selected by the insured at the time of polícy purchase". Insureds elect a dividend option at the time of policy purchase.
According to the California Insurance Code, who is responsible for submitting a life agent's appointment? - CORRECT ANSWER Insurer
The insurer is responsible for submitting a life agent's appointment.
How is a life insurance policy dividend legally defined? - CORRECT ANSWER "A return of excess premium and not taxable".
Life insurance policy dividends are a return of part of the premiums paid. As such, policy dividends are generally not taxable income.
An annuity which is backed by a life insurer's separate account is called a(n) - CORRECT ANSWER variable annuity
An annuity which is backed by a life insurer's separate account is called a variable annuity.
Which of the following is NOT true regarding a family policy that covers children? - CORRECT ANSWER O Term insurance is used for the children's rider
O Conversion of child's coverage to permanent insurance requires evidence of insurability
O Adopted children can be covered
O Additional children can be added at no cost
The correct answer is:
"Conversion of child's coverage to permanent insurance requires evidence of insurability". Conversion of child's coverage to permanent
Which of the following is NOT considered to be an act of insurance solicitation? - CORRECT ANSWER O Publishing a magazine where one of the advertisers is an insurer
O Airing a television commercial recommending an insurance product
O An agency sending out direct mail for a promotion
O An agent giving a rate quotation
The correct answer is:
"Publishing a magazine where one of the advertisers is an insurer". Publishing a magazine where one of the advertisers is an insurer is not considered to
A life insurance policy where the insured can choose where the cash value can be invested is called - CORRECT ANSWER Variable life
allows the insured to choose where the assets backing the cash value are invested.
An agent's attempt to stop the replacement of an existing life insurance policy is known as - CORRECT ANSWER "conservation".
An agent's attempt to stop the replacement of an existing life insurance policy is known as conservation.
A hazard can be best described as - CORRECT ANSWER "a condition that may increase the likelihood of a loss occurring".
A condition or situation that creates or increases a chance of loss is called a hazard. Examples include icy roads, driving while intoxicated, and improperly
How does underwriting differ between group life and individual life insurance? - CORRECT ANSWER "Medical questions must be answered on individual life insurance".
One difference between group and individual life insurance underwriting is that medical questions must be answered on
The objective of underwriting is to - CORRECT ANSWER "avoid selecting a disproportionate number of bad risks".
Tom is shopping for a policy that covers two people and would pay the face amount ONLY when the first person dies. The type of life policy he is looking for is called a - CORRECT ANSWER "Joint life policy".
A joint life policy covers two or more people and pays the face amount at the first insured's death.
The Çalifornia Life and Health Insurance Guarantee Association covers all of these types of policies, EXCEPT
O Immediate annuities
OWhole life
O Disability
OSelf-funded plans - CORRECT ANSWER Self-insured/funded plans are not covered under the California Life and Health Insurance Guarantee Association.
What the price of insurance for each exposure unit? - CORRECT ANSWER "Rate". The price of insurance for each exposure unit is called the rate.
Why is a life insurance policy's delivery date important? - CORRECT ANSWER "The free-look period begins on the policy delivery date".
The California Insurance Code gives an individual between 10 and 30 days to return a life policy for cancellation. This free-look period begins on the policy delivery date
Who are the parties to the master contract in a group life insurance policy? - CORRECT ANSWER "Insurer and employer".
The actual policy for group life insurance, which is called the master policy, is issued by the insurer to the employer.
Who is issued a certificate of insurance with a group insurance policy? - CORRECT ANSWER The participant is issued a certificate of insurance with a group insurance policy.
Which of the following does the California Department of Insurance (CDI1) have NO jurisdiction over?
O Life and health insurance companies O Health Maintenance Organizations
O Preferred Provider Organizations
O Medicare - CORRECT ANSWER "Medicare".
The California Department of Insurance (CDI) has no jurisdiction over Medicare.
If an insured dies because of an accident, which type of life insurance rider will provide additional coverage? - CORRECT ANSWER "Accidental death rider". An accidental death rider provides additional coverage in the event of accidental death.
Which course of action is the insurer entitled to when deliberate concealment is committed by the insured? - CORRECT ANSWER "Rescinding the contract". Intentional concealment entitles the insurance company to void the policy.
