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Test your basic knowledge |
CA Life Agent Exam
Start Test
Study First
Subject
:
certifications
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Grows @ fixed min. interest rate but w/ possible higher rate tied to equity index (i.e S&P Equity Index) appreciation; gains shared w/ Insurer.
Law of Large Numbers
Graded Premium Whole Life policy
Equity Indexed annuity
Needs approach (most common)
2. Provides professional services - rehabilitation - training/re-training & related costs to assist Insured in returning to work.
IRS Penalties for Annuities
Adjustable Whole Life policy
Health Insurance Portability and Accountability Act (HIPAA)
Rehabilitation rider
3. Primary - if 2 or more - equally shared; Contingent (Secondary) - only if primary dead; Tertiary - only if both primary & secondary dead. If none listed - goes to estate.
Exclusions to Work. Comp.
Types of Licensed Producers
Premium modes
Beneficiary provisions
4. 1: mortality probability charge; 2: Insurer's investment return; 3: expenses (admin costs - commissions). 1 - 2 = net; 1 - 2 + 3 = gross.
Factors that determine premium
Accidental Death (aka Multiple Indemnity) rider
Flexible Spending Account (FSA)
Types of Insurers (by ownership)
5. Two death benefit options - Option A: death benefit ONLY; Option B: death benefit + cash value; death benefit NOT guaranteed.
Factors that determine premium
Types of Term Life policies
Universal (aka Flexible Premium Adjustable) Life policy (4 of 4)
Insurable interest
6. Written policy terms supersede oral statements made prior to policy issue.
Phases of an annuity
Transplant/Cosmetic Surgery rider
Medicare Part C (aka Medicare Advantage)
Parole Pardon Rule
7. Unintentional - up to $1 -000 + legal $; Intentional - $1 -000-5 -000 + legal $; If harmful - misdemeanor + up to 1 yr. prison + up to $10 -000.
Reinsurance
Estoppel
Social Security Benefit (Supplement) rider
Penalties for violating AIDS/HIV privacy laws
8. Same as WL but w/ adjustable death benefit (& corresponding premium) & over-fund option but w/ annually renewable term (ART).
Underwriting risk categories
Current Assumption (aka Interest-Sensitive) Whole Life policy
Universal (aka Flexible Premium Adjustable) Life policy (1 of 4)
Reinstatement provision
9. IRS allows tax-free transfer of cash values between 2 LIKE policies (i.e. Life to Life - Annuity to Annuity - or Life to Annuity).
Common Life Exclusions
Human Life Value approach
1035 Exchange
Family Maintenance policy
10. Both Contributory & Non-contributory Group policies are deductible to employer (not employee) but benefits are taxable. Individual policy premium is NOT deductible but benefit is received tax-free.
Consolidated Omnibus Budget Reconciliation Act (COBRA)
Age Discrimination in Employment Act (ADEA)
Tax implications of Disability policy
Concealment exceptions
11. Peril is the CAUSE of loss. Hazard is a condition that increases LIKELIHOOD of loss.
Notice of Claim provision
Types of Agency Authority
Peril vs. Hazard
Tax implications of medical plans
12. Dividends are NOT taxable but interest is. Loan interest is NOT tax-deductible. Interest paid by Insurer on retained funds is taxable.
Medical cost containment (aka Managed care)
Preferred Provider Organization (PPO)
Annuity Classifications (2 of 5): When benefits begin
Tax implications of Dividends - Loans & Interest
13. Intentional OR unintentional failure to disclose material underwriting facts that should have been disclosed; grounds for policy rescission.
Concealment
Human Life Value approach
Common Disability Exclusions
Supplemental Major Medical plan
14. Excludes coverage for specific injury/illness either temporarily or permanently in order to eliminate pre-existing condition.
Approval Type Conditional receipt
Requirements to sell variable life products
Health Maintenance Organization (HMO)
Impairment (Exclusion) rider
15. An unintentional mistake committed by an insurance representative; may be covered by E&O insurance.
Key Employee policy
Errors & Omissions (E&O)
Annuity Classifications (3 of 5): Source of income
Parole Pardon Rule
16. Intentional deception; grounds for rescission.
Fraud
Change of Occupation provision
Annuity Classifications (5 of 5): # of lives
Market Value Adjusted (aka Modified Guaranteed) annuity
17. Written contract to transfer risk of premature death from one party to another; pays stated sum upon death; creates instant estate.