Which of the following refers to a condition that may increase the chance of a loss?
O Peril
O Hazard
O Adverse selection
O Risk potential - CORRECT ANSWER "Hazard". A hazard is a condition or situation that creates or increases a chance of loss.
Which of the following is NOT considered a definition of risk?
O The potential for loss
O Uncertainty
O Exposure to danger
O The cause of a loss - CORRECT ANSWER "The cause of a loss".
Something that can cause a loss, such as an earthquake or tornado, is referred to as a peril, not a risk,
How are Roth IRA's treated for tax purposes? - CORRECT ANSWER "Non-deductible contributions and tax-free distributions".
The tax characteristics of a Roth IRA are non-deductible contributions and tax-free distributions.
Life insurance surplus must be distributed to policyowners at what frequency? - CORRECT ANSWER "Annually".
Life insurance surplus must be distributed to policyowners annually in a participating policy.
When a mutual insurer becomes a stock company, the process is called - CORRECT ANSWER Demutualization
Which of the following is NOT considered to be a definition of the term "loss"?
O Unintentional decrease in the value of an asset due to a peril
O An insurable event that takes place which results in a payment made by the insurance company
O The amount an insurance company must pay because of an insurable event O Probability that an event will occur - CORRECT ANSWER "Probability that an event will occur".
The term "loss" can be defined as all of these.
Which of the following is NOT a component of determining policy premiums?
O Dividends
O Expenses
O Mortality
O Interest - CORRECT ANSWER "Dividends".
Dividends are not a component when determining policy premiums.
After a policy has lapsed, which provision allows the insured to continue coverage? - CORRECT ANSWER "Reinstatement provision".
The reinstatement provision allows an insured to continue coverage under a previously lapsed policy.
Insurance agents and brokers must make their insurance records available to the Commissioner - CORRECT ANSWER "at all times".
Insurance records of insurance agents and brokers must be made available to the Insurance Commissioner at all times.
All of these are reasons the Commissioner may disapprove a licensee's request to use a fictitious name EXCEPT
O The use of the name may mislead the public in any respect
O The name is the licensee's actual name
O The name states, infers or implies that the licensee is an insurance company
O The name is too similar to a name already filed and in use by another licensee - CORRECT ANSWER According to the California insurance code, the commissioner can disapprove a licensee's request to use a fictitious name for all of these reasons EXCEPT when
The name is the licensee's actual name
The risk selection process is primarily given to which insurance company departments? - CORRECT ANSWER "Underwriting".
An insurance company's underwriting department is primarily responsible for the risk selection process (which applications are accepted or rejected).
A participating company is also referred to as which type of insurer? - CORRECT ANSWER "Mutual insurer". A mutual insurer is also referred to as a participating company.
Employer contributions to qualified plans are - CORRECT ANSWER "tax-deductible by the employer", Emplayer contributions to qualified plans are tax-deductible by the employer.
Which of these is NOT a valid policy dividend option?
O Paid-up additions
O Monthly income payments
O Reduce premium
O One-year term - CORRECT ANSWER "Monthly income payments".
is not a valid policy dividend option.
AAA Insurance Company has transferred a portion of its loss exposure to BBB Insurance Company. In this reinsurance transaction, what is AAA. Insurance Company called? - CORRECT ANSWER "Primary insurer".
in a reinsurance agreement, the insurance company that transfers its loss exposure to another insurer is called the primary insurer,
When an accidental death benefit is added to a whole life policy, how does this affect the policy's cash value? - CORRECT ANSWER Policy's cash value is not affected
When an accidental death benefit is added to a whole fife policy, the policy's cash value is not affected.
Which of the following is NOT protected under the California Life and Health Guarantee Association?
O Insureds
O Insurers
O Policyowners
O Primary beneficiaries - CORRECT ANSWER Insurers
All of these are provided protection through the California Life and Health Guarantee Association except for insurers.
Which of the following describes the increase in the probability of a loss due to an insured's dishonest tendencies?
O Physical hazard
O Morale hazard
O Moral hazard
O Speculative hazard - CORRECT ANSWER "Moral hazard".
The increase in the probability of a loss resulting from an insured's dishonest tendencies is known as moral hazard.
Which of the following is NOT a primary objective of insurance regulation?
O Insurance Code enforcemernt
O Protect policyowners
O Licensing agents
O Interpret policy pravisions - CORRECT ANSWER "Interpret policy provisions".
All of these are considered objectives of insurance regulation EXCEPT "interpret policy provisions".
The Human Life Value concept is based on - CORRECT ANSWER "income".
The Human Life Value approach calculates the amount of money a person is expected to earn over his lifetime to determine the face amount of life insurance needed.
Which of the following does NOT have to be included on life insurance policy illustrations?
O Age of the insured
O Name of the insurer
O Name of the agent
O Statement that all values and benefits are guaranteed - CORRECT ANSWER "Statement that all values and benefits are guaranteed".
Not all benefits and values are guaranteed in life insurance policies. Some have non-guaranteed values which must be described in the illustration.
Tim was recently terminated from his employment and opted to change his existing group term life insurance to individual permanent life insurance. What is this process called? - CORRECT ANSWER "Conversion".
Changing group term insurance into an equal amount of individual permanent coverage is called a conversion.
An insurance company entitled to transact business in California is called a(n) - CORRECT ANSWER Admitted carrier
An admitted California insurance carrier is one that submits to specific requirements set forth by the California Department of Insurance (CDI).
Which statement is CORRECT when describing a contract of adhesion?
O Contract involves negotiation between insurer and insured
O Any confusing language in the contract would be interpreted in favor of the insurer
O Contract may be accepted or rejected by the insured
O Contract cannot be modified by the insurer - CORRECT ANSWER Contract may be accepted or rejected by the insured
Which of the following contracts is defined as "one that restores an injured party to the condition that was present before the loss"?
O Unilateral contract
O Personal contract
O Indemnity contract
O Contract of adhesion - CORRECT ANSWER Indemnity contract
A contract that restores an injured party to the condítion that was present before the loss.
What is an "insurance broker" according to California Insurance Code? - CORRECT ANSWER A person compensated for transacting insurance on behalf of another person with an insurer
When an insurer has met the qualifications necessary to transact business in California, it is said to be - CORRECT ANSWER admitted
An admitted carrier has met the conditions required to transact business in the State of California.
When a life insurance policy is surrendered, how does the cost recovery rule apply?
O The insurer withholds the cost basis O The entire cash value is taxable
O The policy's cost basis is exempt from taxation
O The policy's cost basis is taxable - CORRECT ANSWER The cost basis of the policy is exempt from taxation as it pertains to the cost recovery rule.
Which of the following is a life insurance policy that does NOT require a physical exam?
O Noncancelable
O Substandard
O Graded
O Non-medical - CORRECT ANSWER "Non-medical".
Non- medical life insurance policies are written without a physical exam.
What type of license is required for an individual who charges a fee to review an insured's existing life insurance policy? - CORRECT ANSWER "Life and disability analyst".
A life and disability insurance analyst license is required to review an insured's existing life or disability policy for a fee.
The importance of a representation is demonstrated in what rule?
O Law of adhesion
O Consideration clause
O Materiality of concealment
O Insurable interest - CORRECT ANSWER "Materiality of concealment".
The materiality of concealment is used to determine the importance of a representation.
The free-look period for life insurance policyowners age 60 or older is - CORRECT ANSWER 30 days
A representation may be altered or withdrawn
O anytime with the applicant's initials
O only before the insurance is in effect O only after the policy has been issued O anytime with the insurer's approval - CORRECT ANSWER only before the insurance is in effect
If a material warranty violation on the part of the insured is found, what recourse does an insurer have? - CORRECT ANSWER Rescind the policy
A warranty in insurance is a statement made by the applicant that is guaranteed to be true in every respect. It becomes part of the contract and, if found to be untrue, can be grounds for revoking the contract.
An annuitant would like to determine the amount of an annuity distribution that is exempt from taxation. What is used to calculate this? - CORRECT ANSWER "Exclusion ratio".
Annuity benefit payments are a combination of principal and interest. A formula called the exclusion ratio is used to determine the amount of annual annuity income that is exempt from federal income taxes.