Life insurance policy
Rate (as defined by CIC)
Grace Period provision
Graded Premium Whole Life policy
18. Provides usual & customary business expenses (rent - utilities - salaries - mortgage) if owner becomes disabled; premiums deductible - benefits taxable.
Business Overhead Expense (BOE) Disability policy
Preferred Provider Organization (PPO)
Employee Retirement Income Security Act (ERISA)
7 Pay Test
19. Upon death - death benefit is paid + the aggregate of cash value accumulated to date; add-on to WL policy ONLY.
Estoppel
Convertibility provision
Family Income policy
Return of Cash Value rider
20. Allows for use of HMO/PPO or other private carrier to provide expanded benefits @ additional premium & if enrolled in BOTH Parts A & B.
Medicare Part C (aka Medicare Advantage)
Concealment
Dread Disease policy
Elements to contract
21. WL policy covering 2 or more Insureds but ONLY payable upon death of LAST Insured - generally low premium but high death benefit.
Tax implications of an Annuity (1 of 2)
Common Accident provision
Palliative vs. Curative care
Survivorship (aka "Last to die") policy
22. 1: Cash (tax-free); 2: Apply to future premiums; 3: Retained by Insurer @ interest; 4: Buy Paid-up WL policy add-ons; 5: Pay-up existing policy; 6: Buy 1-yr. Term policy.
Medicaid/Medi-Cal
Valid life insurance contracts must identify...
Dividend options
Tax implications of an Annuity (1 of 2)
23. Privately-sold policies to provide benefits not covered by Medicare; divided into 12 plans listed alphabetically A - L; 30-day free look; guaranteed renewable.
Palliative vs. Curative care
Types of Insurers (by domicile)
Payor (aka Waiver of Payor's Premium) rider
Medicare Supplement or Medigap policy
24. Commercial (private) companies; HMOs; PPOs; Blue Cross/Blue Shield; Employer-sponsored plans; Government.
Insurance contract characteristics (1 of 2)
1035 Exchange
Types of Accident & Health (A&H) providers
Medical Savings Account (MSA) & Health Savings Account (HSA)
25. Death benefit is NOT taxable. Cash value grows tax-deferred but cost basis (base premium) is not taxable - only interest is.
Waiver of Premium provision
Types of reinsurance
Tax implications of Death Benefit & Cash Value
Universal (aka Flexible Premium Adjustable) Life policy (4 of 4)
26. Accumulation or "pay-in" - contributions & interest earned are tax-deferred; Annuity or "pay-out" - monthly annuity (taxable) paid.
Universal (aka Flexible Premium Adjustable) Life policy (3 of 4)
Beneficiary provisions
Phases of an annuity
Annuity Classifications (1 of 5): How premium is paid
27. Mathematical law stating the larger # of occurrences - the more predictable the losses; used to calculate premiums.
Law of Large Numbers
Health Reimbursement Account (HRA)
Automatic Premium Loan (APL) provision
Workers' Compensation insurance
28. Level - fixed death benefit - premium fixed until renewal; Decreasing - death benefit decreases over term - premium fixed until renewal; Increasing - death benefit increases over term - premium fixed until renewal.
Medicare Part A (aka Hospital Insurance or HI)
Types of Term Life policies
Waiver of Premium provision
Tax implications of an Annuity (1 of 2)
29. Policy provisions must conform to state regulations where policy is sold.
Single Pay Whole Life policy
Errors & Omissions (E&O)
Retrocession
Conformity with State Statute provision
30. No deductible coverage for: daily room/board; ancillary costs; surgeon &/or physician expense (for added premium).
Entire Contract provision
Settlement options for Life policy (1 of 2)
Concealment
Basic Medical plan
31. Monthly; Quarterly; Semi-annually; Annually (cheapest due to less admin cost).
Premium modes
Split Dollar Plan
Civil Rights/Pregnancy Discrimination Act
Requirements to sell variable life products
32. Policy owner has right to determine mode of premium payment but Insurer can charge admin. fee if not annual.
Total disability (more restrictive definition)
Factors that determine premium
Concealment
Payment of Premium provision
33. War; elective cosmetic surgery; routine dental; work. comp.-covered claims; self-inflicted (intentional); gov't. facility treatment; LTC; private nursing.