An insurer can be protected from adverse selection with which policy provision?
O Reinstatement
O Grace period
O Insuring clause
O Suicide clause - CORRECT ANSWER "Suicide clause".
The sucide clause protects the insurer against possible adverse selection.
According to the California Insurance Code, how is the word "may" interpreted? - CORRECT ANSWER Permissive
When used in the California Insurance Code, the word "may" is intended to be permissive.
Express power given to an agent in an agency agreement is - CORRECT ANSWER "the authority to represent the insurer". Express authority is granted by means of the agent's contract, which is the insurer's appointment of the agent to act on its behalf.
What is an insurance solicitor authorized to do? - CORRECT ANSWER Help an agent or broker sell insurance
An insurance solicitor is a person authorized to assist a broker or agent in selling insurance.
An insurer having a large number of similar exposure units is considered important because
O the greater the number insured, the more premiums it collects
O its financial rating will improve
O the insurer can decrease its reserves
O the greater the number insured, the more accurately the insurer can predict losses and set appropriate premiums - CORRECT ANSWER The greater the number insured, the more accurately the insurer can predict losses and set appropriate premiums.
Which of the following types of information is NOT required for a life insurance application?
O Occupation
O Health history
O Ethnicity
O Hobbies - CORRECT ANSWER "Ethnicity".
Ethnicity is not required information needed for a life insurance policy.
The probability of death, listed by year, is demonstrated in - CORRECT ANSWER "Mortality tables".
Mortality tables give a measure of the number of deaths in a given population over a certain period of time.
Which of the following is NOT a true description of non-medical life insurance?
O Less cost involved with underwriting the application
O Applicants are not required to answer medical questions on the application
O Quicker processing of life insurance application
O Demand on the medical profession reduced - CORRECT ANSWER "Applicants are not required to answer medical questions on the application".
Medical questions can still be asked on an application of non-medical life insurance
Which of these statements correctly describes risk?
O Speculative risk is the only insurable risk
O Pure and speculative risks are both insurable
O Pure risk is the only insurable risk
O An example of pure risk would be a legal wager - CORRECT ANSWER Only pure risks are insurable.
Which of the following describes a contributory group insurance plan?
O All of the premium is paid by the employer
O Federal government contributes a portion of the employee's premium
O Part of the premium is paid by the employee
O Employees are eligible for policy dividends roma - CORRECT ANSWER Part of the premium is paid by the employee
A contributory group insurance plan is one in which employees share the cost of the premiums with the employer.
What does the guaranteed insurability option allow an insured to do? - CORRECT ANSWER "Purchase additional coverage with no evidence of insurability required".
Which of the following is a contract that involves one party which indemnifies another when a loss arises from an unknown event?
O Warranty arrangement
O Insurance policy
O Indemnification arrangement
O Loss contract - CORRECT ANSWER Insurance policy
A savings vehicle designed to first accumulate funds and then systematically liquidates the funds is called a(n) - CORRECT ANSWER "deferred annuity".
A savings vehicle designed to first accumulate funds and then systematically liquidates the funds is called a deferred annuity.
A report which is based on creditworthiness and personal characteristics that influences an insurance applicant's eligibility for life and health insurance is called a(n) - CORRECT ANSWER "consumer report".
A consumer report influences an insurance applicant's eligibility for life and health insurance and is based on creditworthiness and personal characteristics.
One important function of an insurance company is to identify and sell to potential customers. Which of these BEST describes this function?
O Marketing
O Underwriting
O Reinsurance
O Regulation - CORRECT ANSWER "Marketing". Marketing can be best defined as identifying and selling to potential customers,
Anyone employed in California to assist an insurance agent in transacting insurance is called an insurance - CORRECT ANSWER solicitor
Victoria owns a life annuity and elects to receive annuity payments monthly for the remainder of her life with "ten years certain". Her annuity will make payments - CORRECT ANSWER "for a minimum of 120 months and a maximum of the remainder of her life". For a life annuity with 10-year certain, monthly payments are paid to the annuitant for life. If the annuitant dies, the designated beneficiary
What must an applicant do in order to authorize the release of an attending physician report? - CORRECT ANSWER Sign a consent form
An insurer owned by its policyholders is called a - CORRECT ANSWER "mutual insurer".
A mutual insurer is owned by its policyholders.
Non-deductible contributions are typically associated with a - CORRECT ANSWER "Roth IRA".
No income- tax deductions can be taken for contributions made to a Roth IRA, but the earnings on those contributions are entirely tax-free when they are withdrawn.
When intentional concealment is involved, what course of action is the injured party entitled to? - CORRECT ANSWER "Rescission of the contract". Concealment, whether intentional or unintentional, entitles the injured party to rescind insurance,
How long must life agents keep their transaction records? - CORRECT ANSWER 5 years
When an insurance company requests an attending physician's report, the request must be accompanied by a - CORRECT ANSWER "copy of the signed authorization".
An insurer's request for an attending physician's report must be accompanied by a copy of the signed authorization.
What does the term "illustration" mean when used in the phrase "life insurance policy illustration", according to the California Insurance Code? - CORRECT ANSWER "Presentation of policy features that includes non-guaranteed elements".
An insurer that has been found using higher rates based on race, religion, or ethnicity is said to be engaging in - CORRECT ANSWER Unfairly discriminate
It is an illegal practice to unfairly discriminate against a person in any way on an insurance-related matter. An example would be charging a different rate for someone in the same actuarial class. Fair discrimination is necessary for the issuance of life insurance policies, which is based on mortality. Also, no insurer or agent may cancel or refuse to underwrite or renew a particular insurance risk based on race, color, creed, sex, sexual orientation, or blindness of an applicant or policyholder,
When calculating life insurance premium rates, which component would an agent's commission fall under? - CORRECT ANSWER "Insurer's expenses".
The agent's commission is considered part of the insurer's expenses and is a component of the premium.
Which of these is the automatic mode of settlement for life insurance policy proceeds?
O Interest only
O Extended term
O Lump-sum
O Fixed period - CORRECT ANSWER "Lump-sum".
The lump-sum cash settlement is considered the automatic (or "default") option for most life insurance contracts.
An agent has advertised that the insurer to which the agent is appointed with is a member of the Insurance Guarantee Association. This agent has committed a(n) - CORRECT ANSWER "unfair method of competition".
It is considered an unfair method of which the agent is appointed with is a member of the competition for an agent to advertise that the insurer to Insurance Guarantee Association.
A spendthrift clause in a life insurance policy - CORRECT ANSWER "restricts the ability of the beneficiary to assign benefits".
In a modified endowment contract, the penalty tax imposed on premature withdrawals is
O 10%
O 20%
O 40%
O 30% - CORRECT ANSWER "10%".
A creditor would be allowed rights to life insurance policy proceeds if which of the following beneficiaries is chosen? - CORRECT ANSWER The insured's estate
Bruce is involved in an accident and becomes totally and permanently disabled. His insurance policy continues in force without payment of further premiums. Which policy provision is responsible for this? - CORRECT ANSWER Waiver of premium provision
A waiver of premium provision relieves policyowner of paying premiums in the event of total and permanent disability.
John owns an insurance policy that gives him the right to share in the insurer's surplus. What kind of policy is this? - CORRECT ANSWER "Participating".
Participating policies give the policyowner the right to share in the insurer's surplus.
A life insurance policy can be surrendered for its cash value under which policy provision? - CORRECT ANSWER Nonforfeiture options "
Nonforfeiture options allow a policyowner to surrender a policy for its net cash value.
Which word implies permissiveness according to the California Insurance Code?
O May
O Indemníty
O Admitted
O Shall - CORRECT ANSWER "May".
When found in California Insurance Code, the word "may" implies permissiveness.
Which of the following is NOT an element of an insurable rísk?
O Loss must be due to chance
O Loss must be catastrophic
O Loss must be measurable
O Loss frequency must be predictable - CORRECT ANSWER "Loss must be catastrophic".
All of these are elements of an insurable risk EXCEPT "Loss must be catastrophic".
Which of the following is NOT required in the content of a policy?
O Period to which the coverage exists O Parties involved in the contract
O Risk insured against
O Probability of loss - CORRECT ANSWER "Probability of loss".
The probability of loss is not required in the content of a policy. [Show Less]