Exclusions for Major Medical plan
Impairment (Exclusion) rider
Medi-Cal Share Cost plan
Types of Insurers (by sector)
34. If Insured changes to: more hazardous job - benefits reduced; less hazardous job - premiums reduce.
Universal (aka Flexible Premium Adjustable) Life policy (4 of 4)
CA Work. Comp. Statutes
Change of Occupation provision
Total disability (as commonly defined)
35. Savings account for medical expenses; Tax-deductible contributions; tax-deferred growth; tax-free for qualified use; taxable for non-qualified use.
Universal (aka Flexible Premium Adjustable) Life policy (1 of 4)
Medical Savings Account (MSA) & Health Savings Account (HSA)
Types of reinsurance
Non-forfeiture options for WL policy
36. 1: Fixed - guaranteed fixed monthly income & fixed interest rate; 2: Variable - unguaranteed; monthly income varies based on stocks/bond returns.
Types of Agency Authority
Annuity Classifications (3 of 5): Source of income
Common Disability Exclusions
Age Discrimination in Employment Act (ADEA)
37. Upon death - death benefit is paid + the aggregate of premiums paid to date; add-on to Term policy ONLY.
Employer Liability
Return of Premium rider
Dividend options
Policy loans
38. Provides % of monthly income benefit if Insured becomes disabled due to illness or accident.
Factors that determine premium
Grace Period provision
Plans A-L of Medical Supplement or Medigap
Disability Income policy
39. Govt. organization providing health care benefits for dependents of military personnel.
Medicare Part A (aka Hospital Insurance or HI)
Basic Medical plan
Modified Premium Whole Life policy
CHAMPUS (aka TriCare)
40. Same as Universal Life but cash value put in investment vehicles chosen by policy owner (stocks - bonds - munis.); cash value NOT guaranteed.
Accidental Death & Dismemberment (AD&D) Life policy
Types of Insurers (by sector)
Long Term Care (LTC) policy
Variable Universal Life policy
41. Voiding an insurance contract based on fraud - concealment or material misrepresentation; premiums returned; policy treated as never existing.
Rescission
Insurable interest
Types of Term Life policies
Loss exposure
42. Hybrid of HMO & PPO w/ greater flexibility on choosing specialists outside network w/ benefits still provided but @ higher co-pay.
Key Employee Disability policy
Palliative vs. Curative care
Point of Service plan
Family or Dependents rider
43. Provides coverage for specific disease(s) - such as cancer or leukemia.
Relation of Earnings to Insurance provision
Dread Disease policy
Long Term Care (LTC) policy
Equity Indexed annuity
44. Compensates business for loss due to disability of key employee; premiums not deductible but benefits tax-free.
Cross Purchase Plan
Medicare Part A & B "Gaps"
Key Employee Disability policy
Medical Savings Account (MSA) & Health Savings Account (HSA)
45. Federal law which prohibits companies w/ 20+ employees from denying work & medical benefits to employees due to age.
Pure risk vs. Speculative risk
Age Discrimination in Employment Act (ADEA)
Guaranteed Insurability (aka Additional Purchase or Future Increase) Disability rider
Equity Index Whole Life policy
46. Preferred or Preferred Smoker; Standard or Standard Smoker; Substandard; Denied.
Underwriting risk categories
Business Overhead Expense (BOE) Disability policy
Recurrent disability clause/provision
Guaranteed Insurability (aka Additional Purchase or Future Increase) Disability rider
47. Funding mechanism whereby employer & employee share cost of premium. Upon death - benefit is shared between employer & beneficiary.
Fraud
Split Dollar Plan
Requirements to sell variable life products
Relation of Earnings to Insurance provision
48. 1: Non-cancelable; 2: Guaranteed renewable; 3: Cancelable; 4: Conditionally renewable; 5: Optionally renewable.
Disability Income policy
Key Employee policy
Types of Renewability provisions
Whole (aka Permanent or Straight) Life policy
49. Available for any reason up to full cash value @ fixed (max 8%) OR variable interest rate; loan $ + interest deducted from benefit @ death.
Proof of Loss provision
Accidental Death (aka Multiple Indemnity) rider
Policy loans
Types of Licensed Producers
50. Business continuation funding plan whereby each partner agrees to buy Life policies on each other - but not themselves.
Health Reimbursement Account (HRA)
Cross Purchase Plan
Family Maintenance policy
Types of Agency Authority